business news in context, analysis with attitude

Bloomberg Business Week reports that “after vowing to open more than 1,000 stores selling fresh fruit and vegetables in underserved urban neighborhoods, or ‘food deserts,’ grocers have opened a fraction of them, putting in jeopardy Michelle Obama’s effort to improve food choices for low-income Americans.

“Wal-Mart Stores Inc., which said last July it would have 300 food-desert stores nationwide by 2016, has opened 23 and delayed opening some locations after a backlash from activists. Supervalu Inc., which pledged to double to 2,376 its Save-A-Lot stores, has slowed the pace of openings amid declining sales and scarce financing for its licensees. Meanwhile, grocers are opening stores in wealthier urban enclaves.”

In part, the story suggests, the problems have been created by various problems encountered by the companies - Supervalu is in turnaround mode, and Walmart continues to encounter opposition from highly unionized cities. But there’s also another problem - low income communities, by their very definition, have less money to spend on food, and it is hard to make money with them. That’s tough to rationalize if you are a company already having issues with the bottom line.
KC's View: