African-Americans Forced to Spend 2/3 of Their Retail Dollars Outside of Their Neighborhoods

From: <http://www.chicagodefender.com/page/business.cfm?ArticleID=3370>
Chicago Defender - IL, United States

Paper bag test: Retailers shun big bucks in Black neighborhoods
by Kimbriell Kelly, Chicago Reporter

December 23, 2005

Retail Runaround:
It's 7:45 a.m. Tina Saphir has been awake and milling about for hours. She
glances at the corner of her vestibule at a heap of recently purchased
merchandise. Everything must go. Either it didn't fit or didn't work. But
the mother of three decides that it must wait for another day.
Today, she's headed on a road trip. It's one that doesn't happen as often as
she'd like because of time and distance. But, with the minivan gassed up and
the trunk full of beverages, she's just about ready to go. Her destination:
the grocery store.

It will be late afternoon by the time Saphir returns. She'll spend a
majority of the next four hours driving to and around a mostly white North
Side neighborhood searching for groceries and other items at stores she
cannot find in her predominantly black South Side neighborhood. "There's
money on the South Side and nowhere to spend it," said Saphir, 36, an
African American who lives with her husband and their three children in the
Kenwood neighborhood.

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During this holiday shopping season, residents of Chicago's black
communities are likely to spend nearly two-thirds of their money outside of
their neighborhoods, far more than those living in Latino, mixed or white
areas, a Chicago Reporter analysis of consumer market information shows.
In Chicago, the rate of major retailers per 10,000 residents is nearly three
times higher in white areas than in black areas, according to the analysis.
Some black neighborhoods are home to far fewer retailers than white
neighborhoods even when their incomes are similar.

This means blacks in Chicago are likely to spend more time, money and energy
than whites when they buy gifts, groceries, clothes, tools and other items
at stores located far from their homes. It also means black neighborhoods
lose out on billions of dollars in consumer spending each year that could
help revitalize those areas. Furthermore, Chicago could be losing millions
of dollars in sales tax revenue as many drive to south suburban Calumet
City, Lansing and Evergreen Park, among others, to do their shopping.
The Reporter mapped nearly 900 Chicago addresses of companies that Stores
listed as the top-selling retailers in seven categories: supermarket,
apparel, department store, home improvement, drug store, restaurant, and
value retailer, such as Target. Stores, a monthly magazine of the National
Retail Federation, the world's largest retail trade association, ranked the
retail companies by their 2004 sales revenues.

The Reporter also examined consumer expenditures and retail sales figures
for each of Chicago's 77 community areas. The data were provided by
MetroEdge, a market research firm, for the city's department of planning.
The Reporter defined black and white communities as being at least
two-thirds black or white. Asian and Latino neighborhoods were at least 50
percent Asian or Latino. The Reporter found:

Residents of black communities spend an estimated 64 percent of their
consumer dollars, more than $5.3 billion a year, outside of their
neighborhoods.

Among neighborhoods with median household earnings between $40,000 and
$50,000 per capita, white areas have 47 percent more major retailers than
black areas.

White neighborhoods have nearly eight times more apparel retailers than
black neighborhoods.

There are three times more major retailers in communities with a median
income greater than $50,000 per capita than those where the median is less
than $30,000.

Retail consultants said major retailers tend to herd where others have gone.
That's led to a dearth of retail options on the South and West sides. When a
major retailer does consider those areas, however, they're confronted with
other issues that prevent them from opening stores there, such as their
overall unfamiliarity with the neighborhoods and perceptions about crime,
the consultants said.

"The perceptions are usually worse than the reality," said John C. Melaniphy
III, formerly of Melaniphy and Associates, a North Side consulting firm
providing site selection and market assistance. "It's going to take time,
but there is going to be more business."

In the meantime, Saphir has teamed with other South Siders who've agreed
that the best way to get what they need from the stores they prefer is to
carpool to the North Side after dropping their children off at Murray
Language Academy in Hyde Park. That way, they can share the burden---and
fuel costs---of driving across town.

Warmed by one of four remote-controlled fireplaces in her home, Saphir
dresses 6-month-old Lael on the living room couch. She has gotten 5-year-old
Ian off to school and is getting ready to drop 8-year-old Zoe off at Murray.
Embracing a worn library copy of "Captain Underpants and the Wrath of the
Wicked Wedgie Woman," Zoe perches at the kitchen table. "Zoe doesn't like
being late for school," Saphir says of the precocious youth whose report
card on the refrigerator boasts As and Bs in all of her classes, including
Japanese.

