Factors in Attracting Economic Development to Certain Communities

[H]

...Now the 1.2 million square foot mall was forced to close for good in 2002.

Everyone likes to eat out. I guess the Woodmore/Kettering black folks don't. No nice restaurants either.

No matter if your from the Ciprini Green projects of Chicago or the gated communities of Woodmore blacks are treated the same.

I will strongly argue that the $ is colorblind. (please post otherwise if you disagree).

Your example is that of $$ market, not racism. Why no money was spent at the mall, I don’t know the factors but you say there was a mall and it closed. Unprofitable malls close in white neighborhoods also. Profitable Malls don’t close. I imagine your example mall was not turning profit, because if it was profitable it would not of closed. PERIOD.


In regards to restaurants, you bring up an interesting point. I wonder if a study of “eating out” demographics has ever been done.

A good example of restaurant demographic market trend:

I live in Miami = there is a large international culture = international cultures eat late = restaurants stay open late.

My Grandparents lived in Naples Florida (as snowbirds) = There are many snowbirds (ei older people) in Naples = Older people eat early = Restaurants are busy around 5 & 6 and close early.

Are there International cultures in Naples = Yes. Is the fact the restaurant close early “racism” against this culture = no, it is simply marketing 101 supply and demand.

Ok, now a pop quiz:

I live in a younger area in Miami. There are no early bird specials by my house. Maybe I want to eat at 5 for a discounted price. Is the fact that all the early bird specials are north by the snowbird areas?

A: Coincidence

B: Age discrimination

C: Market Factors


When the institutions are private they don’t think about social factors, they think about the $. That’s all. It is not called “racism” it is called “profit”.

If the demand warrants the supply = restaurants would locate in your example neighborhood.

Again I say, the $ is colorblind.

Please respond.

 

[pete-rock]

I will strongly argue that the $ is colorblind. (please post otherwise if you disagree).

I think that the market strives to be colorblind, but is not.

Almost ten years ago I was at the APA conference in Chicago. Several planners from Prince George's County, MD presented on a paradox that brought to light these issues:

- the residential transition in the '80s of the county from predominantly white to predominantly black;

- the higher household income of the black residents moving in compared with the white residents moving out (some 15-20% higher, if I remember correctly); and

- the loss of retail and commercial uses throughout the county.

The planners thought that the higher household incomes of the new residents would allow them to attract a wider variety of retailers. But as they approached them they were told that the county didn't fit their "retail model". They were told Fairfax and Loudoun Counties better fit their model, despite PG having (at that time, at least) similar income numbers. The planners were struggling to maintain a hold on retail/commercial in the county, and couldn't explain the retail/commercial flight. The same dynamic has been at work in south suburban Cook County in the Chicago metro area. In both places, the upscale nature of the communities is tempered by the appearances of the commercial areas, leading people to believe there is a decline. And when the perception of decline exists, the reality of decline is sure to follow.

I think it's only been in the last 5-7 years that retailers began considering how blacks fit in that model (i.e., product preferences, retailer preferences, general buying habits, shopping frequency, etc.)

 

[BKM]

A good example of explicit racism versus more insidious, built-in racism. The system cannot process affluent African-Americans, so the numbers, the comps, don't pencil out and the machine can't handle it. Plus, the executives running the large developers and retailers probably just feel more comfortable in a place like Montgomery County. Its a vicious circle.

 

[H]

A good example of explicit racism versus more insidious, built-in racism. The system cannot process affluent African-Americans, so the numbers, the comps, don't pencil out and the machine can't handle it. Plus, the executives running the large developers and retailers probably just feel more comfortable in a place like Montgomery County. Its a vicious circle.

So what should be done about this? Should we (as a government) call up Applebees and tell them what neighborhoods to locate in?

Or

I will guarantee, if the neighborhood starts spending $ at the current local restaurants (I am sure there are some, maybe not the ones people want, but there are some) and these restaurants become profitable, corps will get wind and set up shop.

If you spend it the will come….

….the questions is “do you really want them?”, most areas complain about how the corps have taken over there local flavor (restaurants, stores, banks, etc..)

Be careful what you wish for.


PS. pete-rock, your post is interesting

 

[pete-rock]

So what should be done about this? Should we (as a government) call up Applebees and tell them what neighborhoods to locate in?

Sort of.

A great deal of what I used to do was almost exactly that. A post in another thread mentioned the "Retail Chicago" program in Chicago. Planners with the program would gather as much demographic data on the incomes and buying habits of "underserved" communities, and make presentations to retailers. THEY WERE NOT GATHERING THAT DATA ON THEIR OWN, and really had no reason to.

For example, we would show how the three-mile radius of a dense urban community can have twice as much disposable income as a three-mile radius in a conventional suburban area. Or we would show how some suburban retailers would have 40-50% of their customers come from urban neighborhoods. After a while, developers and retailers saw profits in urban neighborhoods -- Target in the Chatham neighborhood, a new shopping center on the Southeast Side, supermarkets, Walgreens and CVS all througout the South Side.

Sometimes the market benignly neglects areas simply because they've never been there or don't understand them.

 

[jordanb]

Huston, you're assuming that corporations always act rationally. That's a fantasy commonly held by libertarians, but it's not true. The fact that lending institutions now have to prove that they decide the worthiness of a debter using rational and non-discriminatory methods gives evidence to that.

