Poor Penalized as Food Chains Exit Inner City : Residents Face Long Trip to Supermarket or Higher Prices at Remaining Independents

Low-income residents of South-Central Los Angeles pay some of the highest prices in the area to buy food at small neighborhood stores because lower-priced chain supermarkets are abandoning the inner city for the suburbs.

The migration of supermarkets from the inner city--which began after the 1965 Watts riots--has accelerated in recent years as owners have embraced larger stores and closed smaller ones in the wake of industry mergers. The number of supermarkets in South-Central has dwindled to less than 30 from about 55 in 1965. Nearly half of that loss--11 markets--occurred in the last six years, according to telephone book listings.

As the trend has quickened, it has begun to severely limit access to food for some of the region’s poorest residents--a problem that could eventually prove as intractable as finding housing for the homeless, some observers say.

Today, neither Lucky’s, Vons and Alpha Beta, nor smaller outfits such as Mayfair, operate a single store in a nearly 50-square-mile area of Los Angeles stretching from the Santa Monica to Artesia freeways on the north and south, and Alameda and Crenshaw boulevards on the east and west. They have left this area of mostly poor black and Latino residents to smaller markets and a few independent stores--operations that a committee of Congress said charge prices that are 20% to 30% higher than supermarkets.

‘Classic Example’

“South-Central Los Angeles has become a classic example of supermarkets deserting the inner city,” said John Mack, president of the Los Angeles Urban League. “Black people and the poor find themselves continuously being victimized by problems of racism and economic class discrimination. . . . These chains need to understand that poor people have to eat too.”

“Stores live and die on their economic performance,” responded Vons spokeswoman Vicky Sanders, when asked to comment on why Vons closed several inner-city stores. “Having just acquired (172 Southern California stores of) Safeway, we are being very cautious and conservative about opening brand new stores” and keeping existing ones.

Almost unique among businesses, supermarkets--with their community bulletin boards trumpeting yard sales and lost pets, and their checkout aisles as havens for neighborhood small talk--have become important economic and social fixtures on the American landscape. Thus, image-conscious chains are sensitive about closings. The chief executives of only two chains in Southern California--Boys and Ralphs--agreed to discuss the situation with The Times.

Wrestle With Issue

But privately, officials have wrestled with the issue for years and the phenomenon is not confined to Los Angeles: a dozen supermarkets have abandoned central Newark, N.J., since the 1967 riots; in Boston’s low-income Roxbury section, the nearest supermarket is two bus rides away; and so many supermarkets have left Washington, D.C., that City Councilman John Ray has introduced legislation granting tax breaks and other subsidies to lure them back.

The loss of supermarkets, however, is especially acute in sprawling Los Angeles, where limited public transportation makes access to stores difficult for those without cars. Although at least three new supermarkets have been built in the inner city of Los Angeles in recent years--including Willowbrook, Compton and the corner of Vermont and Slauson avenues--the loss of existing stores far outpaces the new construction.

Meanwhile, efforts to address the issue--including so-called “enterprise zones” and other government inducements--have produced little change, experts say. Many government programs take years to get off the ground, they say, and often end up attracting merchants who already have stores in the area rather than new businesses.

‘Very Real Problem’

“The difficulty of obtaining food continues to be a very real problem for people on the fringes of poverty and the working poor,” said Patty Morris, research director of Public Voice, a Washington consumer group that follows food policy making. “They are being economically penalized. . . . The situation is disturbing,” she added, likening it to “the disappearance of the family farm.”

In a report called “Obtaining Food: Shopping Constraints on the Poor,” the House Select Committee on Hunger found early in 1988 that many low-income residents are not within walking distance of a supermarket and must patronize smaller independent stores whose prices are 20% to 30% higher than chains. Thus, the report said, poor families may spend up to 61% of their weekly budgets on food. The average U.S. consumer spends 15% to 20%.

Supermarket owners, most of whom operate on razor-thin profit margins of less than 2%, cite high insurance, security problems and outmoded stores as the reasons for their migration to newer, usually more affluent suburbs. Most new supermarkets are 40,000 square feet or more, compared to about 20,000 for older stores. Thus, chains favor the suburbs for cheaper land and perceived better control over operational hazards such as crime.

Have Closed Outlets

To be sure, the chains have also closed stores in middle-class areas such as Los Angeles’ Westside. But in those cases, rising real estate prices and expanding high-density commercial districts proved irresistible lures to sell out to developers.

“The reason we had to close stores in the central cities is because of their (small) size,” said Byron Allumbaugh, chairman of Ralphs Grocery. “The only reason we close stores any place is because they are small, obsolete and inefficient.”

Allumbaugh said independent stores enjoy cost savings because they do not have a unionized labor force, although Boys Markets--a chain that has expanded in the inner city with unionized labor--does not consider wages prohibitive.

In addition, Allumbaugh said, low-income shoppers typically buy more lower-profit products such as milk and bread, and fewer higher-profit items such as cooking utensils or other non-foodstuffs. Yet some grocery owners find substantial demand for non-food items such as clothes and toys because inner-city shoppers are not able to easily get to other stores.

