Long-Abandoned Inner Cities Begin to Attract Major Retailers

Maurice Glass walked down Broadway Street, once a thriving part of this city across the bay from San Francisco and now a wasteland of boarded-up windows and empty lots that serve as evidence of the forgotten inner city.

Glass, a retired Oakland resident, didn’t get far before finding something new--a Sears, Roebuck & Co. store, the first this town has seen since the retailer pulled out in 1993.

“It seems like they’re investing in the inner cities again,” said Glass, a former Sears employee, as he looked at ties and slacks in the new store. “I tell you, I know we need them--and they’re beginning to realize they need us.”

From the major retailer to the regional grocer to automobile and boat dealers, companies are becoming increasingly aware of the value and potential rewards of targeting the minority consumer.

Population statistics, street signs, even an infusion of exotic restaurants, point to the fact that the typical American can no longer be considered white and prosperous. The melting pot is constantly simmering, and companies are increasingly scrambling to get their share of the stew.

Some say it’s about time.

“There was a sense of abandonment when Sears and other retailers pulled out,” said Oakland Mayor Elihu Harris, who attended the new store’s opening on Nov. 2.

“You can see from the crowds here that they’ve been looking for this, and I think it shows there is a real underserved retail market. I would think that logic alone would dictate that you come and service that market and reap the profits that come with it,” he said.

Sears opened seven new stores in that same day in the San Francisco and Los Angeles areas, complementing a return to the inner cities that includes recent store openings in the New York City borough of Queens and in San Antonio, Texas.

Like other companies, Sears is finding the money is there for the taking. The nation’s black and Hispanic populations are becoming more affluent, recent studies found, with a combined spending this year of about $630 billion that outpaces white spending in such areas as cars, children’s clothing and perishable foods.

The increased buying power is expected to become more pronounced in coming years as those minority segments, which typically produce larger families, grow at a faster clip than the general population.

Now, companies are looking anew at markets where they once said they couldn’t make any money. Although the trend is attributed in part to falling real estate prices that make doing business in inner cities more attractive, there’s more to it than that.

“Downtown had been left behind by a lot of people, in fact, left behind by us,” said Sears Chairman Arthur C. Martinez. “Our approach is, as we look at the growing multicultural, multiethnic character of America, we want to do business with all those customers. They’ve got just as much buying power as whites in suburbia.”

And minorities generally tend to be more brand-loyal, which would benefit businesses that move quickly to embrace them, said Ken Smikle, president and editor of Target Market News, a Chicago-based company that tracks black consumer marketing and media.

“For those companies who court black consumers with advertising and special acknowledgment, that rare recognition always pays off in long-term patronage,” Smikle said.

Many companies in recent years have gotten savvy about so-called niche marketing. J.C. Penney, Spiegel, Avon, Hanes and others now have products and catalogs tailored specifically to minority shoppers. Automobile, boat and food companies have begun advertising on predominantly black and Hispanic television and radio stations, and banks are teaming with supermarket chains to open branches in inner-city neighborhoods where both once refused to tread.

Not only are companies coming back, they’re portraying their return as a win-win situation for the community and the business. Many talk about a new commitment to the communities they had abandoned and ask for minority consumers’ commitment to them in return.

“Companies are realizing there are a lot of Good Samaritan aspects by returning to the inner cities, and some are even wondering why they didn’t do it sooner,” said Dr. Audrey Guskey, a marketing expert and professor at Duquesne University. “It helps revive a community by adding energy and a spark, but it’s also a very lucrative opportunity.

“And many companies now realize to get loyal customers and keep them is more important than trying to find new customers,” she said.

It’s the individual touches that seem to matter most for success, urban experts and marketing people say.

Sears, for example, sells a line of clothes called African Village that are designed specifically for black women, with larger sizes and brighter colors. Merchandise at some stores also is tailored to meet the needs of the majority of the clientele, which might include smaller sizes for Hispanic and Asian women and rice cookers for populations with a heavy Vietnamese presence.

Others are going even further. Dollar General Corp. recently worked with the Columbia, S.C., Housing Authority to open a third store near a public housing project, with residents working in those stores. The Nashville, Tenn.-based chain also requires public housing residents working for them to take literacy training programs.

“Our whole company culture is enhanced by these things,” said Cal Turner, the company’s chairman.

“My secret hope is that other companies, other executives will see in this a challenge for them to figure out how to leverage what their business does for the greater good,” he said.

Doing more now might provide for a bigger payoff down the road. The Census Bureau projects that the minority population will grow at a much faster rate than the white population through the year 2020.

The agency said whites by far will make up the largest number of Americans, although not as big a percentage as they do now. The share of the population that is white is expected to shrink from the current 83.3% to 78.2% by 2020.

Immigration and rapid population growth are expected to make Hispanics the nation’s largest minority, totaling 15.7% of the population. Blacks will be the second largest minority at 13.9%, with Asians and Pacific Islanders at 6.9%.

Targeting minority markets is a learning experience for many Fortune 500 companies. Many stereotypes have been proven wrong, particularly about theft and a lack of work ethic in hiring people from the neighborhood, corporate executives say. Even commonly held beliefs about cultural preferences have not been accurate or can vary from region to region, they’ve found.

To help correct those mistakes, companies such as Colgate-Palmolive Co., Ford Motor Co. and Quaker Oats Co. often turn to advertising firms that specialize in marketing to blacks, Hispanics and Asians.

The changing face of America also has executives scrambling to train minorities for jobs in the 21st century. In Illinois, executives from AT&T; and Ameritech Corp. sit on a committee examining ways to keep students in high school and to interest them in high-technology fields.

Bozell Worldwide, the nation’s 11th largest advertising firm, announced in September that it had formed a partnership with Chicago sports and entertainment marketer Stedman Graham to target the $324-billion black consumer market.

The partnership, called Graham Gregory Bozell, hopes not only to target blacks for marketing, but to train them, with the help of black businesses and colleges, for mainstream jobs.