I agree with you that corporate retail is often bad for a community. If they can coexist with local retailers, then they can provide the community with a wider selection of goods and services than they'd otherwise have. But if they run local retailers out of buisness (like Walmart, for example, does as a matter of policy), then they destroy vital local jobs and suck money out of the community, all while giving the community less choice than before.

 

[giff57]

Ok, I know Wal Mart has some nasty policy, but.......

Does anyone bitch when Coke screws Pepsi or vice versa? Unless we change our whole economy I don't feel we should complian about WalMart putting local establishments out of buisness. For the most part the local stores refuse to adapt. The ones that do adapt to a Walmart do very well indeed. In the town I moved from a Taco Bell located right beside a Taco Johns. Where were the cries of unfairness? Yes Wally world is a 500 pound gorilla, but the US economic system is designed to work that way.

 

[H]

...Planners with the program would gather as much demographic data on the incomes and buying habits of "underserved" communities, and make presentations to retailers. THEY WERE NOT GATHERING THAT DATA ON THEIR OWN, and really had no reason to.

For example, we would show how the three-mile radius of a dense urban community can have twice as much disposable income as a three-mile radius in a conventional suburban area. Or we would show how some suburban retailers would have 40-50% of their customers come from urban neighborhoods. After a while, developers and retailers saw profits in urban neighborhoods -- Target in the Chatham neighborhood, a new shopping center on the Southeast Side, supermarkets, Walgreens and CVS all througout the South Side.

Sometimes the market benignly neglects areas simply because they've never been there or don't understand them.

Yes, economic development departments are a wonderful and very useful tool to the City/County/Region, the citizens, and the corporations. I understand what you do/did, and encourage this process.

Maybe Prince Georges County needs a lesson; you should call them up, get a consulting fee.

VIVA CAPITALISM!

 

[Cardinal]

I agree with you that corporate retail is often bad for a community. If they can coexist with local retailers, then they can provide the community with a wider selection of goods and services than they'd otherwise have. But if they run local retailers out of buisness (like Walmart, for example, does as a matter of policy), then they destroy vital local jobs and suck money out of the community, all while giving the community less choice than before.

This comment hardly compares to the reality demonstrated by reviewed, scholarly research. Many categories of retail and services benefit from the presence of a Wal-Mart (or similar chain). The 'vital' jobs that are eliminated are in reality no better than those offered at the chain, with the exception that the chain offers a better opportunity for advancement, as well as benefits typically not available through a 'mon & pop." People shop the discount stores because of the selection the offer, along with price. These stores stock more brands and models, offering better selection.

Giff is right. You are lamenting the passing of an outdated, economically inefficient way of business that offers the consumer less, at a higher cost.

 

[jordanb]

Walmart has been convicted of preditory pricing numerous times. It's such a good tactic for them because it leaves them with no competition and they can almost always get away with it. it's a very hard thing to prove, and since Walmart has legions of lawyers, they can ruin most accusers before it even gets to trial.

Even when they do get caught, the only penalty is a payout. So if Walmart gets convicted once for every twenty times they do it (for example), it's a net gain, so they continue.

 

[BKM]

While I actually agree with a lot of what you say, Michael (about Walmart) there are other factors that don't show up in those statistics of "economic efficiency" and "brand selection," namely, the creation of a locally oriented civic class of merchants and community leaders-and a network of local commerce. The loss of local character doesn't really show up in these statistics, either. And, if the era of cheap fuel ends, will we be able to support these vast netowrks of semi trucks and manufactured goods shipped from China? I don't know.

That is a loss to the United States. A few "WalMart supports" programs don't fully make up for this loss.

Still, to a certain extent, some of us can lament the passing of the local hardware store all we want, but the reality of modern capitalism in the US at this moment in time is the vast domination of chain retail across almost all segments of the marketplace. It is more efficient and does offer more choice-at least over the short term.

 

[H]

FYI. I just started a poll about Wal-Mart in the Friday Afternoon forum.

 

[giff57]

Walmart has been convicted of preditory pricing numerous times.

I don't believe there should be any penalty for "preditory pricing" either we want capitalism or we don't, lets stop playing both sides of the fence.

 

[iamme]

So, Unbridled capitalism is a good thing?

 

[donk]

Walmart actually only creates the illusion of low pricecs, by telling you it repeatedly.

A recent study in Maine showed that the drug pricing at their pharmacies was actually more expensive then at independent pharmacies or other chains.

Here is a link to the study:

http://www.state.me.us/dhs/beas/drug_html/drug_survey.htm

During my last 2 go arounds with walmart I have window shopped at walmart to see if the prices are as good as everyone says, for most items they are not, especially when you are comparing apples to apples (exact same thing). Yes you may be able to get a pair of pants there cheap, but it is not the same product available at other places making it only seem cheaper as you have no choices (hope that makes sense).

 

[giff57]

Yes you may be able to get a pair of pants there cheap, but it is not the same product available at other places making it only seem cheaper as you have no choices (hope that makes sense).

This market segment is very important to the low to moderate income population. If you only have $25 for a pair of pants, it doesn't matter if the $50 ones last 4 times as long, you only have $25.

This is what I heard in my last go around with Walmart. The higher income folks were calling to keep them away, and the lower income folks were calling to tell me bring them in.