Tom Thumb Cancellation at Red Bird Mall Stuns Southern Dallas Community

 

There is little question that recent news about the cancellation of plans for a Tom Thumb store at Red Bird Mall stunned many interested parties that had invested considerable time, energy and finances in recent years to recruit a mainstream supermarket to this community.  The planned Tom Thumb supermarket was set to receive $5.8 million in city tax incentives to open the store next year at the Red Bird Mall area.

The planned Tom Thumb was envisioned as a welcome resource for residents who have long been yearning to see quality grocery stores in the area which would also include a pharmacy.  The planned store was especially appreciated given that Southern Dallas includes half of the 90 food deserts in Dallas County and populated by a growing number of dollar stores (Dept. of Agriculture 2019 Food Atlas).

Red Bird Mall developer, Peter Brodsky, was especially disappointed at this decision:  “We had gotten through the design process — fully designed building, fully designed site plan, had already received a permit — and it was sort of the last possible moment they let us know that they were going to pull out.” (Interview in DMN 12,16-24).

As a compromise, Albertsons Cos. stated that they would provide no-fee delivery to ZIP codes surrounding the previously planned store through nearby Tom Thumb locations.  But one community leader in Southern Dallas responded that “They want our business but do not want us to visit their store – that is very disappointing.”

Specific reasons for cancelling the planned store were not provided by Albertsons Cos. although a spokesperson explained that it followed discussions with the City of Dallas and had conducted a thorough economic evaluation.  Peter Brodsky, however, did not appear satisfied with this explanation: “You got to ask them their exact reasons, but I can only assume that they didn’t have confidence that the store will be successful in the market, even with the city subsidies.”  (DMN 12-16-24).

Indeed, it is possible that other reasons were driving the decision by Albertsons Cos. to cancel the planned store?  Let’s consider the following issues:

·       Diminishing the Competition:  Was the earlier introduction of the Joe V Smart Shop store by H-E-B approximately one mile from the planned Tom Thumb store at Red Bird Mall just a coincidence? Perhaps, but it is also likely that it was a planned move to erode whatever competitive advantage the planned Tom Thumb store would have enjoyed from City of Dallas incentives and significant community support that had grown in recent years. Indeed, the Joe V store could have been located at several other locations throughout Southern Dallas, but the decision to place the store in close proximity to the planned Tom Thumb store was viewed with skepticism by some community members.

·       Absence of Community Involvement:  In a recent study of 70 supermarket interventions in food deserts throughout the U.S., Dr. Catherine Brinkley of UC Davis concluded that community involvement was one of the best predictors of their success.  Yet, there has been no evidence that a trade area study of the Red Bird community has been conducted.  Such a study would have measured the estimated market share for the planned Tom Thumb and Joe V stores well as the estimated food expenditure that could support a 50,000 sq. ft. supermarket. Importantly, such studies are often used to evaluate the store design, products and services that would best fit the expectations of community residents.

·       Use of the Wrong Metrics:  The “thorough economic analysis” that was conducted by Albertsons Cos. may not have included the right metrics in reaching their decision to cancel the planned Tom Thumb store. Past studies have demonstrated that traditional site selection metrics are not as effective for selecting promising communities in lower-income areas (Rincon & Tiwari, 2020). Without an independent evaluation of the economic analysis conducted by Albertsons Cos., one cannot determine if the analysis was sufficient to support their decision.

Moving forward, Albertsons Cos. should support an independent evaluation of their economic analysis as a measure of good faith and to avoid perceptions that other factors were driving their decision making.  Prior to inviting other supermarket providers to invest at Red Bird Mall, a trade area study that includes a survey of community residents should be conducted to determine demand, market share, retail leakage and other key metrics that are critical in site selection studies. Of the various recent announcements of new store openings in North Texas by Kroger, Tom Thumb and H-E-B, most have excluded locations in Southern Dallas – so a new site selection strategy is clearly needed.   

Rincon, E. T. and Tiwari, C. (2020) Demand Metric for Supermarket Site Selection: A Case Study, Papers in Applied Geography, https://doi.org/10.1080/23754931.2020.1712555

Please send comments/feedback to the following email:  edward@rinconassoc.com 

H-E-B: South Dallas Overlooked Again by New Supermarket Introductions

 

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. 

