Obama Makes Grocery Store Push

The Obama Administration is getting involved in the supermarket business. Late last week First Lady Michelle Obama was in Pennsylvania, encouraging the development of grocery stores in underserved, low-income areas.

The plan would offer $250 million in federal tax credits to retailers willing to open some of these locations. Obama says that the stores are needed to ensure that more Americans have access to healthy food options.

The USDA even has a “food atlas” that shows the distance to US grocery stores and other food sources by county.

Can you see any of the major chains out there expanding in low-income areas due to government incentives? Or do the Aldis and Supervalus of the world already have their site-selection plans pretty much covered?

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13 Responses to “Obama Makes Grocery Store Push”

  1. 1 R L Gunn February 22, 2010 at 9:04 am

    I have been involved in site locations for grocers and value/discount retailers. Both have there site location criteria refined to demographics, economics, and real estate. A top down / simplistic / computer data driven site selection program is asking for business disaster. You can not pick a site from a computer screen. At the end of a decade, the demographic data is even more suspect. A government driven / mapping / redlining / intiative will not result is good site location decisions. IF there is a site that meets real estate and business site criteria AND you can get a tax credit or benefit, the companies will take advantage of the credits. Credits will not drive long term site location decisions

  2. 3 Cameron Maness February 22, 2010 at 9:40 am

    Where is the payoff to the grocery? A front-end tax incentive to get up and running? Long term success is the goal with national grocery chains and the front-end cost savings won’t make doing these deals any more palatable.

    I think the “best” way for the government to get involved in the grocery market business is to simply ensure that there are nutritious options mandated with food stamps and other subsidy programs. If you take away the awful (and by awful I mean no redeeming nutritional value) products that are mostly available via the subsidy programs and replace them with fresh fruits and veggies, you’ll help the folks on the programs as well as the farmers whose demand for those products will have increased.

  3. 4 CR Ellison February 22, 2010 at 10:38 am

    Camerson is right on the money. Having worked in depressed areas of large cities it is all to clear those who need help most also need to be assisted in the decision making process of what is healthy and nutricious. Limiting their purchases to these items should have an impact in several areas: merchants in their areas will change their stock accordingly, junk food is by in large more expensive by volume so purchasers can actually obtain more food for their budgets, by reducing certain food source intake this can also directly attribute to better long term health reducing medical illness factors such as diabetes which is often previliant to these areas, and children should do better in school with a more balanced intake of specific foods attributied to better memory retention and fewer calories.

  4. 5 Bob February 22, 2010 at 10:46 am

    I have to agree with the real estate, business and health wisdom in the first two replies.
    This type of wisdom will bring productive results for years into the future. Yea for good choices!

  5. 6 Broker February 22, 2010 at 10:49 am

    Maybe Barack and Barney Frank can work the same magic in the food industry that they worked with the subprime mortgage biz. If there was a way to make profitable deals in these areas I suspect the supermarket chains and Wal-Mart would be actively pursuing them. Please let the free market economy work.

  6. 7 Bob February 22, 2010 at 11:18 am

    Free market driven, healthy choices, incentives for good nutrition and customer education – what a concept.
    We have brilliance in blogsphere, why is it so painfully absent in D.C.?

  7. 8 Developer/Engineer February 22, 2010 at 11:37 am

    Federal Assistance should come by using existing USEDA grants to provide funding to developers to assist with unusual site development cost associated with building in urban locations. These typically include high upfront develpment cost for site remediation, utility infrastructure and land acquisition costs. Also, in many urban areas, former industrial areas (brownfields) are the only areas where one can find parcels large enough to accomodate current day supermarkets requiring in excess of 100-150k square feet. These areas are not often close to neighborhoods or public transporation. It is hard to encourage developers to invest in urban supermarkets where the risks are substanitally higher than suburban locations. Although urban supermarkets hold the potential for job creation, the incentives in themselve can not create markets that do not already exist.

  8. 9 David Larsson February 22, 2010 at 11:45 am


    Sure. It’s already happened here in Philly: check out the ShopRite at 52nd and Jefferson, for example.

    Pres. Obama’s initiative seeks simply to capitalize on what’s already happened in Pennsylvania — to quote Mrs. Obama’s remarks, “six years ago [Pennsylvania] decided to invest $30 million in fresh food financing, which has leveraged $190 million more from the private and non-profit sectors. And so far these investments have funded 83 supermarket projects in 34 counties, bringing nutritious food to more than 400,000 people. And, more importantly in this economy, this investment is projected to create more than 5,000 jobs.”

  9. 10 Broker / Developer February 22, 2010 at 1:02 pm

    I am a broker and developer that specializes in supermarkets. The Obama administration forgot to tell everyone in their announcement (gee, there’s a surprize) that all such supermarkets must be unionized before they’ll qualify for any government help. I lost a big redevelopment deal last year with a major, non-union supermarket chain because the city will only allow unionized retailers in town. Now the site continues to sit vacant in this blighted neighborhood with no supermarket. If I was a constituent, I would be even more upset and recall the ciy council (oh yea, one of them quit recently under threat of indictment too). Don’t be fooled by yet another Obama administration lie. There are unacceptable strings tied to everything they suggest.

  10. 12 greendiamond February 22, 2010 at 4:49 pm

    What would any lender say as you describe in detail your investment plan for opening a grocery store in an economically challenged area and how good it will feel making fresh, nutritious food available to an underserved demographic? And because we put stewardship ahead of profit, we will be rewarded with tax credits. Yet another brilliant idea from Washington.

  11. 13 getSerious February 23, 2010 at 10:33 am

    This is yet another “great” idea with no basis in reality. If it makes good business sense for a retailer to go to such a location, then they will go, and the monetary incentive is unnecessary. If it doesn’t make good business sense, then what good is a 2 million dollar incentive for a 50 million dollar disaster. It’s the same useless logic of giving an employer a $5,000 tax incentive to hire an employee. If you critically need an employee, then you have to hire them and no taxpayer backed incentive is required. No employer is going to take on a $30,000-80,000 (per year) unnecessary liability for a $5,000 incentive.

    By far the best solution is to allow the subsidy money to buy ONLY nutricious food. That could solve the problem and wouldn’t cost the taxpayer a dime. If implemented, I’m certain the existing retailer would make his vegatble section larger than his cigarette section.

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