Finally, Allumbaugh said, there is crime. “I’ve been to the funeral of four of our employees who have been shot and killed” while working in Ralphs stores in South-Central. “You can’t expect us to operate in that kind of environment.”

Migration Not New

Although it appears to have accelerated, the migration of supermarkets from inner cities is not new.

In 1979, the San Francisco-based consumer action group Public Advocates asked California and federal officials to develop programs to lure supermarkets back to the inner cities.

The federal government never acted on the request, which, among other things, sought the development of joint ventures between grocers and community groups to improve the availability of moderately priced food. For example, the California Department of Food and Agriculture agreed to open farmers’ markets in Watts and Oakland in 1980.

That experiment did not last long. The Oakland farmers’ market closed in 1982; the one in Watts stayed open only four weeks--victims of poor publicity and lack of community involvement, program administrators and consumer groups agree.

“There just hasn’t been a commitment to this problem,” said Lois Salisbury, a Public Advocates lawyer who led the petition effort. “A bad situation has been allowed to become worse. There are far too many pockets in inner cities where there is nothing--no grocery stores at all.”

Shoppers Hardest Hit

Hardest hit by the closures in the inner city are shoppers such as Christina Dixon, 75.

Once, she could walk from her Vernon Avenue home to a Vons store about six blocks away on Martin Luther King Boulevard at Crenshaw Boulevard. But since it closed in 1986, Dixon has to take two buses to reach a Boys at 3970 Crenshaw Blvd. or an ABC Market on Martin Luther King at Western Avenue.

“I’ve been living in this neighborhood for 11 years but I can’t get around like I used to,” said Dixon, a retired domestic worker. “When they had that Vons up there, it was real nice. Now I have to get on the bus with those heavy packages. . . . It’s a big inconvenience.”

The Vons store was leveled to make way for revitalized Baldwin Hills Crenshaw Plaza, but the chain said it will not return despite unofficial estimates that its Baldwin Hills store was doing $15 million in annual sales--about three times the average for a store of its size.

“We have no intentions of returning to that site,” Vons spokeswoman Sanders said of the location, which was cleared to allow any supermarket operator to build a more modern facility. Sanders would not confirm the estimate of annual sales. But Boys Chief Executive Peter J. Sodini, who calls the $15-million estimate conservative, said the location is “among the most desirable in Los Angeles.” Boys, the only chain to expand its operations in South-Central Los Angeles in recent years, is seeking to build a store there, he said.

Prices Often High

Where stores do remain open, prices are often high and selection limited.

Tong Chau, assistant manager at the tiny John’s Market at 10826 Central Ave. in Watts, for instance, said his prices average 20% higher than major supermarkets because of high insurance costs and his inability to buy in large enough volume to obtain discounts. In fact, he said, he buys some items at retail from area supermarkets that are too far for neighborhood residents to easily reach by foot and resells them in his store.

Although it is about twice the size of John’s Market, the independent Blue Star Market at 2701 Vernon Ave. does not stock cheaper house brands or generic products as many major markets do. And national brands are no bargain. A can of Green Giant corn sells for $1.09, about twice the price at major chains. Owner Kim Yong declined to comment.

High prices are not confined to small independent operators. Boys, which has about 20% of its 55 stores in South-Central, acknowledges that its prices are higher than other chains.

An October study of Southland chains by the California Public Interest Research Group, a consumer organization, found that someone paying $100 at Lucky’s would have paid $109.40 at Boys for the same goods. A 1987 survey by the group found that Boys’ markets in South-Central were especially pricey. A basket of goods bought in the Watts store cost at least $5 more than at Boys in El Monte or Marina del Rey.

Disparity Explained

Boys officials said prices are higher in their stores where theft, crime and liability lawsuits are more widespread.

“In a high-crime area, costs will be substantially higher if you’re going to provide a secure shopping environment,” Boys’ Sodini said. “Our prices are fair. But we’re never going to be the lowest-priced chain in town.”

Unlike Boys, the largest chains have been reluctant to raise prices at inner-city stores to reflect the higher cost of doing business there. They have also been reluctant to alter their product mix to include more of the non-food items such as clothes, toys and other high-margin household goods that have enabled some inner-city supermarkets to remain profitable.

Although there is some price and product variation from store to store--advertising, pricing and product selection are generally kept consistent. Officials say that approach is more efficient than having separate efforts for each facility. What’s more, some chains fear that they will be accused of discrimination.

‘It Wouldn’t Look Right’

“It wouldn’t look right to charge cheaper prices in Beverly Hills than in Watts,” Allumbaugh said. “Unfortunately that doesn’t solve a very real problem” of inner-city residents having access to lower-cost grocery stores, he added.

Los Angeles City Councilwoman Ruth Galanter, who said she has heard widespread concern about the issue from her 6th District constituents, plans to meet with supermarket owners. But she said there are no easy solutions to improving access to food. “You can’t order these people to keep their supermarkets open,” she said.

State Assemblywoman Maxine Waters (D-Los Angeles), who represents the 48th District in South-Central Los Angeles, is even more pessimistic: “There is a lack of competition and (owners) won’t invest their capital,” she said. “I don’t think there is any legislative solution.”