Walmart’s Fresh Food Makeover

Walmart’s Fresh Food Makeover

Can the retailer known for its poverty wages solve the problem of urban “food deserts”?


On a map of “food deserts” in Chicago, a red bow-tie-shaped splotch covers parts of Englewood, a historically working-class neighborhood on the South Side.

I’m driving through that zone with the man leading the city’s efforts to bring fresh food to communities that need it—Mike Simmons, the policy director for Mayor Rahm Emanuel. We pass brick houses, many decent and neat, but others boarded-up casualties of the foreclosure crisis. On a side street, two men push a shopping cart piled with heating ducts and other metal fixtures, likely stripped from vacant buildings. Empty lots dot blocks lined with storefront churches and chicken-wing stands. We pass a couple with a cooler and a half-dozen pump bottles for snow-cone flavoring. We pass many corner stores with signs that read Food and Liquor.

We don’t pass any supermarkets.

The residents here are just a fraction of the 23.5 million Americans living in areas with no easy access to fresh food, according to government estimates. As cities like Chicago try to expand food access, vanquishing such areas—now labeled food deserts—has also become a matter of national policy. The Obama administration has pledged to eradicate food deserts by 2017, in the hopes that increasing access to healthy food will stem the country’s obesity and diet-related-disease epidemics and create new jobs in the process.

In this effort, some policy-makers have turned to a surprising—and controversial—corporate partner: Walmart.

In July Michelle Obama announced a joint plan by Walmart, Walgreens and SuperValu, along with three regional chains, to open 1,500 new stores in food deserts across the country. Walmart, the nation’s largest grocery retailer, plans to open more than 275 new stores by 2016 in neighborhoods it claims are underserved. At least a dozen will be in Chicago, where the giant was one of a handful of chains invited to the mayor’s food desert summit. There, the city touted various spots, including one on the fringes of Englewood’s food desert, as ripe for development. Simmons is in talks with the chains and working to put together packages of financial incentives, zoning amendments and other accommodations to seal the deals.

“When they know that’s the entree that we’re bringing to them, it tends to yield a very productive conversation,” he says.

As Walmart positions itself as an expedient solution to the food desert problem, critics question whether a retailer known for fostering a low-wage economy and driving small stores and union groceries out of business is a viable ally in the effort to help struggling communities get access to affordable, decent food. The food desert problem, these critics contend, is more about poverty than grocery stores. Some argue that the retailer’s newfound interest in food deserts is a public relations push designed to help it finally gain entry into lucrative urban markets from which it has long been excluded, thanks to grassroots opposition.

LaDonna Redmond, a longtime food justice advocate who leads the Food and Justice Program at the Institute for Agriculture and Trade Policy, puts it bluntly: “Walmart is using the term ‘food desert’ as a Trojan horse to get into our communities and bring about more corporate control of our food system.”

* * *

The USDA defines a food desert as a low-income census tract in which more than 500 people or 33 percent of the population live at least a mile from a supermarket that does at least $2 million in annual sales. In rural areas, anyone living ten miles from such a store is in the desert.

But some community food activists say this measure defines the problem in a way that means that only large grocery stores can solve it. It does not account for the grassroots food infrastructure, made up of food hubs, farmers’ markets, co-ops and farmstands, which have multiplied in recent years as the local food movement has gained traction.

“If we define it based just on USDA data, it’s pretty much not just supermarkets but chains,” says Daniel Block, a Chicago State University geography professor who has studied and mapped his city’s food deserts. Some cities, such as Chicago, use more detailed data to map their food deserts.

The term food desert is also contested—it masks the structural causes of unequal access to food, such as racial, social and economic inequality, says Orrin Williams, executive director of Chicago’s Center for Urban Transformation. “The term food desert creates a notion in people’s heads that the only problem is food and food access. But there are no bookstores in these neighborhoods. There are no cultural institutions, no arts institutions. The schools are in bad shape, and people have fears, founded or unfounded, for their safety,” he says.

