Another two bite the dust.
Last week's news that Loblaw Cos. Ltd. was closing Extra Foods stores in Winnipeg's North End (Main Street and Inkster Boulevard) and another in Steinbach was greeted with what appeared to be a deep resignation.
The closure of a grocery store, especially in an older, inner-city neighbourhood, seems hardly to qualify as news these days. Especially considering grocery stores are doing what banks, dry cleaners, restaurants and other purveyors of goods and services have been doing for years: closing outright, or leaving low-income neighbourhoods for the more lucrative strip malls and power centres of the suburbs. There are so many inner-city neighbourhoods going without grocery stores, the phenomenon has a name: 'food deserts.'
The closure of these latest two stores follows a well-worn path. Loblaw said the stores were no longer viable, which was the same explanation it provided two months ago when the Extra Foods on Notre Dame Avenue was closed. There is good reason to believe this is the hard, sad truth. It appears selling groceries is such a low-margin business, it is impossible to keep underperforming stores in inner-city neighbourhoods.
In the United States, the most recent statistics show a profit margin of just over one per cent; in Canada the margin is just over two per cent. Over the past decade, profit margins on both sides of the border have fallen by half.
What is driving the low margins? Industry analysts believe a weak economy has consumers pinching their pennies, which, combined with fierce competition, has driven down retail food prices in the past four years, even as wholesale costs have increased. This trend gives the grocery chains motivation to take a hard look at the number and location of the stores they operate.
A quick survey of other North American cities facing this problem -- which is to say just about every city on the continent -- has shown almost no progress in reversing the trend. Grocery co-operatives, neighbourhood gardens and smaller independent stores and chains serving specific ethnic communities have helped. In general, however, the loss of the inner-city grocer is a problem that has defied the efforts of policy-makers and lawmakers all over the continent.
Although they cannot be blamed for the harsh economics of the time, big grocery chains can be held responsible for blocking the effective redevelopment of the stores they leave behind. Those facilities are often impossible to repurpose. Even so, the big chains consistently refuse to sell them to anyone interested in selling groceries. So even if another chain wanted to take over the Loblaw properties, it is unlikely the current owner would give up the deed. Safeway has drawn considerable criticism for doing this in the U.S.; Walmart has an estimated 250 abandoned stores across the U.S. it is hoarding.
All of these forces add up to a stubborn, complex issue for government, especially in a city such as Winnipeg that has not shown a propensity for bold or creative solutions to chronic planning woes. Every year, North End and downtown residents are losing means to obtain basic necessities. The implications of this trend are profound.
Although research in this area is still rudimentary, there is strong evidence the absence of conveniently located stores with full grocery offerings means more families are forced to compromise on nutrition, living on fast food or convenience-store staples. Poor nutrition contributes to social and familial problems, higher obesity rates, poorer results in school. These are the trends that help keep inner-city neighbourhoods mired in poverty, violence and dysfunction.
It is impossible to say there is one solution to the chain reaction that starts with something as simple as the closure of a grocery store. Non-governmental groups are doing their part with community gardens and food banks where needed. A handful of co-operatives, such as the North End's Neechi Foods Co-op and Agape Table's low-cost grocery program in the West Broadway area, certainly provide some reason for optimism.
Neechi is an excellent example of government creativity. Supported by a provincial tax credit on shares of the co-operative, Neechi meets the needs of its neighbourhood because the neighbourhood runs it. Lamentably, there are too few Neechis to offset the loss of the large chains and smaller independents.
It may be unfair to expect a private company to stick it out in a neighbourhood that does not provide a return on its investment. That means this problem will require some concerted, focused effort by government.
To date, however, we haven't seen even a half-hearted effort toward finding a more comprehensive solution.
This isn't a new problem, so we can't claim we didn't see it coming. Perhaps this most recent spate of closures will finally inspire someone or something to take steps to help bring food back to the expanding inner-city deserts.