business or developer, but also to help economically distressed communities attain viable commercial development on a larger scale. TRF hired Econsult, an economic consulting firm, to assess the impact of new supermarket development on consumers and their communities. Econsult looked at three commonly suggested community benefits that supermarket development can bring to areas currently served by only small grocers and convenience stores: increased real estate values due to supermarket amenity, increased economic activity and employment, and lower food prices. For this study, we expand on Econsult’s previous effort by using address level data to better understand a supermarket development’s ability to attract additional economic activity to a community, sometimes referred to as an anchor effect.
This analysis attempts to measure the extent to which TRF-financed supermarkets serve as anchors for additional economic activity in the retail and service sectors. TRF purchased data from InfoUSA listing all businesses operating in industries within the retail and service sectors, based on a custom selection of Standard Industry Classification codes. These industries were chosen because they are likely candidates for locating within close proximity to a larger retail anchor store, such as in strip malls and other shopping clusters. The dataset includes all businesses in operation at any time from 2001 through 2008, which allows for a time series trend calculation of total employment within the immediate areas surrounding each grocery store before and after its opening. Additionally, we use total retail and service sector employment throughout the city as a comparative benchmark. The presence of an anchor effect would be shown if there was a positive change in the trajectory of employment within ¼ mile of the subject supermarket in years after the store opened or expanded.
Figure 7 shows the results for all stores (including those not in the BSR chain) meeting the following criteria: received a TRF loan, began operating prior to 2007, and is located in a distressed urban
community within the Philadelphia metro area. Each line in the chart illustrates trends in the number of employees working for retail and service sector businesses that are located within ¼ of a mile of grocery stores that received TRF financing. The large square marker on each trend line identifies the year in which the store received financing from TRF. Overall, it is difficult to observe clear and consistent findings from the results shown in Figure 8. However, trends do indicate that after each supermarket opened, total employment surrounding 4 out of 5 stores increased relative to City-wide trends. With the exception of ShopRite Chester, where the relative increase is dramatically high, the stores show a steady increase in total nearby employment in the years following their opening. Only the BSR Island Avenue location exhibits a relative decline in total employment, though it is only a slight decline. Tables 18 shows the raw number of employees within a ¼ mile of each store as well as the index figures that were used to construct the line chart.
Table 17: Number of Employees at Retail and Service Sector Businesses Surrounding Grocery Stores Financed by TRF
Stores 2001 2002 2003 2004 2005 2006 2007 2008
BSR Island Ave - 2004 238 229 238 291 154 245 246 246
1st Oriental Supermarket - 2005 261 314 317 331 327 346 360 360
ShopRite Chester, PA - 2005 582 603 557 564 1,133 1,035 1,261 1,261
Fresh Grocer Chelten Ave - 2006 360 369 384 391 252 313 336 336
Woodland Foods - 2006 391 417 428 418 373 417 457 459
City Total 169,130 171,836 169,457 173,892 171,745 180,220 164,151 164,774
Index (to City total) 2001 2002 2003 2004 2005 2006 2007 2008
BSR Island Ave - 2004 100 94.7 99.8 118.9 63.7 96.6 106.5 106.1
1st Oriental Supermarket - 2005 100 118.4 121.2 123.3 123.4 124.4 142.1 141.6
ShopRite Chester, PA - 2005 100 102.0 95.5 94.3 191.7 166.9 223.2 222.4
Fresh Grocer Chelten Ave - 2006 100 100.9 106.5 105.6 68.9 81.6 96.2 95.8
Woodland Foods - 2006 100 105.0 109.3 104.0 93.9 100.1 120.4 120.5
City Total 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: TradeDimensions, 2007; InfoUSA, 2008.
Number of Employees at Businesses Surrounding Grocery Stores
Again, these results are not unambiguous. Nonetheless they do suggest the presence of a positive effect on overall economic activity resulting from the introduction of a new supermarket. We did notice some discrepancies in the data set and thus we have reason to question certain aspects of the InfoUSA file.10
10
It is possible that the business listing data are skewed by either data errors or address locator gaps in the geocoding process. Also, we would prefer to use total sales and employment figures to calculate trends. Unfortunately, nearly 25% of the business records a missing one or both of these attributes. Data errors might include basic errors in InfoUSA’s historical database records, their query language that removed duplicate records for prior years, or another unknown complication. Worth noting is that instead of purchasing a listing of all businesses matching the SIC list in every year, InfoUSA performed a merge/purge query that extracted each business’s most recent year of data and we then used each record’s “year first appeared” field to determine for which years the data should be counted. This reduced the total data cost to around $9,000 versus nearly $40,000 for the entire listing from each year. Unfortunately, our purchased listing included
Map 6 shows retail and service sector businesses within the ¼ mile anchor area surrounding Fresh Grocer at Chelten Avenue. At this level, the reader can more clearly grasp the difficulty of identifying anchor effects for a large number of stores. Perhaps a study focusing on a smaller geography and fewer anchor stores would allow more time to fully verify business listing data, thus providing a more
reliable assessment of supermarket anchor effects.
many duplicate entries from the historical databases, as well as incomplete data related to sales and employment. We manually corrected these duplicate entries. InfoUSA admits that their older databases are less reliable than in recent years, but because it is too expensive and logistically challenging, they have no plans to clean their historical databases.
Section 4: Conclusion
There are many reasons to believe that there is a shortage of supermarkets in many distressed urban places. One thing is clear: there are added operating and ongoing costs to proprietors of supermarkets in these locations. This research shows that there is a way for a CDFI to use a variety of financing tools to expand opportunities for stores in these communities. We also find that: 1) the advent of these stores increases the opportunity to shop in larger stores thus enhancing choice; 2) employees of these stores tend to reside in close proximity, also in distressed urban places; 3) the employees obtain jobs with a positive wage trajectory and at wage levels comparable to their industry peers; 4) customers of these stores reside in close proximity to the stores; 5) supermarkets may serve as retail employment anchors, although this finding remains ambiguous; and 6) these stores reduce leakage of food retail expenditures resulting in a net increase in employment for the local communities. We believe these findings
substantiate the role that the CDFI industry could play in this sector and that there are lessons to be learned from the analysis of the approach to how these markets are financed.