Calling neighborhoods deserts may also reinforce the idea that poor communities have no resources on which to build and need to be rescued by some outside force, says Williams. Other terms have been proposed: “food swamp,” “grocery gap,” “food red-lining,” “food apartheid.” But as some activists contest the food desert label, many policy-makers and grocery chains have run with the term—and none more than Walmart.

A segment of the Walmart Report, a series of videos produced for the company’s New York City web page, opens with a polished yet hip host asking, “Do you know what a food desert is?” With a sympathetic grimace she says, “Well, chances are, you’re living in one.”

She details the health risks of living in a neighborhood where double bacon cheeseburgers are easier to get than broccoli. Then the tape cuts to an image of young girls of color walking in a gritty tableau of tire shops and smokestacks. Three million New Yorkers live in food deserts, she says, and Walmart wants to change that by opening new stores.

The chain has been trying to crack New York City’s tantalizingly large market for years. So far, public opposition has kept it out. But its new focus on food deserts, Walmart-watchers say, is part of a charm offensive aimed at winning over urban consumers so Walmart can enter the blue cities on the coasts and Chicago, where buying power is concentrated.

Walmart is struggling domestically, and cities are its only chance for US expansion. The chain is in no danger of going out of business, or even losing money, but its business model has always depended on rapid growth, explains historian Nelson Lichtenstein, author of The Retail Revolution: How Wal-Mart Created a Brave New World of Business. But that growth has slowed to a crawl. Walmart’s stock prices have been flat for a decade, and its US sales have declined for nine quarters in a row. Its core customer base, those with household incomes of $30,000 to $60,000, has yet to recover from the recession. Production costs are going up as oil and commodity prices rise and the Chinese yuan gains on the dollar. The company has also so fully saturated suburban and rural markets that to open more stores in these areas would mean cannibalizing its own business.

At its 2010 shareholders meeting, Bill Simon, CEO of Walmart U.S., outlined plans to enter urban markets through “less expensive, less intrusive stores.” On average these stores are about a fifth the size of the chain’s trademark hangar-sized Supercenters; they range from 3,000 to 62,000 square feet and are modeled after the company’s stores in Latin America. They are easier to fit into urban areas where real estate is tight, and they may generate less opposition than the larger stores.

But resistance to Walmart in blue-state cities has had less to do with the store’s footprint than with its low wages and impact on local business. So over the past several years Walmart has been reinventing itself as more cosmopolitan and urbane. It hired Leslie Dach, a former staffer to Al Gore and Ted Kennedy, as vice president of corporate affairs. It has made high-profile sustainability efforts and charitable donations in dozens of urban markets. The company endorsed the Obama administration’s healthcare plan. Dach even went on The Colbert Report in January to talk about the company’s plans for cutting produce prices.

And since Walmart has positioned itself as a key player in eradicating food deserts and creating jobs in poor neighborhoods, it’s landed its greatest public relations coup yet: in January, in a historically black Washington neighborhood where the chain wants to open stores, Michelle Obama stood before a giant Walmart banner and overflowing produce bins and endorsed the chain’s new plan to cut prices on healthy foods and open stores in food deserts.

Walmart’s public opinion numbers have risen in recent years, Lichtenstein says. But the charm offensive hasn’t entirely blunted the opposition. A Washington coalition of labor unions, small businesses and clergy is trying to force the chain to sign a community benefits agreement requiring it to observe wage, hiring and environmental standards. Similar groups in New York are fighting to keep the giant out entirely.

Along with better access to food, Walmart emphasizes how it will bring jobs to urban communities in dire need of them. But evidence suggests that Walmart’s expansion into poor urban neighborhoods won’t lift people out of poverty; it may even deepen the crisis by depressing wages and replacing existing jobs with lower-paid ones, as union and independent businesses fold or cut costs to compete with the chain.

Grocery store jobs were once an avenue to the lower tiers of the middle class—if a worker held a union job for twenty years, he or she would have a decent pension and be able to afford a house, says Lichtenstein. Those days are dwindling, as Walmart expands and other chains emulate its model. “The new standard is clearly a cut below what had been the case when the dominant players in the industry were unionized grocery stores,” he says.

