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PRESIDENT CLINTON RELEASES HUD REPORT SHOWING AMERICA'S INNER CITIES HOLD TREMENDOUS ECONOMIC PROMISE
President Clinton today released a Department of Housing and Urban Development report showing that America's inner city neighborhoods - with $331 billion in annual retail purchasing power - hold major economic potential for retail business growth.
The HUD report is titled New Markets: The Untapped Retail Buying Power In America's Inner Cities. It concludes that retailers can find major profit-making opportunities in low- and moderate-income inner city neighborhoods, which it calls "undiscovered territories for many businesses."
"This new report shows that when businesses invest in our nation's inner cities they can increase profits and benefit communities at the same time," the President said. "By working in partnership with business, we can make our strong national economy even stronger and create new jobs and new opportunity for millions of Americans."
The two major findings of the HUD report are:
The report finds that many inner city neighborhoods suffer from "out-shopping." These neighborhoods simply have too few retail stores to meet the demand and tap the buying power of their own residents. As a result, many shoppers make a large number of their purchases in suburban malls, by mail order, and increasingly over the Internet.
The HUD study also highlights two gaps - capital and information - that hold back the growth of inner city economies. The capital gap deprives inner city businesses of the investment dollars they need to set up shop and expand. The information gap deprives businesses of vital market information they need to establish retail stores that can succeed by meeting the shopping needs of inner city residents.
Vice President Al Gore, who chairs the Community Empowerment Board and has played a key role in the Administration's initiatives to revitalize communities, said the HUD report shows that "the best way to reverse decades of decline in America's cities is to attract new businesses and new jobs to bring people and prosperity to every corner of our nation."
HUD Secretary Andrew Cuomo said: "Increased business investment can transform many inner cities from places left behind by the new economy into places leading the way to economic success. This investment will bring shoppers, billions of dollars in consumer spending, and new jobs to urban America."
President Clinton began a New Markets Tour on Monday to visit six economically distressed urban and rural areas that represent untapped markets. The President is leading a bipartisan delegation of corporate CEOs, Members of Congress and Cabinet Secretaries on the tour of communities that can grow their economies if they receive capital investment. The communities are: Annville and Hazard, KY; Clarksdale, MS; East St. Louis, IL; Pine Ridge Indian Reservation, SD; Phoenix, AZ; and Los Angeles and Anaheim, CA.
The President is proposing tax incentives and investment tools that will make it more attractive for corporate America to search for opportunities in inner cities and distressed rural communities. The President's proposals build on Clinton-Gore Administration initiatives that seek to remove remaining barriers to business development in new markets. These barriers include access to capital and technical expertise, as well as better market information.
When joined to existing programs with a proven track record in community development, the President's new initiatives can stimulate private investment and bring the full benefits of America's unprecedented economic expansion to communities in need.
The HUD report said the President's initiatives will "connect Wall Street to Main Street" and "join the great engine of American capital and entrepreneurship to the places where people are ready to work but not yet employed, ready to buy but not yet served adequately by businesses."
The report also says inner cities have many overlooked business advantages, among them: significant and concentrated spending power of large numbers of residents, an available and trainable labor pool, an excellent central location at the hub of metropolitan transportation networks, and underutilized land.
As an example of the business opportunities created by high population density, the report points out: "Harlem's estimated retail demand for food and apparel of $116 million per square mile per year is more than twice the New York metro area rate of $53 million; retail demand per square mile in inner-city Boston is six times as great as in the Boston metro area as a whole; and the Super Stop and Shop store in Boston's inner city is the highest grossing of that company's 186 supermarkets."
The report concludes: "The opportunities highlighted in this report are significant for inner-city neighborhoods and for America. Pent-up, unmet demand - and the density of that demand - in new urban markets, presents us with a chance to further two of our most important goals as a Nation: first, to extend the record-breaking economic expansion by identifying new profit opportunities and room for growth; and second, to extend the fruits of that expansion to all Americans, especially those who have yet to be lifted fully in the Nation's extraordinary rising tide."
The study focuses on the retail buying power and sales patterns in the 539 U.S. central cities - the principal cities of metropolitan areas - and specifically on the low-income, inner-city neighborhoods within those central cities. It highlights the enormous potential waiting to be tapped in economically distressed communities.
The report says "clear profit potential is attracting a handful of major retailers to tap the gold mine of urban markets, often in the inner city. Sears, Roebuck & Company has dramatically expanded its urban presence in the last few years. With annual sales of $75 million to $100 million each, these center city stores are grossing triple the company average. K-mart's SuperK store in Oakland reports sales 50 percent higher than for comparable stores in the chain, and the Foot Locker outlet in Harlem has sales exceeding $1,000 per square foot."
America's untapped markets are not limited to inner cities, the report says. It says the record-breaking economy presents America with the opportunity to boost markets in rural America that have been mired in poverty and joblessness for decades, such as those in Appalachia, the Mississippi Delta, and Indian Country - areas President Clinton will visit on his New Markets Tour. In coming months, HUD will issue a report on the market potential of rural America.
"Thanks to the information revolution and other economic trends, businesses are increasingly mobile," the report says. "A wider array of businesses can reach their customers from strategic rural locations that offer competitive advantages, such as inexpensive land, lower average labor costs, and more."
The report points out, for example, that on the Pine Ridge Indian Reservation in South Dakota, in the poorest county in the nation with a poverty rate of 63 percent in the most recent census, there is $60 million in retail buying power each year. In the Mississippi Delta, where poverty was almost 21 percent in 1995, counties have $95.7 billion in retail purchasing power. And in the counties that make up the Kentucky Highlands in Appalachia, where the poverty rate in 1995 was 33.5 percent, residents have over $1.3 billion in retail purchasing power.
Content Archived: January 20, 2009
Content Archived: January 20, 2009