 Reference Notes

[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

The Richards Group Steps into a Multicultural Minefield

The recent headlines about Stan Richards’ controversial comments regarding their Motel 6 client sounded an alarm bell throughout the advertising and marketing industry, especially as it relates to multicultural marketing.  As the recent Dallas Morning News story reports, Mr. Richards stated in a meeting at the ad agency’s office that a particular ad pitch for Motel 6 was “too Black”  for its “white supremacist constituents.”  The statements were reportedly made during an internal meeting to discuss an idea for celebrating Black artists in a Motel 6 campaign.

The ensuing reaction by the firm’s clients was a bloodbath:  In addition to losing the Motel 6 account, The Richard Group also lost accounts for Home Depot, Keurig/Dr. Pepper/Keurig, H-E-B, Orkin and Advanced Auto Parts.  Last year, The Richards Group reported revenues of $200 million, but the loss of these large accounts will lead to the loss of many jobs at the firm.

Mr. Richards has apologized for his misstatements and assured us that he has never uttered racists comments in the past. He “fired” himself from the firm while operations will be assumed by his hand-picked successor, Glen Dady, who has worked with Richards for 40 years. In addition, Richards is planning to create a new position on diversity, equity and inclusion; begin bias training for staff; and commit to becoming more “culturally relevant.”

 In the past, such apologies may have been forgiven in due time but the current volatile climate for race relations in the U.S. suggests that The Richards Group will feel the pain for a longer period of time. With such a close relationship to his successor, one wonders if changes will indeed occur or whether traditional practices will continue.

As a research professional who has evaluated multicultural campaigns for the past 45 years, it is indeed difficult to understand why Mr. Richards felt the need to make the controversial statements about the multicultural campaign.  In the normal course of campaigns, it is customary to conduct focus group research with members of the target audiences and let them judge the appropriateness of the advertising concept for themselves or members of their communities.  Why would Mr. Richards feel like his views should override the views of the Black or white customers for Motel 6?  And why telegraph the message that Blacks are not welcomed at Motel 6 or that its preferred customers are “white supremacists?”  While Mr. Richards is described as being “fiercely independent,” it appears consultation with a multicultural expert may have been the best approach.

This unfortunate incident underscores a general problem that permeates academic institutions today, that is, the relative absence of courses in multicultural marketing, public relations and research. The multicultural segment in the U.S. numbering 120 million in 2019, has brought considerable cultural and linguistic diversity to this nation, and continues to challenge the work of advertising agencies and research practitioners.  Unfortunately, these industries have not kept pace with the changing composition of the U.S. population, and college graduates are not receiving sufficient training regarding the best communicative strategies for this growing segment.  Instead, academics have chosen to focus their curricula on international markets rather than the more relevant issues related to U.S. multicultural consumers – a pattern that needs to change.

Certainly, it is never too late to make a company more culturally relevant, especially if your client base serves a large segment of multicultural consumers.  Like the recent experience of racially profiling Black customers by Starbucks, The Richards Group reputation may benefit from staff bias training to staff and hiring someone to lead a newly created diversity, equity and inclusion department. In my opinion, however, this transformation will require more substantive changes in order to be successful. My suggested changes include the following:

·       Hiring multicultural staff – Blacks, Hispanics and Asians – to become key members of the advertising staff.  Aside from ethnicity, these individuals should be experienced professionals that understand these communities.

·       Ensure that the Board of Directors includes multicultural members who are seasoned professionals with intimate knowledge of multicultural communities.

·       Persuade academic institutions to include courses on multicultural marketing, public relations, and research in marketing and advertising departments – thus ensuring that future generations of college graduates will have the foundation to make better judgments regarding multicultural consumers.

 

It will take time for The Richards Group to recover from this unfortunate incident, and the firm is paying dearly for its misstep.  On the bright side, however,  this experience provides a strong message to the broader advertising and marketing communities that their activities as well as their clientele will be closely watched in the current climate of fragile race relations.