It's 8:30 a.m. Saphir flicks her hair into a low ponytail, slips on a pair
of sneakers and hoists a backpack over her head. She walks out the door,
greeted by signs of the economic prosperity of her Kenwood neighbors.
Manicured lawns are spread with gold leaves moistened by a light rain.
Plumes of smoke are exhaled from the tailpipes of import cars bearing
weathered alumni license plate covers. Street sweepers lurch toward the
block where Saphir lives in a four-level graystone. There are million-dollar
homes two blocks south. In a year, the Saphirs expect to get as much for
their home.

If she had lived there anytime from the 1940s through the 1960s, Saphir
would have had better luck shopping in her own neighborhood. During that
time, the intersection of 47th Street and Cottage Grove Avenue, just a few
blocks from Saphir's home, was at the heart of a successful business
district for blacks. But things began to sour in the 1970s as many of the
area's middle-income residents began moving to other parts of the city.
Residents near the Ida B. Wells public housing development moved elsewhere,
and less wealthy people moved in. Businesses fled, creating a skeleton of
commercial development that has since spawned a difficult environment to
lure developers.

Vacant buildings now dot Cottage Grove, where the intersection at 47th
Street is known for a liquor store with late hours and people congregating
in front of businesses.

Bernita Johnson-Gabriel, New Communities Program director of the Quad
Communities Development Corporation, recently drove through the area with a
representative from a company interested in opening a business there. The
development corporation, chaired by 4th Ward Alderman Toni Preckwinkle,
attracts businesses to the Douglas, Oakland, Grand Boulevard and North
Kenwood neighborhoods. The area has $191 million in purchasing power per
square mile, 23 percent more than the citywide figure, according to a 2004
study by MetroEdge. Most of those dollars are now spent outside the area.
Johnson-Gabriel sensed some caution and probed more. The representative told
her that, aside from statistics, there are other important things he's
looking for when deciding where to locate: Was this a place he'd let his
daughter work at 1 a.m.?

She has held a subsequent meeting with the representative, but they have yet
to strike a deal.

"You're not looking at statistics when you're looking at safety. You're
[physically] looking out there," said Chinwe Onyeagoro, a planning
consultant with OH Community Partners, who helped Johnson-Gabriel's group
develop a five-year plan to bring retail to Cottage Grove.

Retail consultants said some areas may be deemed risky for unmeasurable
things, like poor lighting, blight, or people loitering. Retailers avoid
such areas because they may require more lighting, fencing or security.
"One of the biggest barriers is the perception of crime---right or wrong,"
Melaniphy said. "Obviously, we look at crime statistics when we conduct a
study in an area where we think crime might be a factor. So we try to
differentiate the perception and the reality."

The Quad Communities group has created a multi-pronged redevelopment plan
that includes marketing, beautification and networking. The group will also
embark on a heavy-handed marketing campaign to pursue proven urban
developers.

The plan includes trying to keep people from congregating in front of
businesses. That way, the perception of fear and crime will be lessened,
Onyeagoro said. "What we're focusing on doing now is bringing life to the
corridor and bringing change," she said. "So, when developers drive by, they
see things are going on and we're not sitting back and waiting for them."
When considering potential sites, retailers might spend thousands of dollars
on research to assess land availability and market profiles with demographic
and socioeconomic information such as household size, income and education.
They're also mindful of close competition and traffic volume, said George
Rosenbaum, chairman of Leo J. Shapiro and Associates, a Chicago-based survey
research firm.

However, their primary form of research is done through site visits and
in-person surveys. "You interview the managers and sales people of other
stores in the area. They will very candidly tell you if they're having
problems because of a shooting or fear of crime. But you really pick it up
directly from consumers," Melaniphy said.

Retailers also try to anticipate possible "blind spots"---theft, a 5-year
expressway construction project or unfavorable traffic patterns. "What you
now have to do is go there, look at the area, walk it to see if there are
some unexpected barriers that would impede people's ability to get to the
store," Rosenbaum said.

Some places are nixed because existing stores are dissimilar, or there are
too many nearby vacancies. "When the retailer drives the corridor and sees
30 percent of the retail is [vacant], how can you convince them [their
business] is going to be successful?" said Onyeagoro.

