City grocery storesChicago entrepreneur Karriem Beyah grew up working in the grocery business, but when he courted some industry heavyweights to bring stores to the South Side, their response was disdainful: "Who wants to go over there, in that negative element?"

It's not just a Windy City problem. According to the USDA, 13.6 million Americans have low access to supermarkets or large grocery stores.

In many of these neighborhoods, like the Lower Ninth Ward in New Orleans, the South Side of Chicago, and the Seventh and Eighth Wards of Washington, D.C., residents often rely on overpriced convenience stores and discount outlets such as Family Dollar (FDO) for packaged goods and staples foods. Even then, they can't find quality produce nearby.

Finding Healthy Choices in Food Deserts

Over the past three years, as first lady Michelle Obama has shone a spotlight on nutrition and obesity through her Let's Move program, the issue of food deserts has come under increasing scrutiny. These locations, often in inner cities, are defined as areas where residents lack convenient and affordable access to groceries.

Inadequate access to healthy food has been blamed as one cause of the country's obesity epidemic, but food deserts are also a curious example of the flaws of our relatively free market. Based on the theory of the invisible hand, supply should meet demand at a given price point in an open economy, especially in the case of necessities such as food.

While the grocery budgets of America's lower-income enclaves may be smaller than in other populations, these communities still have money to spend on food. The USDA estimates a low-cost monthly food budget for a family of four to be $820. Multiply that out through large populations, and such areas should be able to attract adequate food suppliers.

But in many places, that's just not happening.

There are a number of suspected causes for the lack of supermarkets in these areas -- crime, security issues, poverty, lack of overall economic development, and urban decay among them. But a study by economists at the University of California and Michigan State shows that little progress has been made in pinpointing the real reasons that some areas become food deserts. And some possible causes are more insidious than you'd expect.

The Food Emporium has 16 stores in New York City down from 30 stores in 2010. Getty Images

Deed Restrictions: I Don't Want It, But You Can't Have It

It only seems logical that if a neighborhood grocery store shuts down, another one should be allowed to move into the abandoned space. But the anti-competitive policy of deed restrictions often prevent that from happening, which leaves the neighborhood without convenient access to groceries.

Often, the store that is shutting down is moving to another location, and uses deed restrictions to keep competition at baby so it can charge higher prices. Safeway, (SWY) for example, has used this tactic in areas such as Seattle and Vallejo, Calif., drawing flack from the locals over its behavior. This problem is only exacerbated in urban areas, where large tracts of real estate suitable for a supermarket are hard to come by.

Walmart (WMT), the world's largest retailer, also takes advantage of this anti-competitive practice. As of 2010, the company had 250 abandoned stores across the country sitting empty because of deed restrictions. The retail giant openly defends this tactic, saying, "We welcome competition in the marketplace, but what we can't be doing is providing infrastructure for our competitors in the same market."

The Light at the End of the Aisle

Where the big chains have gone AWOL, others have found opportunities.

Beyah, the Chicago entrepreneur, decided to take matters into his own hands, starting his own chain called Farmers Best Market. Since opening his first store in 2008, Beyah has grown his enterprise to three supermarkets in the Chicago area, two of them occupying spaces previously vacated by other grocery stores.

And HBO fans may recognize another member of the newest generation of grocers. Wendell Pierce, who played Detective Bunk Moreland in The Wire and now stars in Treme, has focused his efforts on his native New Orleans. Along with two business partners, Pierce is preparing to open his first Sterling Farms grocery store, one of many he intends for New Orleans' poorer neighborhoods.

"Bringing fresh food into these areas helps create economic growth," he explains. As the city has rebounded from Katrina, supermarkets have been slow to come back; before the hurricane there were 30, as opposed to just 21 now.

At the behest of Michelle Obama and others, some of the national chains are reconsidering their flight from the food deserts, and following the independent upstarts back into them. Walmart has pledged to open 300 stores in food deserts by 2016; SuperValu (SVU), parent of Albertsons, Shaw's, and several other supermarket chains, has planned 250 stores in such locations. Pharmacy chain Walgreen (WAG) is taking on the problem in its own way by stocking produce and other grocery staples at 500 of its locations in food deserts nationwide.

Motley Fool contributor Jeremy Bowman holds no positions in the companies mentioned in this article. The Motley Fool owns shares of SuperValu and Walmart Stores. Motley Fool newsletter services have recommended buying shares of Walmart Stores, creating a diagonal call position in Walmart Stores, and buying calls on SuperValu.


