Yes, we should all celebrate the arrival of two new H-E-B supermarkets in North Texas – one in Frisco and a second one in Plano – both suburban communities that have been in the national spotlight due to significant population growth.[1] [2] The H-E-B brand has proven successful in markets throughout Texas and existing competitors have reason to worry about their diminishing market shares once the two stores – both 110,000 square feet -- open in the Fall of 2022.
One wonders, however, why H-E-B chose to open two new stores in communities that already included at least 6-7 other supermarkets while overlooking other communities that continue to have fewer or no supermarket choices. To obtain some insight on this issue, I retrieved relevant demographic and economic information [3] to compare the opportunities in the two locations chosen by H-E-B with two other zip codes in South Dallas that remain under-served. Following is the resulting table that profiles these four communities.
The two zip codes in South Dallas – 75215 and 75216 – were chosen as comparison points because interest has been shown by community advocates to establish the groundwork for a mainstream supermarket in these two communities. In zip code 75215, the Cornerstone Community Market has received financial support to open this Spring, while efforts to introduce a store in zip code 75216 are continuing. Interestingly, the statistical information presented in this table suggests that the two South Dallas communities should have caught the attention of H-E-B as potential sites for their supermarket brand.
Let’s study this table to understand why this makes sense.
A significant income gap was clearly observable. Median
household income is perhaps the most frequently used metric in retail to
measure disparities in economic standing. Clearly, the sites chosen by H-E-B revealed
significantly higher median household incomes ($112,930 and $117,707) than the
ones in South Dallas ($30,865 and $27,288). Similarly, aggregate household
income (that is, the sum of all income earned by employed persons in a
household) was distinctly greater for the H-E-B sites ($3.1 and $5.8 billion)
compared to the South Dallas sites ($314 million and $724 million). Although
SNAP benefits are not considered income, they nonetheless supplement a
household’s ability to pay for food. Since the South Dallas sites had
substantially more households receiving SNAP benefits (34.5% and 31.2%) than
Plano (0.1%) or Frisco (2.9%), substantially greater SNAP benefits were observed
for the South Dallas sites ($8.5 million and $20.9 million) compared to Plano
($614,484) and Frisco ($3.9 million).
Demographically, the communities differed significantly. Perhaps it
is only coincidence that the two sites chosen by H-E-B were predominantly
non-Hispanic white (66.2% and 60.6%) and secondarily non-Hispanic Asians (16.4%
and 16.2%). By contrast, zip code 75215 in South Dallas was predominantly Black
(68.1%) while zip code 75216 included mostly Blacks (54.9%) and Hispanic
(21.0%). About two thirds of the
households in the Plano and Frisco zip codes were homeowners (63.7% and 67.0%);
by contrast, most of the residents in zip code 75215 were renters (67.5%) while
zip code 75216 was more evenly split between homeowners (49.0%) and renters
(51.0%).
Despite these wide disparities, the potential demand for a
mainstream supermarket was observed in each of these communities. Using our
own formula for estimating food-at-home expenditures (FHE), we estimated annual
FHE for the H-E-B sites as $136 million for Plano and $295
million for Frisco, while the FHE for zip code 75215 in South Dallas was $46.6
million and $132.8 million for zip code 75216.
Importantly, South Dallas zip code 75216 shared some similarities with
zip code 75093 in Plano -- FHE, total population and total households – which
could have made zip code 75216 a suitable substitute for zip code 75093.
Adjusting for the existing number of supermarkets in each zip
code, however, differences in the potential demand for a supermarket become
more uniform across these four communities. Zip code 75093 in Plano, for example, already
includes SIX supermarkets that currently share the estimated annual
food-at-home expenditures of $136.6 million. Assuming that the six stores have
equal shares, their individual shares would be approximately $22.8 million. Of
course, this does not include the new H-E-B store which will likely diminish this share
even further. Similarly, the share for
the seven stores in zip code 75034 in Frisco would be approximately $42.2
million assuming equal shares. With no
supermarkets currently operating in zip code 75215, however, the potential
share for one supermarket would be $46.6 million, while the share for zip code
75216 would be $132.8 million with one existing supermarkets. Of course, with
H-E-B’s entrance into the Plano and Frisco communities, the potential shares
are expected to change dramatically and perhaps lead to some store closures as
well. Thus, competition or the lack of competition can make a big difference in
the performance of a supermarket.