But experts said most retailers aren't intimately familiar with minority
neighborhoods and could rely more heavily on their perceptions than research
that might suggest that there's money to be made there.

"When you look at some of the national companies and their real estate
representatives, it's kind of a fact: there's not that many blacks,
Hispanics and [people of] other ethnic origins that really know the
neighborhood and the characteristics of the neighborhood," Melaniphy said.
"And their reputation is on the line to select the location that's going to
generate a required sales volume."

Of the Gap company's 21 Chicago stores, 14 are in white communities,
including six in Lincoln Park. The company, which owns Banana Republic, the
Gap and Old Navy, has two stores in Latino areas and one in black
neighborhoods. "We evaluate all of our locations in the context of that
specific market. We first look at the existing store base in the market to
determine how and where we're already represented," said Gap spokeswoman
Sarah Anderson. "Then, we work to identify the sales potential of that
particular market and analyze the shopping patterns of that market's
population." Chipotle, a subsidiary of McDonald's Corp., has 17 restaurants
in Chicago. Eight are in white neighborhoods, one in Latino areas and none
in black neighborhoods. "Ethnicity is not a variable that we look at. At
least it's not a primary variable," said Chipotle spokesman Chris Arnold.
"The things that matter most to us are education level, income levels and a
balance between daytime population and nighttime population."

The Limited Brands operates its Limited stores as well as Bath and Body
Works, Express and Victoria's Secret. Of the company's 18 Chicago locations,
12 are in white areas, and four are in Latino areas. None are in black
community areas.

When asked about the disparity, company spokesman Anthony Hebron said:
"Limited Brands is a mall-based company with stores located in top-tier
malls and high customer traffic areas in Chicago."

Developing models for risky neighborhoods may include coming up with new
ways to train employees, advertise, control theft and accept credit cards for
purchases, Rosenbaum said. "Very often these problems seem very foreboding."
Instead, retailers use a "herd mentality," locating their stores where
others have created a "critical mass" of patrons, Melaniphy said. "So many
stores like to be near a Wal-Mart or a Target even though they sell similar
merchandise."

But Saphir is among many middle-class African Americans starving for
commercial development in gentrifying South Side neighborhoods like Douglas,
Grand Boulevard, Kenwood, Oakland, Washington Park and Woodlawn.
On this particular day, Saphir is making her shopping road trip with two
other South Siders, but sometimes the group includes more. Calling
themselves the "Murray moms," the women have mounted these excursions two to
four times a month during the past year.

Saphir, a stay-at-home mom, pulls up to Murray Language Academy and walks
Zoe inside. She returns to the car with Jill White, a 38-year-old educator
and writer, who is white and lives in Hyde Park. Waiting in a nearby
cul-de-sac is Conswaila Sydnor-Davis, a 34-year-old African American and
former therapist, who operates a T-shirt company from her house down the
block from Saphir.

The women take Saphir's Chevy Venture. They stop near the area grocery store
but head to the patisserie next door to buy croissants. It's rare that they
shop at the grocery---"where you get a box of cereal for $6, where you can
get it for $3 anywhere else"---Saphir explains.

The women head north on Lake Shore Drive. Always looking for ways to save a
few bucks, they talk about how to find inexpensive acting lessons for their
children. Sydnor-Davis is paying $185 an acting session for her son. "I can
teach him to act," she says.

"His mother is as dramatic as anyone else."

"We pay $5," Saphir says of the fee for her daughter's acting lessons. "All
summer long, it only cost $230."

"Hey, Denzel [Washington] went to the Boys' Club," White adds as the group
approaches McCormick Place. "He didn't have a fancy acting school,"
Saphir retorts, "Unless you want him to do commercials, they can get all
that for $5."

The car's speedometer reads 60 miles per hour as they zoom by a 40 mph speed
limit sign near Navy Pier. In all, the drive spans more than 10 miles and
takes the women through seven neighborhoods before exiting at North Avenue.
It's 9:45 a.m., and the outline of neatly lined stores begins to emerge as
the women get closer to their destinations. Each month, they make several
stops at the Clybourn Galleria shopping center in Lincoln Park. White likes
Whole Foods where she can get bulk nuts, yeast and spices. Saphir and
Sydnor-Davis prefer Trader Joe's, which offers affordable pre-packaged
organic foods. On her last trip, Saphir set her sights on a TV tray at Crate
and Barrel. She's picking it up today.

