Kroger is opening a Ralphs in downtown Los Angeles. It will be the first new grocery store opening up in that part of the city in 57 years.
Kroger is not opening a new store in Detroit and it appears that neither tax incentives nor political bullying is likely to get the chain to build in the city that it left three years back.
Why does the company believe it is worth taking a chance on one inner city location while steering clear of another?
According to the Los Angeles Times, the area where Ralphs is located has been revitalized with upscale bars, eateries and new hotels. The chain is following the upscale trend with its own high-end Fresh Fare format.
Reportedly, Ralphs was surprised to see more than 1,000 people on hand when the store opened its doors to the public for the very first time.
Back in Motown, there is no such joy as locals struggle to understand why Kroger bought 20 Farmer Jack stores recently but none were within Detroit's city limits.
Sam Riddle, chief of staff to Detroit councilwoman Monica Conyers, told The Detroit News, "This is no mystery to us. This chain has systematically and consciously avoided the city of Detroit, and when you look at the demographics, it shows potential institutional racism at the corporate level."
Ms. Conyers, who is the wife of Congressman John Conyers, met last week with Dale Hollandsworth, manager of integrated communications at Kroger, to discuss incentives Detroit might offer to get the grocery chain to open a new location inside the city. The councilwoman has also threatened to use her connection to her husband to seek a federal inquiry into the matter.
David Livingston, principal with DJL Research and a member of the RetailWire BrainTrust, told the News, "If a store can't make it on its own, those tax incentives are worth nothing anyway. It goes a lot further than dollars and cents up front. A store has to know it can make money in the long term. They're not in the business to lose money."
Jane Shallal, president of the Associated Food and Petroleum Dealers, said members of her group were willing to discuss buying Farmer Jack locations and wonders why the city was not discussing tax incentives with them.
Discussion Question: What is the solution to the clear need for well-run supermarkets in communities such as Detroit and the legitimate desire and need for businesses to make a profit?