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June 2004 Profitwise News and Views
Merging the Two Sides: Community Needs and Market Opportunities
What does a community need, and what can its market support? Financial institutions, regulators, community development financial institutions, community development corporations, and a wide range of others have been asking this question more regularly. Perhaps you have been asking yourself this and other questions:
As part of its public mission, Metro Chicago Information Center (MCIC) occasionally sponsors free workshops and forums to help answer these and other questions and to share our latest market research methodologies and techniques. Needs assessments quantify deficiencies; market analyses quantify opportunities. Both are important. Community needs assessments often focus on what some have despairingly dubbed "poverty data." Organizations quantify the number of individuals they serve. They count single family households, assess infant mortality and high school dropout rates, and measure poverty levels-census tract by census tract. Often these reports are developed to support policy positions for funders who require them, or simply for the organizations themselves, who wish to learn more about their community's changing trends. But the "tale of the tracts" often misses key challenges and opportunities. On a per capita basis, these neighborhoods are more likely to have currency exchanges in place of mainstream bank branches, liquor stores in place of full service grocery stores, and adult book stores in place of family book stores, which also offer cultural and new learning venues for young and old alike. Yet these communities are not without emerging assets that individuals and community networks can foster and expand, and that new wealth-building and market-building opportunities can be built upon. In Chicago, a wide range of actors are collaborating on new, practical ways of thinking about and measuring individual, household, and community assets. For instance, cultural and institutional assets (such as libraries, post offices, community centers, and religious institutions) add value to communities, but their impact is not readily measurable. Economics and quality of life go hand in hand. At least that has been historically true for many of Chicago's south side communities. What's needed are new ways to increase the impact of these assets on a regular, affordable, and geographically appropriate basis. We are reminded of this by the fact that not all blighted markets are poor. Last year, the Chicago Tribune compared conditions in African American middle-income neighborhoods to their White, middle-income counterparts. As the Tribune pointed out, just rising into the fiscal middle class does not inherently transport African Americans into the idealized American dream: a neighborhood insulated from poverty with nice stores, good schools, and safe streets. "For the middle class, it's hard to maintain the lofty goals you have for yourself when this abject poverty is all around you," said Pat Debonnett, MCIC member and executive director of the Greater Roseland Community Development Corporation. Roseland is located on Chicago's south side. Though it contains a substantial middle class population, it has had difficulty attracting quality, full-service businesses. Ms. Debonnett was a featured panelist in a recent Women in Planning and Development public forum where MCIC presented its research on grocery store patterns throughout Chicago and the Six County Area. There are 86 major grocery stores (Jewel, Dominick's, Cub Foods, and Aldi) in Chicago. Approximately 60 percent are located on the city's north side. This is the case even though the population distribution is roughly equal (1.47 million residents on the north side verses 1.41 million on the south side). There are eight aldermanic wards in Chicago with no major grocery stores, and all of those wards are predominantly minority. Six of the eight wards are located on the city's south side. Of these six wards, five are predominantly African American and one is predominantly Latino. Both wards with no major grocer on the north side are predominantly Latino. MCIC looked at racial patterns of stores city-wide and found:
MCIC analyzed these same major stores by suburban location. Combined, there are 284 Jewel, Dominick's, Cub Foods, and Aldi stores throughout DuPage, Will, Lake, Kane, McHenry, and Cook counties (excluding the City of Chicago). A similar pattern emerged:
In the last five to ten years, specialty grocers and wholesalers on both the north and south sides have responded to untapped markets as well as the changing nature of shopping patterns and consumer preferences. Examples include Trader Joe's, Sav-A-Lot, Whole Foods, Ultra Food Warehouse, Costco, and Avanza-with mixed success. Avanza, owned by Nash Finch Company, opened two stores in Chicago in 2003, but is now closing the stores and leaving the market. How do community advocates and market actors bring needed commercial venues-such as grocery stores-into undervalued neighborhood markets like Roseland and Little Village? How do community advocates and market actors effect sustainable change in low- to moderate- and, in some cases, middle-income emerging markets? What key factors will stimulate emergence from blighted conditions? The first step is to get both sides talking the same language and to identify where a broad range of interests might converge. Typically, the business community focuses on three core drivers: buying power, stability/growth, and risks/rewards. The social services sector often focuses on local deficiencies and hardships, and programs and policies to address them. In the Roseland community, for example, drilling down into an analysis of income patterns, homeownership rates, safety measures, school improvements, and commercial leakage might identify sustainable "win-win" opportunities for shared community and market action. If not completely sustainable, these potential community economic development investments might at least have smaller financing gaps than originally perceived. In Little Village, a predominantly Hispanic community, a recent analysis blended secondary data sets with a bilingual consumer survey. The results have demonstrated that there is a thriving and