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38 Comments

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Wayne Bradshaw

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May 06 2012 at 12:01 AM Report abuse rate up rate down Reply
Wayne Bradshaw

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May 05 2012 at 11:48 PM Report abuse rate up rate down Reply
facethetruth1128

Let's see. This my experience of shopping at both an inner city grocery store and then a suburban store both of which were Kroger stores. The inner city store, had several homeless people outside that I actually gave money too. The inner city store had two police officers who arrested three people during my 15 minute trip for shoplifting. The inner city store had a person who tried to offer me drugs on the way back to my car. The inner city store smelled of pot and piss. The suburban store had, well, nothing. I was in and out in 15 minutes without a problem. That is the reason why grocery stores have pulled out from inner city areas.

April 06 2012 at 5:35 AM Report abuse rate up rate down Reply
petpetdonna

Why do real supermarkets not want to open stores in the inner cities? They will get shoplifted blind and go out of business in a few short years. Lucky's Supermarket located on the corner of 62nd street and 27th avenue in Miami was burned to the ground in a riot in the early 80s. He took care of the people in the community, cased their checks, gave credit to them when they need help to make it until the end of the month. BUT, they burned him to the ground and he never re-built. They destroyed his spirit and broke his heart. The people in the community has to take a bus to the nearest supermarket about 8 or 9 miles away. That is the reason NO ONE wants to build supermarkets in the inner city.

April 06 2012 at 12:51 AM Report abuse +1 rate up rate down Reply
sugarcreekchile

What a crock of liberal propaganda! Deed restrictions aren't responsible for the lack of grocery stores in the inner city food deserts. This article would have everyone believe that it's big bad corporate America that's keeping grocery stores from opening in the food deserts. I doubt if many of the big name stores ever operated in these areas or if they did, then it was decades ago. The idea that there's no suitable retail space available in the inner cities is for grocery stores is ludicrous. These areas have tradtionally been dependent on mom and pop operations and these are the people who are leaving. These stores don't require that much space for basic foodstuffs.

The main reason these stores are gone is that the residents drove them out with shoplifting, intimidation and violent crime. To open a grocery store in these areas, one would need to build an armored fortress and not let anyone in the store. Submit your list, pay and get your groceries from a slot box. Then, the only thing the proprietor would have to worry about would be getting to and from work without being mugged. Of course, an armored car service could be hired to pick up receipts and a bodyguard retained to escort employees in and out of the store. Hardy a picture for profitability. It hard to feel sympathy for those who've lost convenient access to food when they're the ones responsible for the stores being gone in the first place and no amount of spin that blames other factors can change that.

April 05 2012 at 11:25 PM Report abuse +1 rate up rate down Reply
swtnsassy121

How are these people surviving in these areas without grocery stores? Eating out can get expensive.

April 05 2012 at 11:25 PM Report abuse -1 rate up rate down Reply
1 reply to swtnsassy121's comment
facethetruth1128

They drive 10 minutes or take the bus to the nearest grocery store. As much as Hp wants you to think that there are no grocery stores within a 15 minute drive of an inner city, there are.

April 06 2012 at 5:28 AM Report abuse rate up rate down Reply
Tom

That half-naked woman in front of the Whole Foods store looks hot.

April 05 2012 at 11:16 PM Report abuse rate up rate down Reply
1 reply to Tom's comment
facethetruth1128

That was funny. I guess that is why she shops at that Whole Foods store, better access to healthier foods :)

April 06 2012 at 5:46 AM Report abuse rate up rate down Reply
arealscourge

I live in one of these " food deserts ". Most of the people I know do not know how to cook. Not even the basics. They've been eating out their entire lives. Having more options won't do any good if people don't know how to use them.

April 05 2012 at 10:56 PM Report abuse +2 rate up rate down Reply
demsrcommies

The term Food Desert is stupid. There's no such thing. If a certain race would learn how to act, groceries might move back to the inner cities.

April 05 2012 at 10:43 PM Report abuse +2 rate up rate down Reply
1 reply to demsrcommies's comment
Tom

Don't be racist. Many blacks do know how to act. It is not their fault that many other blacks live in poverty, it is due to history. It is because of people like you that Republicans have a reputation of being racist. And regarding your nickname, racists are just as dangerous as commies.

April 05 2012 at 11:13 PM Report abuse -2 rate up rate down Reply
B

Yep. Robberies has to be it. Not to mention overnight break-ins and piss-smelling sidewalks. Bottom line: hard to make a buck as a mom and pop operation when you've got a huge well-lit Super Mart/Gas Station down the street with security protection, cameras and lots of bright lights. Just sayin'.

April 05 2012 at 9:55 PM Report abuse +1 rate up rate down Reply