when they look at urban areas. "You can’t expect to have a suburban store in an urban area," he insists. "Instead of having a long, flat store, for example, some of the larger chains should consider having a store with two or three floors and an elevator."
The FMI report also highlighted other issues-local politics, negative reactions to commercial development, environmental concerns and the need for specialized marketing strategies-in response to why the major supermarket chains avoid African American communities.
But some aren’t convinced that these reasons are valid. "These concerns will affect any supermarket owner, regardless of whether [the store is in] an urban or a suburban neighborhood," says Roderick Mitchell, president of Restoration Supermarket Corp. (No. 89 on the be industrial/service 100 list), a Pathmark franchise in Brooklyn, New York. Mitchell also says the "high crime rate" that is often associated with urban stores is the product of misinformation: "There is still the perception that black neighborhoods are high risk because people associate color with high crime." He says that contrary to popular belief, crime is not an issue for his supermarket, located in Brooklyn’s Bedford Stuyvesant neighborhood. In fact, the Boston Consulting Group study reports that this Pathmark is one of the highest sales generators in the 144-store chain. "High crime in this neighborhood is a perception that’s not based on reality. People are very comfortable shopping at Restoration Plaza. Other merchants use the misperception as justification for charging higher prices or not entering the neighborhood at all."
The lack of supermarkets in inner cities, where the majority of African Americans live, is largely based on the same stereotypes that affect other aspects of black life. Aside from the assumptions about excessively high crime rates, the owners of many mainstream supermarkets assume the residents of African American neighborhoods are less educated, disproportionately dependent on government assistance programs and too poor to afford their products and services. Nothing could be further from the truth.
"The mistake retailers make when examining inner cities is in thinking that these are communities of poorer people," says Anne S. Habiby, director of research and communication for Initiative for a Competitive Inner City (ICIC), a Boston-based nonprofit corporation aimed at encouraging private-sector development in inner cities. According to the organization’s 1998 study, The Business Case for Pursuing Retail Opportunities in the Inner City, inner-city areas can have up to six times as much buying power as surrounding communities. While inner-city residents may report lower-than-average incomes, that doesn’t necessarily mean they are poor. In 1995, nearly three in 10 inner-city households had incomes of $50,000 or more, and another 12% reported incomes of $75,000 or more. In fact, the estimated 7.7 million households in America’s inner cities represent more than $85 billion in retail spending power. That’s 7% of total retail spending in the country. Market Segment Research & Consulting Inc. in Coral Gables, Florida, reported that in 1996, African Americans spent approximately $23 more than other ethnic