Wednesday, May 12, 2021

News Coverage of Food Insecurity in South Dallas Falls Short

Recent local news coverage about food deserts and community efforts to address food insecurity in areas like South Dallas have been informative, but to audiences that are more familiar with the topic of food insecurity, news coverage has been incomplete. As the following map illustrates, food deserts are disproportionately distributed in the southern and northwest areas of Dallas – a pattern that has changed minimally in past decades.  

Two recent stories in the Dallas Morning News provide a good example.  One story [i] covered local efforts to address the food insecurity problem by local community groups who would like to emulate the experience of a store in Waco, called Jubilee, that has served lower-income residents in an identified food desert.  The story provided valuable insights about the challenges faced by non-profits in creating a food store to serve their residents and the challenge of achieving profitability. 

The second story [ii] discussed a new grocery store – Southpoint Community Market -- founded by Cornerstone Baptist Church in South Dallas that is scheduled to open this summer on Martin Luther King Blvd.  The proposed store has a small footprint – 800 sq. ft. – and accompanied by a community kitchen and other sources of support provided by the church. The store received start-up funding by The Real Estate Council, City Square, St. Phillips School and Community Center, and Cornerstone Baptist Church – clear evidence that the store concept has merit in the eyes of these community stakeholders.

Unfortunately, this second story presented a rather grim picture of Southpoint’s likely success by Dr. Michael Fox, SMU Chair of the Marketing Department, who further described the grocery store concept as a “boutique” and “convenience” store that would require considerably more time than projected by the City of Dallas to achieve profitability. Despite this grim evaluation, Pastor Simmons of the Cornerstone Baptist Church remained optimistic that the store would eventually achieve profitability with continued support from its sponsors and increasing consumer demand. Interestingly, Dr. Fox was highly critical of the financial projections presented to the Dallas City Council, noting its many inaccuracies, but had few words about the business plan that had been prepared for store sponsors by the SMU Cox School of Business.

In a recent journal publication that I co-authored in Papers in Applied Geography, [iii] we developed an urban site selection model that identifies food deserts with adequate economic potential to sustain a mainstream supermarket of different sizes. The model is effective in identifying promising food deserts since it relies more on relevant economic indicators rather than the typical household income and social indicators employed by traditional site selection models.  What we discovered using our urban site selection model may surprise the skeptics.

Since the new Southpoint Community Market is located in zip code 75215 (denoted by an "S" on the map), we identified nine census tracts that were included in this zip code in order to describe the store’s potential trade area and customer profile– a step that was not evaluated in the business plan prepared by the SMU Cox School of Business.  We produced the two tables that follow below using the American Community Survey 2019 5-Year Estimates[iv] and SNAP payments reported by Texas Health & Human Services Commission.[v] We derived one variable – Annual Food-at-Home Expenditures – which incorporated the number of people living in a household and the average amount of weekly expenditures for food-at-home estimated in surveys sponsored by the Food Marketing Institute.[vi]   

In reviewing Table 1 Economic Profile, it is readily apparent that households in the 75215 zip code spent an estimated $71 million annually for food-at-home.  These annual expenditures were made possible by an aggregate household income of $606 million earned by all employed persons in 2019 and $10 million in SNAP payments received by qualified residents in 2021.  

Table 2 Demographic Profile shows that the race-ethnic representation in this zip code was predominantly Black (median = 60.2%), followed by non-Hispanic whites (median = 24.4%) and Hispanics (median = 12.9%).  However, the race-ethnic distribution and economic indicators varied considerably by census tract.

Why does this matter?  Because it provides decision makers an assessment of the potential market that is available to Southpoint Community Market.  The specific trade area for Southpoint was not identified in the business plan prepared by SMU, a critical first step for defining the potential sales and competition in a trade area. Moreover, the business plan did not include a survey of community residents that would provide a more specific estimate of demand for the store concept.

According to Dr. Fox with SMU, the City’s assessment of Southpoint’s profitability  “is based on flawed calculations” and that his back-of-the-envelope calculations indicated that Southpoint would need to sell about $80 a day per square foot of shelf space to make the city’s proposed profit margins. Perhaps his assessment is correct, especially given the store’s small size of 800 sq. ft. and its location. The City expected a profit of $34,000 a month by the store to justify reimbursing the investment made by The Real Estate Council.

Current information provided by the Food Marketing Institute reveals the following information about U.S. supermarkets in 2019 [vii] that might encourage a second opinion about Southpoint’s future success:

  1.   The net profit after taxes was 1.0 percent.
  2.   The weekly sales of U.S. supermarkets averaged $15.15 per square foot

Thus, assuming ideal market conditions for a 800 sq. ft. store, SouthPoint Community Market could achieve approximately $52,520 in monthly sales or $630,240 in annual sales.  These potential sales could be accelerated by expanding the size and inventory of the store and reaching more customers in its defined trade area. Assuming this sales scenario, a profit margin of 1.0 percent may be realistic, especially if consumer demand could be accurately documented.

In summary, the economic potential of urban communities like South Dallas is often overlooked or obscured by the absence of relevant economic data.  Our urban site selection model incorporates more relevant information and has further challenged perceptions of elevated crime rates by analyzing actual crime statistics from police department files. It is curious indeed that a market demand study for a supermarket in South Dallas has yet to be conducted despite several unsuccessful attempts by the City of Dallas to address food insecurity. 

Given the common practice of supermarket redlining that has been evident in North Texas for several decades, it does not seem unreasonable to expect news reporters and experts to provide a more balanced analysis of supermarket potential in urban areas like South Dallas, especially when community advocates and sponsors are struggling to remediate the negative consequences of supermarket redlining practices.    

 

Reference Notes


[i] Dand, S. (2021 May 10).  Waco store fills void, with help.  Accessed at https://edition.pagesuite.com

[ii] Dand, S. (2021 May 6). Cornerstone Baptist Church is launching a grocery store to address food insecurity in South Dallas. Accessed at https://www.dallasnews.com/news/2021/05/06/cornerstone-baptist-church-is-launching-a-grocery-store-to-address-food-insecurity-in-south-dallas/

[iii] Rincon, E.T. and Tiwari, C. (2020 March 23).  Demand metric for supermarket site selection: A case study. Papers in Applied Geography, Accessed at https://doi.org/10.1080/23754931.2020.1712555

[iv] American Community Survey 2019 5-Year Estimates, U.S. Census Bureau. Accessed at https://data.census.gov/cedsci/

[v] Texas Health and Human Services (2021 April).  Month End SNAP Food Benefits Cases and Eligible Individuals by County - March 2021 Benefit Month. Accessed at https://hhs.texas.gov/about-hhs/records-statistics/data-statistics/supplemental-nutritional-assistance-program-snap-statistics

[vi] Food Marketing Institute (2021). Trended Weekly Household Grocery Expenses,  FMI U.S. Grocery Shopper Trends, 2021. Special table provided by FMI Research Director Steve Markenson.

[vii] Food Marketing Institute (2021) Supermarket Facts. Accessed at https://www.fmi.org/our-research/supermarket-facts



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