dense commercial district with nearly 1,200 businesses. Despite the strong retail presence, MCIC determined that commercial leakage was occurring, meaning that local dollars were being spent outside of the market, particularly in the adjacent town of Cicero, where many "big box" stores are located. Within one mile of a proposed development in Little Village, MCIC estimated buying power to be more than $570 million annually with $236 million destined for retail sales. We projected that roughly $60 million is not being captured within the study area. MCIC's client, the Little Village Community Development Corporation (LVCDC), was also adamant about including community forums into the process. "We wanted to have a third-party expert quantify what our market could support; but at the same time, we wanted to include the desires of the community, so that we can make informed choices that serve the interests of everyone," said LVCDC executive director, Jesus Garcia. MCIC and Chicago- based architectural firm CAPA teamed together to help community members develop a "vision" for the targeted development site as well as the community overall. The MCIC market analysis will also report on these findings. Markets are more than just the built environment. Not all needs assessments or market analyses focus on developing new housing or grocery stores. Working closely with the United States Department of Agriculture Forest Service, and in collaboration with the Openlands Project for the Lake Calumet/Wolf Lake area and the City of Chicago Department of Planning and Development, MCIC designed and conducted focus groups with a variety of recreational users. Getting input directly from recreational users in the area was important because there are a number of initiatives moving forward in the Calumet region to preserve and enhance natural habitats and open space, while redeveloping the area's industry at the same time. While many not-for-profit organizations, government agencies, politicians, and institutions had contributed to the Lake Calumet area planning process, input from casual users of the Lake Calumet and Wolf Lake area, not affiliated with any organized group and from nearby communities, had been absent. The findings from the casual users' focus group, combined with input from the other stakeholders in the area, helped in the planning and development of the Calumet area for recreational and industrial users and for wildlife habitat. Chicago prides itself on being a global city. To stay competitive, the city needs to retain and grow our high-skill "knowledge" workers and provide the types of amenities that attract them. Does that present development potential for downtown or neighborhoods like Roseland, where land is readily available and less expensive? Are developers missing opportunities in neighborhoods north, south, or west of downtown? Are we missing opportunities in Illinois? There is little to refute that Illinois manufacturing overall is declining, as thousands of jobs have disappeared from the sector, although growth may be occurring in some sub-sectors. Illinois is not alone in its dilemma as to how to grow meaningful jobs in viable sectors; other states are suffering from this same trend. MCIC research suggests the need to define sector and sub-sector priorities and related strategies and take action by region, focusing on firms that are viable, growing, provide meaningful jobs, and support a diversified economy. Also the research shows the need to foster collaboration and information sharing among Illinois towns, counties, and regions, and among neighboring states, to minimize unproductive bidding wars and the overpaying of firm location decisions. Better and more drilled-down market information might point market players to missed opportunities. This is the case for particular neighborhoods, like Roseland, and towns, regions, and states. About MCIC and More Some of our approaches involve data blending and indices; others involve brand new custom datasets, such as the national database on bank branches that accept Matricula Consular cards and Individual Taxpayer Identification Numbers. Matricula cards were first accepted by a small community bank in Chicago, Second Federal Savings, which worked in partnership with the Mexican Consulate office and the regulatory community. In 2001, Second Federal developed the Amigo account for anyone with a taxpayer ID number-which the IRS now allows banks to help issue-and the Matricula card. For this particular program, account holders keep one automated teller machine (ATM) card and send another to their family in Mexico who use it to withdraw money at a fraction of the cost of a wire transfer or money order. Today, approximately 30,000 (32%) out of roughly 88,000 total bank offices across the country accept Matricula cards, and Chicago is leading the way. The study was commissioned by the Federal Depository Insurance Corporation and recently released at a public forum co-sponsored by the Federal Reserve Bank of Chicago. MCIC is moving much of its data, reports, universal findings, and content knowledge to an easily accessible online site. And we have developed new Web-based tools such as our Community Vitality Index (CVI). CVI provides a Web-based tool that uses multidimensional indicators to quantify current community strengths in the Chicago metropolitan region. Here the focus is not deficiencies, but neighborhood potential. CVI empowers users, from a policy and action perspective, by creating and comparing detailed neighborhood profiles and highlighting areas of opportunity to leverage community capacity for positive change. Users will no longer have to rely solely upon the "poverty data" for community needs assessments. What does a drill-down of data say about your custom market? To learn more about how you can access this and other information, and to receive notice of workshops and forums at no charge, visit www.mcic.org. Mari Gallagher is a senior consultant at MCIC. Ms. Gallagher previously directed the Emerging Neighborhood Markets Initiative, a two-year Chicago pilot project spearheaded by Social Compact. Ms. Gallagher earned an M.A. from the University of Illinois, School of Urban Planning and Policy and a B.A. from DePaul University in Political Science. |
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