The women envy the many North Siders within walking distance of these
stores.

According to the Reporter's analysis, Kenwood has just one major retailer, a
Walgreens. Lincoln Park has 50.

Approaching Trader Joe's, White points to Sam's Wines and Spirits. "Here's
one thing you don't have to leave the South Side to buy."

Every Sunday morning, in a quiet South Side block off 87th Street, Maria
Scott waits for Todd, the newspaper carrier, to arrive. It's her ritual.
>From 6:30 a.m. to 6:45 a.m., usually before jumping in the shower or eating
breakfast, she's peering out the window of her modest ranch home, past the
Toyotas and Lexuses, waiting for the newspaper to be delivered.

When the Chicago Tribune arrives, Scott, 42, burns through the packaging to
get to the flyers advertising stores nowhere near her Calumet Heights home.
"Do they think we're too poor that we won't shop there?" said Scott, who
owns and operates an industrial and residential cleaning service. "It's
black people that have money too, you know."

Scott remembers when her "addiction" to shopping began. As a child, she and
her mother would take a cab downtown every Wednes-day to meet her father for
lunch at Ronny's Steakhouse. On one such visit, it was her father's
payday---he was a carpenter helping to build the Sears Tower. After lunch,
her mother deposited his check. But her mother set aside some money so they
could shop at Marshall Field's.

Scott maintains her penchant for the upscale store. This week, the store is
advertising a cherry curio for $349. Scott's not sure if it'll fit in her
living room and has to call the store for details. She'd rather see the
scale for herself, but the nearest store is 40 minutes away at River Oaks
Mall in south suburban Calumet City---even longer if she gets caught by the
freight train crossing at 115th Street and Torrence Avenue.

When Scott does shop in her neighborhood, it's usually at the Target on
Cottage Grove near 87th Street. But, when it comes to dressing her family,
she's limited. There's one neighborhood store where she says she can buy
quality clothes. The last time she shopped there, she bought a pair of
shoes, pants and a top. The bill came to $230. "I took [the items] back,"
Scott said.

Not only do black neighborhoods feature far fewer clothing stores than white
neighborhoods, but the shopping choices found in black areas often fail to
stack up with more upscale stores found in white communities.

There are 46 apparel retailers in white neighborhoods, including the Gap,
Banana Republic and Express. The most notable of six apparel stores in black
neighborhoods is Marshall's.

South Sider Denise McDuffie Martin, 48, regularly shops at Bloomingdale's
and Tiffany, and recently paid $5,000 to rent the Excalibur, a River North
night club, for her daughter's Sweet 16 birthday party of 150 guests. "A lot
of banks are moving out to the South Side," said Martin, a federal
administrative law judge who lives in the Burnside neighborhood. "I think
that shows they're willing to move out to the customers. Hopefully, some of
the stores will, too."

While there is more concentrated wealth on the North Side, South Side
residents spend billions of dollars each year---although much of it appears
to be done outside of South Side neighborhoods.

According to the Reporter analysis, residents of the city's white
neighborhoods outside of the O'Hare community area log $8.2 billion in
consumer spending with businesses in those neighborhoods raking in $8.6
billion in retail sales. The picture is much different in the city's 27
black communities. In all, residents there spend $8.3 billion a year, but
retail sales for businesses there stands at just $2.9 billion.

Retail "leakage" is the term retail insiders use for the difference between
consumer spending and retail sales in a given community. It's meant to
measure what residents spend outside of their communities.

The sum of leakage costs for apparel and grocery items in black
neighborhoods totaled more than $792 million for 2004. But, in white
neighborhoods, businesses sold a combined $263 million more than
neighborhood residents spent on apparel and grocery items. That's because
Saphir, White, Sydnor-Davis and others from other parts of the city
frequently shop there.

After the "Murray moms" pull into a complimentary parking garage, they walk
into Trader Joe's grabbing crimson shopping carts.
Fifty-three minutes later, the women head to the checkout where a young
brown-haired cashier asks where they're from. Hyde Park, they tell him. "We
see a lot of people from Hyde Park," the cashier says.
Angelica Herrera, Frank Life, Sean Redmond, Amy Shebeck and John Wicencyjusz
helped research this article.
A Media Titan - John H. Johnson: 1918-2005