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“Cost of doing business in those neighborhoods is very high. Vandalism and robbery jack up insurance rates.“ Oof. I was with you til this. For a large grocery

“Cost of doing business in those neighborhoods is very high. Vandalism and robbery jack up insurance rates.“ Oof. I was with you til this. For a large grocery store chain, the occasional vandalism/shoplifting incident is nothing. Built into the price, as they say. The real reason they don’t operate in these areas is because a poor community spends less money than a rich community. If you have to stretch your floor space buck, you want to operate 1) in the market gap you work best in and 2) the area of best fit for that market. A Kroger, if you will, serves middle class America. Their stock, their prices, their marketing and everything else they do operates at that market. However you might see a Kroger operating in an area a bit beneath their target. You won’t ever, however, see a Whole Foods or Trader Joe’s anywhere near a poorer community. So Dollar General and the like are filling a previously neglected niche that used to be filled by small bodegas and mercados.

hakfoo 8y ago
But that doesn't mean that a company with the resources of Kroger couldn't also manage a brand that aimed significantly lower. In Arizona, there's a local grocery chain (Bashas') that's been around since before WWII. They have three very distinct brands-- the mainstream brand, a decidedly lower-class brand with a string Hispanic focus, and a deluxe brand which seems to target a more foodie, but similarly affluent audience to Whole Foods.
- azeotropic 8y ago
  Kroger Co. does manage several brands (including jewelry stores), but sold off their convenience store brands just this year.
- UncleEntity 8y ago
  Bashas is now part of Albertsons which is one of the big grocery conglomerates in the US.
hajile 8y ago
Compare prices between a Dollar General in a poor neighborhood and a walmart. One of those is going to be 30% higher (even more on some things). Supermarkets have a net profit of 1-2%. If walmart could charge 30% more for the same thing, they'd build in poor neighborhoods every time. They don't because the risk is too high when a store a couple minutes away offers lower overhead, lower prices and lower risk. Walmart tried this with walmart express then killed most of them off (keeping some larger neighborhood markets in better neighborhoods) because they weren't turning a profit. https://www.forbes.com/sites/greatspeculations/2016/01/22/walmart-kills-walmart-express-are-neighborhood-market-stores-more-productive/#22f03c3524c5 https://www.forbes.com/sites/greatspeculations/2016/01/22/wa... Companies like Whole Foods are not typical of grocery chains. They will go wherever their niche is located. That would be like complaining there aren't Swiss watch stores on every corner. There is something to be said for branding and location, but even Walmart with their "
- iguy 8y ago
  You're making a lot of different claims here. You may be right about insurance etc, although the rent will be lower too... but I think there are much simpler explanations for why some things are more expensive in the shops in poorer neighbourhoods. Staff are a big expense anywhere, and if they spend their time on $10 purchases instead of $100 purchases, then the margins have to be higher. That's basically why Costco is cheaper than 7/11. Isn't this just the same thing?
  - deleted 8y ago
    [deleted]

hakfoo 8y ago

But that doesn't mean that a company with the resources of Kroger couldn't also manage a brand that aimed significantly lower. In Arizona, there's a local grocery chain (Bashas') that's been around since before WWII. They have three very distinct brands-- the mainstream brand, a decidedly lower-class brand with a string Hispanic focus, and a deluxe brand which seems to target a more foodie, but similarly affluent audience to Whole Foods.

azeotropic 8y ago
Kroger Co. does manage several brands (including jewelry stores), but sold off their convenience store brands just this year.
UncleEntity 8y ago
Bashas is now part of Albertsons which is one of the big grocery conglomerates in the US.

hajile 8y ago

Compare prices between a Dollar General in a poor neighborhood and a walmart. One of those is going to be 30% higher (even more on some things). Supermarkets have a net profit of 1-2%. If walmart could charge 30% more for the same thing, they'd build in poor neighborhoods every time. They don't because the risk is too high when a store a couple minutes away offers lower overhead, lower prices and lower risk. Walmart tried this with walmart express then killed most of them off (keeping some larger neighborhood markets in better neighborhoods) because they weren't turning a profit. https://www.forbes.com/sites/greatspeculations/2016/01/22/walmart-kills-walmart-express-are-neighborhood-market-stores-more-productive/#22f03c3524c5 https://www.forbes.com/sites/greatspeculations/2016/01/22/wa... Companies like Whole Foods are not typical of grocery chains. They will go wherever their niche is located. That would be like complaining there aren't Swiss watch stores on every corner. There is something to be said for branding and location, but even Walmart with their "

iguy 8y ago
You're making a lot of different claims here. You may be right about insurance etc, although the rent will be lower too... but I think there are much simpler explanations for why some things are more expensive in the shops in poorer neighbourhoods. Staff are a big expense anywhere, and if they spend their time on $10 purchases instead of $100 purchases, then the margins have to be higher. That's basically why Costco is cheaper than 7/11. Isn't this just the same thing?
- deleted 8y ago
  [deleted]