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.
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:
- The net profit after taxes was 1.0 percent.
- 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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