King of the Food Deserts

For some, low-end retail is a godsend. Questionable food and part-time jobs with no benefits are better than no food and no jobs. For others it is a bad omen.
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Last week the Oakland City Council voted unanimously to amend their laws regarding eminent domain. Now the city may potentially force a commercial property owner in West Oakland to sell his land to the Kroger corporation for a Foods Co discount supermarket/gas station in one of the city's notoriously underserved neighborhoods. This is the city's third Foods Co deal this year, making Kroger the undisputed retail king of Oakland's food deserts.

It is easy to understand why the city wants Foods Co to come in. They have been unable to keep a retail grocery chain in the neighborhood. After fifteen years without a store, residents are desperate for food access. While local property owners were predictably not in favor of the use of eminent domain, at the City Council meeting, scores of residents vociferously demanded the city facilitate Foods Co's entry. Said one resident, "When the city used eminent domain for the freeway, there was no problem. When it used eminent domain for the BART (rapid transit) station, no problem. But now that people want a grocery store, everyone is all against eminent domain!"

Other residents and local businesses, labor, and food and health advocates expressed concerns about the medium and long term impacts of the low-end grocery chain on health, livelihoods and other businesses. Will Foods Co hire local people and pay living wages? Kroger came and left Oakland once before. What will keep Foods Co in town after the incentives (up to $7 million in stimulus funds) are gone? Will the cheap, processed, sugary, high fat items Foods Co infamously stocks lower or ultimately raise the incidence of diet-related diseases among underserved communities?

For some, low-end retail is a godsend. Questionable food and part-time jobs with no benefits are better than no food and no jobs. For others it is a bad omen. The deals, done quickly with a minimum of information, cost-benefit analysis or public dialogue, end up polarizing communities around an issue that everyone otherwise agrees upon: the right to fresh, healthy, affordable food.

The corporate drive into the America's urban food deserts is reflective of the nation's food and financial crises. Large agrifoods corporations reaped windfall profits during the 2008 food crisis. Now these must be reinvested. Unfortunately, with the financial crisis, consumers are cutting back on purchases. Big retail must expand, but they have already saturated rural and suburban markets. The only place left is the urban market. But urban land is usually too expensive for the large formats (which is why Wal-Mart is experimenting with small, 10,000 square foot stores). So, Kroger has gone for cheap land and stimulus money in low-income neighborhoods. Margins will be thin so saturation must be complete.

People may be poor but they still have to eat and their combined food dollar is substantial. Families in Oakland's food deserts spend over half a billion a year on fresh food--mostly outside their neighborhoods. In fact, the "float" of food dollars out of the community has been estimated at $375 million in lost sales -- an amount that according to one local study represented $67.5 million in lost wages or 1500 jobs paying an average of $45,000 per job.

The entry of discount grocery stores will mean people won't have to travel so far to buy their groceries. But the food dollar will still leave Oakland, and this is a problem for a city so desperate for funds that it is considering legalizing pot to capture revenues. Studies have shown that corporate operations provide significantly less overall benefit to local economies than small, locally-owned businesses because they send most of the purchasing power out of town. For every $1 spent at a local business, nearly half of the money is reinvested locally. The capture rate for food dollars spent in corporate chains is roughly three times less that through local retailers who often rely on other nearby business owners and services to operate. By retaining local accounting, banking, advertising, information technology and other services, retailers drive cyclical reinvestment within the trade area. 'Shopping local' really means building upon existing local business capacity and infrastructure.

The problem of America's food deserts is complex and demands diversified, local solutions. The food system is better off with many stores -- including large retailers -- because they will help distribute risk, wealth and opportunities. This builds in economic resilience and food security. Before they were forced out by the big grocery chains (who eventually abandoned the city anyway) there were some 150 family-owned groceries in Oakland. Today, the city is home to a number of grassroots initiatives for community grocery revival. Two of these seek to set up shop right across the street from the proposed Foods Co sites.

"Well," said one resident at the meeting, "We know Foods Co is not the best option, but it is a step in the right direction."

True, but if the discount giant's step squashes the opportunity to re-establish locally-owned grocery stores, the city may not travel very far out of its food deserts.

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