Last week, I discussed the effects of Wal-Mart stores on the communities they enter. Many studies show a strong correlation between the presence of Wal-Marts and a decrease in area employment, depressed wages and even the presence of hate groups. Clearly, the body of evidence does not work in Wal-Mart’s favor. Really, it is not Wal-Mart itself that is a problem, but the mentality that the city must court any type of big box retail to bring in tax revenue. But not all retail is created equal. What if instead of allowing Stockton to be defined by big box retailers at the edges of the city, Stockton instead tried to attract the types of businesses that actually brought positive benefits? Surely, this would be a preferable economic development model to the current strategy reliant on big box shopping centers, but what companies could offer positive benefits for Stockton? There is one particular company that has is proven track record of revitalizing neighborhoods and jump starting development:
Across the country, the healthy food retailer is widely credited with reinvigorating formally undesirable neighborhoods, creating demand for housing and bringing in customers to adjacent businesses. A stark contrast to the consequences of bringing a Wal-Mart to town, this phenomenon has been dubbed the “Whole Foods effect.” Communities such as East Liberty in Pittsburgh, Logan Circle in Washington, DC and Uptown New Orleans all experienced development booms following the arrival of Whole Foods. As a recent article in Salon discusses, many communities covet the grocer specifically for its purported revitalization powers and are even providing incentives to lure them to town.
While most evidence is anecdotal, all accounts indicate that the arrival of a Whole Foods is a sure sign that a neighborhood is about to turn around, and community leaders have taken notice. In Washington, DC, residents of the long distressed Logan Circle area started a petition to bring Whole Foods to the area. Once the Whole Foods opened up, development took off, and now Logan Circle is considered one of the trendiest neighborhoods in DC. The positive transformation brought about by the opening of one store was so obvious that residents in Columbia Heights, another underserved community in the district, started a similar drive to bring Whole Foods into their area, hoping for similar benefits. While these are case studies which should be taken within context, there is data that show stores such as Whole Foods do provide measurable benefits to the communities they enter. A report in 2007 by a Portland-based firm showed that the presence of a specialty food retailer (i.e. not a typical grocer) increases home prices by anywhere from 6% to 29%.
In addition to fostering redevelopment in older neighborhoods, Whole Foods can also serve as the anchor to development in previously barren areas. In Baltimore, a Whole Foods was one of the first anchors in the brand new Harbor East neighborhood that was essentially built from the ground up along the city’s waterfront just east of downtown. The area that was once home to industrial warehouses now bustles with shops, hotels, restaurants and housing.
In a nutshell: Wal-Mart brings lay offs, store closures, more crime, depressed wages and no new tax revenue, while Whole Foods fosters higher home values and increased residential and commercial development. Undoubtedly, Stockton does not need more Wal-Marts for all the reasons indicated in my previous post. Conversely, Stockton could benefit from the supposed benefits that a Whole Foods brings with it. Unfortunately, Stockton has three Wal-Mart’s in the works (four if you count the smaller store planned for the former Foodmaxx site), but the nearest Whole Foods is in Sacramento.
Would the Austin-based company ever consider opening a store in hardscrabble Stockton? The prospects might not be as far fetched as you think. The general criteria the store uses for selecting new locations are that the area must have a population of at least 200,00 (the Stockton metro area is about 650,000 – check) within a 20 minute drive (not an issue in Stockton- check), a “good portion” of which are college educated (Stockton has a 17% college education rate, so, partial). Moreover, a look at the areas which Whole Foods has invested in in the past should ease concerns that Stockton isn’t good enough. In Washington, DC, the Logan circle area was shoddy and run down with little to no commercial activity. Whole Foods is soon to open a store in Detroit, the hardest hit of the frost belt cities with a shrinking population and a smaller percentage of college educated residents than Stockton. Clearly, the leadership at Whole Foods is not afraid of a challenge. The chain has 50 more stores in the works, it is entirely conceivable that Stockton could qualify for a store in the future. Also, Whole Foods would be the king of the mountain in the entire San Joaquin market: shoppers from Manteca, Lathrop, Lodi and maybe even Tracy would come into town to shop at the store, potentially boosting tax revenue, unlike other types of retailers. No one is coming to Stockton to spend money at our Wal-Marts or Targets, but they might for the Whole Foods.
This is not some personal appeal to try and convince leaders to lure a store which I prefer. Personally, I don’t shop at Whole Foods. In fact, I have definitely shopped at Wal-Mart more in the past year than I have at Whole Foods. However, you can’t ignore the success Whole Foods has had in turning around previously underserved neighborhoods. So, should Stockton’s economic development team look into wooing a Whole Foods to the city? Possibly, given the retailer’s strong track record in turning around neighborhoods, but the issue is not that clear cut. The store is by no means a savior, and any incentives provided should be fair. Detroit reportedly gave Whole Foods $4.2 million in tax incentives to open up shop and I have not seen any analysis showing that the city would make up the money in increased tax revenue or commercial activity, though it is entirely possible that it would. A similar deal would not sit well in Stockton.
Really, this information is more valuable to developers looking for a way to jump start interest in stalled projects. In particular, Grupe and Spanos both have previously shown interest in building communities downtown along the water, though since the housing market collapsed, these plans are shelved indefinitely. However, if one of these companies can partner with a Whole Foods on a mixed-use project (which I advocated for here), chances are that interest in the area would be markedly higher than in a run of the mill subdivision. While the construction of the ballpark and arena have not affected housing prices in the immediate area nor spurred additional construction, the presence of a Whole Foods might actually be the revitalization catalyst that these publicly funded projects were supposed to be. Whole Foods has stated that they are proud to be part of the fabric of emerging neighborhoods, no reason why one of those neighborhoods can’t be in Stockton.