Grocers Flocking to the Inner Cities

By Carol Wolf

Wal-Mart Stores is gearing up to open small outlets next year in U.S. cities, where it hopes to sell a lot of groceries. Trouble is, at least a half-dozen others are also seeking accelerated growth in urban America. CVS Caremark, Walgreen, Supervalu, and Family Dollar Stores all are offering more fresh food at their urban outlets or opening small stores in neighborhoods with limited access to nutritious grub.

 While selling food is a mature business, 23.5 million Americans live in underserved urban areas—a market potentially worth $100 billion a year, says Jim Hertel, managing partner with retail consultant Willard Bishop. "It's easy to go into a liquor or convenience store and find potato chips," he says. "But in terms of something you would feel good serving your family, not so much."

The big grocery store chains largely abandoned the cities in the 1970s and followed their customers to the suburbs. There they found abundant, cheap land and built superstores and parking lots large enough for 1,000 cars. Now they have saturated that market and are turning their attention back to urban neighborhoods that have long been served by mom-and-pop stores—or not at all.

About five years ago, Family Dollar began selling a limited selection of mostly packaged and frozen food in New York, Chicago, and Detroit. As the concept caught on, the company began carrying staples such as bread, eggs, and milk. "We have a bulkhead in many major urban areas, and we'll continue to build on [that]," Chief Operating Officer R. James Kelly said in October.

Now other retailers that traditionally haven't carried groceries are moving in. Pharmacy chain CVS Caremark is adding fruit, salads, sandwiches, and other prepared meals at a growing number of its city locations. The second-largest U.S. drugstore chain, behind Walgreen, plans this year to remodel about 300 urban stores to carry food items in Boston, New York, Washington, Detroit, and Philadelphia. Eventually one-fifth of its 7,000 stores could be reconfigured, CVS says.

While CVS is aiming at a cross-section of consumers, Save-A-Lot, a no-frills grocer owned by Supervalu, targets households with incomes below $45,000 in neighborhoods where supermarkets are scarce. The U.S. government is offering $400 million a year in loans and tax incentives to lure stores offering better quality food to these underserved areas by 2017, part of First Lady Michelle Obama's campaign to reduce childhood obesity.

Read the complete story here.

Second Helpings Celebrates 10 Years!

2008 marks the tenth anniversary of Second Helpings! Thanks to the great support of people like you, we are able to continue providing vital services to organizations in the Greater Indianapolis area. To celebrate our tenth year we are spreading the news about our mission of eliminating hunger and empowering people. Look for us in the following:

April issue of Indianapolis Woman magazine

Radio spots on 92.3 WTTS during the week of April 21, May 5, June 9, and June 23.

Television spots, in limited markets, during the week of April 14, April 28, June 2, and June 16 on the following networks:

History Channel
Discovery Channel
TBS
CNN

Don't forget to continue checking us out on the Web at ww.secondhelpings.org!

"Pay What You Think It's Worth" Scheme Pays Off In Germany

Ernest Gill, dpa Hamburg

The latest trend in the European restaurant business is the pay-whatever-you-think-it's-worth gimmick, and enterprising eateries in Germany say it pays off big time.

Taking a tip from the rock group Radiohead, which offered its latest album via the Internet for whatever buyers were willing to pay, restaurant owners in Germany say the idea of letting customers decide how much their dinner is worth to them is great for business.

Until a few weeks ago an Iranian ethnic restaurant called Kish in Frankfurt was empty most nights. Then owner Pourya Feily posted a sign out front saying "Pay What You Want" for entrees. Beverage prices are fixed, but everything else is up for grabs.

"Now we're full every evening and the amazing thing is that people are quite reasonable in paying a fair price," says Feily. He concedes that the patrons tend to pay less than the fixed prices he used to charge. But the difference is made up in the increase in trade.

"People pay about 6.95 or 7.95 euros (10 or 11.80 dollars) for an entree, which is quite acceptable," he told RTL Television.

He and Radiohead are not the only ones. Across Germany, wine bars, hotels, hairstylists, gourmet food shops and even some cinemas have taken up the "Pay Whatever You Want" slogan.

"Admittedly, it's a gimmick," Frankfurt marketing analyst Martin Natter told RTL. "Everyone knows it's a come-on. But it's a way of making customers feel they are in control. And it offers them a chance to be gracious and to feel they aren't being ripped off, but rather that they are doing their favourite restaurant or pub or hairstylist a service. Customers like to feel needed and appreciated."

The Iranian restaurant in Frankfurt has made headlines nationwide, and television news crews jostle with customers to report on the phenomenon.

"We could never have paid for such publicity in a million years," says Feily. "At lunch we used to close early due to lack of customers. Now we have up to 150 people, and we can only seat 90, so people have to wait. And that's just for lunch."

If nobody is required to pay a cent, then why do people still pay about what they would pay anyway?

"Basically, people are honest," he says. "They know what their lunch is worth and they are willing to pay that. Most people wouldn't want to cheat anybody any more than they would want to be cheated themselves. And because they set the price themselves, they feel it's a bargain, even if it is just as much as they would have paid anyway."