Concluding
Thoughts: A company
like H-E-B with a track record of successful supermarket performance in Texas
is probably quite comfortable with their site selection strategy and may not see
a need to change it. It is unfortunate,
however, that such a successful supermarket brand has opted to overlook the
opportunity to change the historic supermarket redlining practice in South
Dallas, which has left this community without healthy and nutritious food
choices for decades.
H-E-B’s decision to overlook the South Dallas community is
especially difficult to justify given the documented economic assets in this community.
Collectively, the two zip codes in South Dallas included 71,145 residents who
spent an estimated $180 million annually for food-at-home. Only two supermarkets serve these two
communities, which means that their food dollars are being spent on dollar and
convenience stores which reinforces the practice of unhealthy eating. In
addition, much of their food dollars are spent at supermarkets outside of these
communities --- referred to as “retail leakage” – which contributes little to
the economic vitality of their own communities.
H-E-B executives --- are you listening?
An Alternative Strategy: Community groups have grown tired of the
redlining practices by supermarkets and the absence of any decisive action by
public officials to change this trend. Consequently, some community groups are
developing their own solutions along with the support of private industry and
foundations that share their vision for healthier food choices. For example,
Cornerstone Baptist Church in South Dallas was successful in obtaining 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.[4]
Arlington Woods, Indianapolis is a food desert with a
predominantly Black community of 100,000 residents without a full-size grocery
store within 4-mile radius. A medical device manufacturer – COOK Medical – is
building a plant in this community and adding a grocery store based on feedback
from community residents.[5] Importantly, two local Black convenience store
owners were hired to operate the new grocery store and provided training on
store operations as well. Future plans
call for these two young men to assume store ownership as well.
In my opinion, these are two excellent approaches to the
persistent practice of supermarket redlining. Community groups can achieve their goal of
establishing better food options through creative partnerships with the private
sector, foundations and other community groups that share their vision.
Eventually, supermarket brands will recognize that their highly selective site
selection strategies also reinforce redlining practices – whether intentional
or not – and cannot be justified with the available evidence. Indeed, our recent research [6]
using an innovative urban site selection model revealed that (a) perceptions of higher crime rates were not
supported by actual analysis of crime data, (b) traditional metrics used in
site selection formulas, like household median income, have little relationship
to the dollars spent annually on food-at-home, (c) SNAP benefits are a
significant component of food spending, and (d) various food deserts show
sufficient economic assets to support the annual sales of a mainstream
supermarket.
Access to healthy food choices is a right, not a privilege that prioritizes communities with a more attractive economic profile. Food providers, especially large supermarket brands, should re-evaluate their site location strategies and place more weight on the inclusion of under-served communities that show promising economic potential. H-E-B has an impressive record of community support in areas related to disaster relief, diversity, education, celebrating first responders and hunger relief (i.g., food banks and holiday dinners). [7] However, it is time for H-E-B and supermarkets in general to take the bold step of also reducing the number of food deserts in under-served communities. While the various areas of community support are valued, they cannot fulfill the role of a full-service supermarket.
[1]
Halkias, M. (2021, June 3). H-E-B is
underway on its Frisco and Plano stores, the popular grocer’s first in North
Texas. Dallas Morning News, Accessed at:
https://www.dallasnews.com/business/retail/2021/06/03/h-e-b-starts-construction-on-its-frisco-store/#
[2]
Department of Agriculture Environmental Food Atlas, Accessed at: https://www.ers.usda.gov/data-products/food-environment-atlas/
[3]
American Community Survey 2019 5-Year Estimates, Accessed at https://data.census.gov/cedsci/
[4]
Dand, S. (2021, May 6). Cornerstone
Baptist Church is launching a grocery store to address food insecurity in South
Dallas. Cornerstone, Dallas Morning
News, 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/#:~:text=Now%2C%20in%20an%20effort%20to,set%20to%20open%20this%20spring.
[5] Yousry, F. (2021 May 22). This neighborhood badly needs a grocery store.
A medical device maker will build one. National Public Radio, Accessed at: https://www.npr.org/2021/05/22/998646579/medical-device-maker-building-plant-in-a-food-desert-adds-grocery-store-to-its-l
[6]
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
[7]
H-E-B: Giving back to our communities. Accessed at https://www.heb.com/static-page/Community-Involvement
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