Len Lewis
Food Deserts
June 2012

… If you’re looking for a topic that’s sure to start a heated debate —just drop the phrase food deserts.
… At this point, virtually everyone concedes they exist.
… But there are vast differences of opinion on how they should be defined and where they are located. 
… In general, consultants, academics and politicians identify a food desert as any area where access to healthy, affordable food is extremely limited or virtually non-existent because supermarkets could no longer justify the cost of operation.
... No matter the reason, the result is always the same. With no other choice, consumers have to rely on corner stores, bodegas, dollar stores and even gas stations for their groceries.
… To position food deserts as an opportunity for private label would be a mistake, according to observers. But they do believe store brands will be an integral part of the solution to what is a national problem.
… Statistics vary, but the USDA Department of Agriculture’s Economic Research Service estimates that nearly 25 million Americans live within food deserts—a population that is most at risk when it comes to diet-related health problems like diabetes and obesity.
 … However, experts emphasize that food deserts are part of a broader problem—dysfunctional communities that have become “commercial deserts”, with no banks, pharmacies, groceries, opticians, healthcare or other outlets that serve residents on a day-to-day basis.
… And food deserts are not limited to lower-income inner city areas like East L.A., North Chicago or East St. Louis. They exist in rural areas from Maine to California and virtually every state in between, according to the food desert locator published by USDA.
… Clearly, this is a socio-economic problem that’s not going away any time soon, but store brands will be a big part of the solution, according to industry experts. In fact, they are convinced that store brands will take center stage as retailers open more stores in food deserts.
… For one thing, it’s a logical way to provide high quality products at more reasonable prices to income-strapped consumers.
… Additionally, stores with a greater proportion of private label would be in a better position to offset the higher costs associated with stores in these areas.
… In other words, store brands make these projects more economically feasible.
… Walmart has already identified areas like Chicago as fertile grounds for growth, plans to open as many as 300 stores in USDA-designated food deserts over the next five years. This is an urban and rural strategy that includes the Walmart Express and Neighborhood Market formats, both of which are heavily supported by store brands, according to observers.
… The same is true for Save-A-Lot, owned by Minneapolis-based Supervalu.  Company officials say they plan to build over 250 food desert stores over the next five years. On average, private label accounts for over 60% of store sales.
… Walgreens is converting or opening 1,000 stores in underserved communities over the next five years in order to create what they call a “Food Oasis”.
… Dollar General is opening its DG Market stores in metro and rural food deserts. The chain estimates these stores will produce annual sales of $4.5 million each compared with the current $1.4 million.
... It’s all a good start and industry sources agree the right mix of store brands can help make it a success. 

Reporting for PLMALive!, this is Len Lewis.