Win hearts to win sites

March 21, 2011

Retailers get inventive to seed acceptance for locations in new markets.

Stores may covet local markets before residents want them in their confines. Community groups often move against chain encroachment and prefer to support hometown favorites. They also don’t want the traffic, pollution and noise that come with big-box retailers; they prefer to maintain the character and quiet of their neighborhoods.
Some of the usual retailer persuasions include employment and contributions to the local tax base. That’s not always enough when skeptics point out the in-store jobs often pay little and taxes flow only after frequent abatement incentives end. When retailers want to win over a community, they can do so unconventionally.
For example, Duane Reade, the Walgreens-owned chain with a distinct New York City presence, wanted to open in the gentrified neighborhood of Williamsburg, Brooklyn. Locals loyal to a long-standing independent pharmacy launched a social media campaign against the Duane Reade being built across the street, the New York Times reported recently.
Duane Reade positioned its new store as a different kind of destination by offering six kinds of beers on tap and groceries - filling two voids it identified in this local market. A company official told the Times that the average transaction size “had risen since opening, as more people try the beer.”
Meanwhile, Walmart has deployed three strategies that could help offset community resistance: a healthy-foods initiative, lower food prices, and accelerated philanthropy. The food strategies, already widely reported, seem well suited to the struggles so many core customers have today to eat well and affordably.  
Under Margaret McKenna, the Walmart Foundation has stepped up to donate $288 million in 2009, more than any other U.S. company, reported the Boston Globe, citing the Chronicle of Philanthropy. The retailer also became the #1 food donor in the U.S., contributing $192 million in food in the same year, and it gives money to nonprofit groups in new markets it hopes to enter, the Globe added.  Much of this money goes toward hunger relief and education to help make communities more viable.
Time will tell if philanthropy will be a successful long-term strategy for seeding acceptance in dense urban markets. But the two examples in this story underscore the importance of understanding needs in targeted neighborhoods and addressing them.