* * *

Part of the way Walmart achieves its low prices is by paying rock-bottom wages. In 2005 its workers made about 17.5 percent less than workers at large grocery stores and 14.5 percent less than workers at discount retail chains overall, according to the Center for Labor Research and Education at the University of California, Berkeley. Its jobs offer little mobility—the company capped wages for many employees in 2006; and 1.5 million current and former female Walmart employees brought a class-action suit that charged it with denying them pay raises and promotions because of gender discrimination (the suit was largely dismantled by the Supreme Court in a 5-4 ruling in June).

Walmart also shifts many of the costs of its low wages onto the public. Missouri, Massachusetts and Wisconsin have shown that the retailer tops the list of employers whose workers depend on publicly funded safety-net healthcare for the poor. A 2004 UC Berkeley study found that the families of California Walmart employees used 38 percent more in public assistance programs like food stamps, subsidized housing and school lunches than those of employees of other large retailers.

When Walmart opens a new store, it holds splashy, camera-ready job fairs. But when a store has been open for a while, staff levels are reduced to a skeleton crew, as managers attempt to meet the company’s demands to sell as much merchandise as they can with as few workers as possible. This business model, coupled with Walmart’s tendency to put other retailers out of business, eliminates three jobs for every two it creates, reducing retail employment by an average of 2.7 percent in each county the chain enters, according to a 2007 study by the Institute for the Study of Labor at the University of Bonn.

Still, despite this mountain of evidence, it’s hard to counter the impression that Walmart brings jobs. Elected officials are under tremendous pressure to create employment opportunities, says Stacy Mitchell, a researcher with the New Rules Project and author of Big-Box Swindle. “They want to be at those ribbon-cutting ceremonies. When you have an empty lot that becomes a store, and now there are 250 people working there, it certainly looks like you’ve created jobs.”

* * *

Moreover, amid the push to bring grocery stores into areas without them, one thing has been missing: firm evidence that opening supermarkets actually helps increase people’s consumption of healthy foods. In fact, research published in the Archives of Internal Medicine a week before Michelle Obama’s July announcement reached the opposite conclusion: “There’s no evidence that building supermarkets will change people’s diets,” said the study’s lead author, Barry Popkin, who directs the Nutrition Transition Program at the University of North Carolina and headed the Institute of Medicine and National Academy of the Sciences committee on the public health effects of food deserts.

For fifteen years, researchers followed more than 5,000 people living in low-income, obesity-prone parts of four cities. They found that affordability, not access, seemed to be the key factor in improving people’s diets. Popkin’s previous research showed that poor people ate the healthiest diet in the 1960s and ’70s. “The poor ate beans and vegetables…. The rich ate meat and butter,” he says. Now, of course, the situation is largely reversed. Instead of creating incentives for new supermarkets, Popkin contends, limited public funds should be helping existing small stores make produce more affordable, as Philadelphia and New York have done.

But if affordability is the key factor in healthy food consumption, couldn’t Walmart, with its cost-cutting prowess, play an important role in making sure poor people can afford healthy food? Recent studies have shown that the chain’s products aren’t always much cheaper than its competitors’, like Target. Lichtenstein says Walmart has a small price advantage over other retailers, but it is “not dramatic.” Even if Walmart is able to offer cheaper apples than its competition, says Lichtenstein, that’s little consolation if the company’s net effect on a community is to depress wages and reduce the number of jobs. “If you want to buy medical insurance or go to college or buy a house, it’s better to have higher wages than cheaper groceries,” he says.

Jennifer Stapleton, assistant director of the United Food and Commercial Workers’ Making Change at Walmart campaign, says Walmart as a solution to food deserts is a shortsighted solution to a long-term problem. “Why are there food deserts? Because people are poor,” she says. “Having Walmart come in isn’t creating careers that will lift people out of poverty. It will keep people in poverty.”

Sheelah Muhammad grew up bagging groceries at her father’s supermarket on Chicago’s South Side. Now she’s standing at the counter of Fresh Moves, a city bus that’s been converted into a produce market on wheels. “This is full circle for me,” she says.

