There are many complex factors behind why supermarkets can’t or won’t open stores in lower-income urban areas. A few of the main reasons are:
- Higher development costs in densely populated urban areas where there is limited land availability for building larger supermarkets. One study concluded that it can cost up to 30% more and take up to three times as long to build a grocery store in a densely populated urban area.
- Higher employee turnover in lower-income areas where fewer residents have job training and job experience. Large supermarkets tend to lack the ability to provide the in-depth employee training and ongoing support necessary to mitigate this problem.
- Higher rates of product loss from shoplifting, employee theft, damaged and spoiled products, and errors in recording the purchase and sale of products. Many chain stores struggle to establish authentic relationships with their employees and customers in a way that reduces these problems.
- Inability to tailor products and services to the preferences and needs of specific communities. Large chain stores can have a difficult time adapting to communities with a high degree of cultural diversity.
- Inability to undertake the deep community engagement and relationship building necessary to strengthen the business’ chances of success.
We believe that there are solutions to all of these issues. Designing the right solutions requires fresh thinking, local insight and an investment of time and effort. Most supermarket chains aren’t able to make that kind of investment. There’s also evidence that independent grocers that are locally rooted can more effectively address these issues and can perform better and serve better in lower-income areas. We’re creating People’s Community Market to demonstrate solutions that can work and how independent stores can excel at providing those solutions.
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