A chain reaction
Retailers finally ready to roll stores into city's neighborhoods
A CVS drugstore, an Aldi grocery store and a Starbucks probably will join a previously announced Menards home-improvement store across North Avenue from the Wal-Mart that opens today, said Ald. Emma Mitts (37th), who represents the Austin neighborhood on the West Side.
Menards confirmed last week to the Sun-Times that it will open a 240,000-square-foot store across from Wal-Mart in late 2008. An Aldi spokesman said Tuesday that talks are under way, but that the grocery retailer is also looking at other sites in the neighborhood. CVS and Starbucks declined to comment.
Wal-Mart has counter-punched its critics with policies on lowered generic-drug pricing and environmentally friendly packaging, but has been unable to quell opposition to its entry into the city.
(Brian Jackson/Sun-Times)
Some of these retailers are new to the city; others are old hands. But these mostly non-union companies agree that they can be profitable in areas long overlooked, as well as in middle-class African-American neighborhoods such as Chatham and South Shore.
Experts say retailers have covered every inch of ground in the suburbs, where land prices are lower and opposition tamer, and now are looking for new growth.
Several chains have found ways to work around the high cost of inner-city operations -- with the attendant challenges of bureaucracy, strong labor unions, higher crime and lower family income levels -- to turn a respectable profit.
"New stores generate more growth than older stores. New stores create interest in a company's products, and attract new customers," said Thomas Smith, assistant director of the Center for Economic Education at the University of Illinois at Chicago.
Retailers move in herds, so when a bellwether company such as Wal-Mart, Starbucks or Home Depot moves in, others follow to take advantage of the foot traffic, said Mari Gallagher, principal of Mari Gallagher Research and Consulting Group in Chicago.
"The ones who follow know that the major retailers have done their homework," she said.
The situation can be a double-edged sword: The companies hire local residents, but many cannot afford to raise a family on the salary offered or save for retirement.
Retail growth can be a tell-tale sign of gentrification, which ultimately evicts lower-income households.
"Retail follows rooftops," Gallagher said, and increasingly, those rooftops cover condos, not rental units.
Yet employers say they offer employees life skills, competitive wages and jobs that the ambitious can use to climb the career ladder.
"We don't necessarily look for job applicants with experience. We look for a great attitude, and people who have the energy, enthusiasm, excitement and the desire to work with a great company," said Bob Wolfe, regional vice president of Staples, the office supply store.
Staples, a 20-year veteran of working in city neighborhoods, opened its first eight stores in Chicago about 18 months ago, and will have 50 stores by 2007.
How do retailers make it work?
Brent Ryan, co-director of the City Design Center, a research center at UIC's College of Architecture, said retailers must adapt to urban realities such as a multicultural population with lower incomes than those in the suburbs, and shoppers who come on foot with carts rather than by car.
"It has been a struggle for many retailers to understand that cities have buying power," he said.
When grocery retailer Food 4 Less, a division of Kroger, opened on Sept. 20, it became the first grocery store in 30 years in the Englewood neighborhood.
Food 4 Less operates on a low-cost model compared with full-service supermarkets. Shoppers bag their own groceries, products are kept in cut-out boxes rather than stacked one by one on shelves, and there are no loyalty cards. The stores employ from 70 to more than 200, depending upon their business volume.
Food 4 Less is "actively looking in virtually every neighborhood" for store sites throughout Chicago, said spokesman Terry O'Neil.
Sears has had stores on Chicago's South Side for more than 80 years.
"Sears feels the Chicago market has always been valuable," said Robert Gartner, Midwest region vice president. "Part of good customer relationships is providing opportunities to residents in the neighborhoods where we operate."