The bus could easily fit in a single Walmart aisle, and on a humid day in July is only in its sixth week of operation. But business is brisk. Runs on collards, mustard greens and fruit have already sent staff back to the produce wholesaler twice to replenish the bins that stand where the seats once were. A half-dozen shoppers crowd the bus, inspecting produce.

“It’s a cycle,” says Muhammad, a Northwestern University MBA who used to work for Oprah Winfrey’s philanthropic foundation and founded Fresh Moves with two other community activists. “The chains have been gone for so long, and now they’re trying to get back in,” she says.

In fact, Chicago’s only Walmart Supercenter is just over two miles from where Fresh Moves operates. (A smaller-scale Walmart Express opened elsewhere in the city in July.) Muhammad says she’s not against Walmart’s expansion—the issue of unequal food access is broad enough for multiple approaches. But she thinks community-rooted approaches will have better staying power. “What happens when these stores decide to leave again? Or when they have another shift in corporate strategy?” she asks.

Muhammad’s project is just one of hundreds of community projects that have grown out of the food justice and local food movements and are rebuilding local food infrastructure in underserved areas. Though these projects don’t fit the USDA’s definition and thus do not appear on its food desert map, they’re multiplying fast; at least 1,400 independent grocery stores have opened since 2002, according to the New Rules Project, and the number of farmers’ markets nationwide has more than doubled during that time, USDA data show. Meanwhile, the National Cooperative Business Association reports a “tremendous resurgence of growth in food co-ops”—only 350 such co-ops exist nationwide now, but another 300 are in the planning stages.

One of the best examples of how public policy can nurture these sorts of local food projects and increase food access and jobs along the way is Pennsylvania’s Fresh Food Financing Initiative. Since 2004 the program has increased food access for more than 500,000 people and created or saved 5,000 jobs by extending loans and grants for projects that bring fresh food to underserved areas, or help existing retailers expand their healthy food offerings. Though chain retailers aren’t excluded, all the projects it has funded so far have been independent or small regional chains. In 2010 Michelle Obama announced the creation of a federal fund modeled after Pennsylvania’s program. But Congress failed to fund the $400 million per year program this year, so it’s operating with $35 million drawn from existing federal funds. The administration will request an additional $330 million in 2012.

New York City has supported the introduction of produce carts into food deserts and is working to help local bodegas stock fruits and vegetables. A number of programs across the country provide incentives to low-income families to spend at farmers’ markets, such as Michigan’s Double Up Food Bucks. Chicago, in addition to courting large chain grocers, has revamped its urban agriculture policies to encourage city farming and is working with the public health department to increase nutrition education. And many cities, such as Boston, New York and Portland, have added food policy coordinators, responsible for overseeing efforts to increase food access.

But eventually policy-makers must decide whether they will throw their weight behind corporate or local solutions to the grocery gap. The future of the burgeoning local food movement may hinge on whether cities decide to let Walmart in, says Big Box Swindle author Mitchell. If Walmart is able to replicate the dominance it has in suburban and certain metro areas, it may stop local food systems from developing, she warns.

“The larger the presence of Walmart in grocery markets in cities, the fewer opportunities there are for anything else,” she says. That means the chain could prevent the creation of new small businesses. “Starting a small retail store in your neighborhood or getting a job at a factory that is a union job have been two of the really important pathways into the middle class, and those avenues are being cut off by Walmart,” she says.

After a day of selling mustard greens and mangoes from the bus, Dara Cooper, Fresh Moves project manager, hops off to do a little neighborly arm-twisting in a hyperlocal effort to bring healthier food to the neighborhood.

She walks a half-block to the nearest corner store where she’s trying to guilt-trip the manager into carrying healthier food.

Pausing outside, she glares at the windows plastered with advertisements for liquor. “We talk about choices in low-income communities, but we have to think about the environment and how it is shaping our realities,” she says.

Inside, people are lined up to buy cigarettes, chips and beer. The only produce in the place appears to be a half-dozen cans of fruit on a shelf at knee level. The clerk is wedged between a wall of liquor and a bank of candy and studiously avoids Cooper’s eye. With a cherubic smile she sidles up to the counter. “Remember me?”

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