Many West Oakland residents went to Eugene’s Market at the Jack London Gateway Shopping Center over the weekend to do their food shopping and instead found a posted letter from the shopping center management saying they were as surprised as everyone else that the store had closed, and that they’re looking for a new grocery store tenant. Once again, West Oakland’s only grocery store has lost its operator.

While it’s disappointing to see another grocery store close down in West Oakland it is far from surprising. There has been a fairly high rate of turn over of store operators at the supermarket location at the Jack London Gateway Shopping Center. There have been a number of different store operators there over the last 10 years. I see two big reasons for why this store location has had so many problems retaining operators:

1) One problem is location. The area around the Jack London Gateway Shopping Center does not have enough population density or vehicle/foot traffic to provide a concentrated customer base. In fact, that area of West Oakland, known as the Lower Bottoms, has the least amount population density of all of West Oakland. And while redevelopment in the area, especially along 7th St., is destined to increase both population density and traffic counts in the future, the traffic count along 7th St. is too low at this time to support strong sales for almost any retail.

2) Another, and bigger, problem is a faulty financial incentive model. Grocery store operators are often recruited through short-term financial incentives such as subsidies and tax discounts. These incentives make it possible for the store operators to make a great profit. However, the incentives are generally geared to only last for the first few years of business. Once the incentives run out, the store operators make less profits and many pick up and leave. This is what is suspected to have happened to the store operator at that location prior to the last operator. The city government attracted them from LA and padded their profits with subsidies for a number of years. Once the subsidies ran out they closed down and went back to LA.

The financial incentives provided by the public sector set the stage for financially unsustainable businesses that build their business models and cultures around ongoing subsidies and tax benefits. As a result, they are less rigorous as a business and tend to not operate as efficiently or, in some cases, ethically. The extra padding from the incentives also tends to dampen innovation and quality control, one reason inner-city grocery stores are notorious for poor quality products and poor customer service. These financial incentives also tend to reduce motivation to conduct more aggressive and ongoing marketing to capture greater customer base and market share, which means that, once the financial incentives expire, the store doesn’t have enough customers to keep profitable.

Financial incentives are usually used to attract existing store operators who are perceived to have the industry know-how and track record to run a grocery store. The problem is that such store operators are usually not from the community and are not generally agreeing to operate a store in an inner-city area out of concern for the well-being of the people there. Rather, they are agreeing to the incentives and the profits to be made. This inherently results in the recruitment of store operators who are not from the community and are not particularly committed to the community. So it’s easy for them to pick up and leave when the going gets rough.

West Oakland needs grocery store operators that are committed to the community beyond profits and financial incentives. There are numerous such efforts in West Oakland, including one by People’s Grocery, to establish authentic community-based grocery stores that value the health and well-being of the community. Haven’t we had enough of uncommitted store operators who continue to abandon our community? Isn’t it time to give home-grown entrepreneurs in West Oakland the opportunity to run their businesses and serve their community? People’s Grocery believes so and is working hard to make the dream of a grocery store that cares for its community and stick with its community a reality.

Read a previous blog post about Eugene’s Market and the Jack London Gateway Shopping Center: http://peoplesgrocery.org/brahm/peoples-grocery/hope-for

This entry was posted on Monday, March 12th, 2007 at 4:13 pm and is filed under People's Grocery, Oakland, Food Justice, Grocery Stores, Nutrition, West Oakland. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.