According to the U.S. Department of Agriculture, 23.5 million Americanshave troubleaccessing food from traditional grocers and supermarkets. With the local convenience store or bodega serving as the primary food market, residents of these so-called “food deserts” have difficulty acquiring more nutritious foods and often experience higher rates of obesity.
So why aren’t there more supermarkets in the inner cities and unpopulated rural areas? It comes down to economics. Grocers already operate with extremely thin profit margins; on average their profits register only 2.5 percent of sales. Operating stores in food deserts proves significantly more expensiveand serves as a deterrent. Consider these facts confronting urban grocers:
- On average, training staff costs seven times more in inner cities than in suburbs.
- Real estate taxes are higher.
- Security costs five times more.
- The cost of opening an urban store is 60 percent more than that of opening a suburban store ($16 per square foot vs. $10 per square foot).
- The cost to operate an urban store is $2.08 per square foot more per year than a suburban outlet.
With grocery chains facing these constraints, it becomes clear why they have been reluctant to enter the urban retail environment. And while some innovative programs are underway, such as the Food Trust’s Healthy Corner Store Initiative in Philadelphia to create incentives for corner stores to add healthier products, and Walmart’s declaration that it will sell produce inexpensively in urban locales, large supermarket chains can’t control costs like Walmart and will lose money if they venture into cities.
Perhaps there is another way to address the food desert dilemma. Instead of prompting grocers to enter unprofitable markets, why don’t we bring the inner city residents to the grocery stores? After all, there are over 30,000 supermarkets located in nearby suburban and non-rural areas. It’s just a question of finding an easy way to transport the shoppers.
One approach has been sitting right under our noses: school buses. There are almost half a million school buses in the United States and most of them sit idle most of the time. Grocers could commandeer school buses during “down times” such as late morning and/or early evening when the buses are grossly underutilized to pick up shoppers at designated spots in their neighborhoods, bring them to full-service supermarkets, then return them back.
The benefits are plentiful, especially since there would be no incremental costs associated with this program:
- Sponsoring supermarkets, given their slim profit margins, would be able to attract new shoppers.
- The additional sales generated by these new customers would more than offset the nominal costs of mobilizing the school buses (driver, gas, insurance, depreciation).
- Grocers who jump on this would differentiate themselves from their competitors and extract themselves from competing purely on a price basis. A little positive PR wouldn’t be bad either.
- School districts and contractors would gain more utilization of their fixed assets. Payments from grocers could also bring extra cash into starved school coffers.
- Shoppers gain ready access to full-sized food stores offering a complete selection of better-for-you products, not “dumbed-down” versions to fit food desert communities.
It’s important that we think out of the (big) box store model to make affordable, healthy foods available to all Americans. It’s just a question of making it easy for consumers … and profitable for grocers.