South Siders Spend Billions Each Year Outside of Their Neighborhoods

September 1, 2009

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(WBEZ/Natalie Moore)

South Side of Chicago residents are forced to spend billions of dollars each year outside of their communities. There are few restaurants or retail shops for them to go to in their own neighborhoods. And basic shopping needs such as groceries and household items often go unmet. Public policy, political will and race play into how the South Side is developed. But some communities are looking for ways to overcome those hurdles, and tap into the buying power of South Side residents.

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South Side Retail Leakage [pdf]
848: Reporter Kelly Virella on the affect of race on neighborhood investment

ambi: in the car

Lauren McCadney lives in a lovely townhome on grassy Drexel Boulevard. She picked the mixed-income North Kenwood neighborhood because of the parks and price.

MCCADNEY: The downside is when it comes to things like grocery stores or vast merchandisers, it's definitely a get in your car and it has to be a destination trip.

Today McCadney is running errands. She is driving seven miles to Target and Dominick's on Roosevelt Road.

ambi: grocery store

At Dominick's, McCadney buys fruit, salad greens and juice. She comes here to grocery shop because she doesn't like the dollar store and corner store options back in her neighborhood.

I ask McCadney how much she spends outside of her neighborhood each month.

MCCADNEY: Holy cow! Outside of my neighborhood? Just in groceries or groceries and dining out and the trips to Target?

After some adding, she figured $500-$700 a month. McCadney realized 100 percent of it was outside of her neighborhood.

MCCADNEY: Number one, I'm mortified to actually speak to how much money I'm spending but it's also unfortunate because I look around our neighborhood and I say our neighborhood can support the businesses.

What McCadney is doing, spending dollars outside of one's home community, is called retail leakage. A WBEZ analysis examined retail leakage in Chicago neighborhoods. Thirty neighborhoods have more than 50 percent retail leakage. Of those, 20 are on the South Side. Almost all are majority-black neighborhoods. In 2007, residents in these neighborhoods spent a collective $3.8 billion outside of their own South Side communities.

If you want to find out about retail leakage, the place to go is LISC Chicago. It's a nonprofit that promotes neighborhood growth. What a lot of people don't know, says LISC Business manager Jake Cowan, is that underserved communities actually have a lot of spending power. Cowan says it may seem surprising, but the fact is a community's buying power isn't necessarily related to median income.

COWAN: The concentration of incomes, in specifically middle-income families, is great enough that in almost every Chicago neighborhood there is more buying power than in suburban neighborhoods and including affluent neighborhoods like the Wilmette's of the world. Your average Chicago neighborhood – because of the dense population – has more money in the pockets of people going to stores.

Retail leakage occurs in lots of communities, even affluent ones. Every neighborhood isn't going to get—or even want—the shiny new grocery store. And there are some South Side areas with bustling shopping districts such as Pilsen. But for the Washington Park, Roseland, Oakland and Grand Boulevard neighborhoods, the dearth of shopping has a ripple effect: food deserts and overpriced low-quality goods at low-quality stores. Cowan says neighborhoods like these can attract retailers. He's seen it happen – if they have the right strategy.

COWAN: With regard to graffiti and trash, can they get their sites cleaned up so that when they take that retailer on the tour to show them the opportunity they can picture themselves there. But a community's determination is sometimes not enough. Other powerful forces are in play.

MERRIMAN: Public policy plays a big role in sort of determining what areas grow and what areas don't grow.

David Merriman is a public economics professor at the University of Illinois-Chicago.

MERRIMAN: Sometimes the criteria is which alderman has the most power or what looks best for the mayor rather than whether or not is in the best interest of citizens.

Merriman points to retail corridors on the North Side that have benefited from city tax financing. Leaders in the Auburn-Gresham neighborhood have been deliberate as they try to spur economic development. ambi: Auburn-Gresham Auburn-Gresham is full of brick bungalows, two flats and black working families. Before white flight occurred between 1960 to 1970, there was a variety of businesses and department stores in the area.

NELSON: You typically didn't need to leave your community to go and get the goods and services you needed to exist.

ambi: bakery

Carlos Nelson is buying a piece of red velvet cake at Perfect Peace Bakery along the West 79th Street corridor. He's executive director of the Greater Auburn-Gresham Development Corporation. The annual 79th Street Renaissance Festival takes place along this stretch here where the bakery is, between Racine and Loomis. Nelson helped conceive this festival as a marketing tool.

NELSON: It's not about the kids in the community. It's not a back-to-school festival. This festival is really about bringing people to support the businesses.

This commercial strip of 79th Street has street-scaping, banners and a few new sit-down restaurants. Nelson has helped get private and government money to help small ma-and-pa businesses like the Perfect Peace Bakery open up. Nelson is trying to recreate a vibrant shopping area and for him, that means limiting the storefront churches that don't provide a tax base. He also doesn't want the community overrun with national chains that are dollar stores, or overpopulated with chicken and fish fast-food joints.
 
NELSON: The national retailers that have shown an interest are the same ones that help us continue this cycle of poverty, unfortunately.

He'd rather promote florists, bookstores and more restaurants. Julie Welborn is co-owner of Perfect Peace bakery. She says she opened it up because 79th Street deserved something high quality.

WELBORN: What better place if not here? A lot of people that come in on their first time will say ‘wow this like being downtown or in Hyde Park or Beverly' or people will even chastise us like ‘why are you here?' ‘You could really be making a bunch of money if you moved.'

ambi: grocery

Back at Dominick's, Lauren McCadney, muses over her neighborhood. It's not exactly poor. Some of the homes are worth upwards of half a million dollars.

MCCADNEY: When does the tipping point come? How much of a change in demographics do the retailers have to see before they finally say it's time? As it turns out, there is a tipping point: race.