Much of New Orleans remains a scene of devastation one year after Hurricane Katrina ripped through the city, overwhelming its levees and washing away the hopes and dreams of thousands.
The rebuilding continues (more in some places than others) with many retail chains having reopened stores and, in some cases, building new ones.
Why, some wonder, would retailers build new stores in a city where large segments of the population have yet to return?
Herb Tyson, vice president of state and local government relations with the International Council of Shopping Centers (ICSC), has the answer. "Most large scale suburban retail development is done. So the inner cities have become the new hot retail market. It's a market that has a lot of potential but it's still largely underserved," he told CNN/Money.
But, why build in New Orleans? Haven't retailers seen the many obstacles the city has yet to overcome?
According to Deidre Coyle, a spokesperson for the Initiative for a Competitive Inner City (ICIC), "Gateway cities like New Orleans are more attractive retail markets because merchants realize they can pull customers both from local residents and from tourists."
Other cities that may be less of a tourist destination than New Orleans, said Ms. Coyle, but they too represent a major opportunity for retail businesses.
For one, inner-cities with 21 million consumers across the country represent a $90 billion retail market.
Many of these consumers, contrary to popular belief, have financial means with 38 percent falling into the moderate to middle income category ($20,000 - $50,000 a year).
The density of consumers in inner-city areas also works to the advantage of retailers, according to Ms. Coyle, because "inner-city residents with lower per capita income tend to spend a higher percentage of that income on retail purchases."
Research from the ICIC, shows that a grocery store in the suburbs of New York needs to bring customers in from a 20-mile radius to match what it can get from a 10-block radius in the city.
Once retailers begin to build in inner cities, said Ms. Coyle, there is a rolling effect that takes place.
"Harlem is a great example of successful inner-city retail penetration," she said. "Once the mass market retailers went to Harlem, we started to see the next wave of business activity develop through new hotels, restaurants and other types of retailers selling better-quality products."
Not looking to sugar-coat things, Ms. Coyle said retailers need to be aware of challenges that will inevitably pop-up with opening an inner-city store.
"Unfortunately, retailers get caught in a quagmire of regulations and city and community politics. But then again, the most successful business models are established in collaboration with everyone involved."
Space for stores is also an issue. "If you can't find space, build vertically and make smaller stores. Inner cities are heterogeneous markets with various ethnic and income groups. You can't have a one-size-fits-all model here," she said.
Burt Flickinger, managing director with Strategic Resources Group, said drugstore chains have done a "brilliant job in positioning themselves to cater to the urban inner city markets."
"Between 35 and 40 percent of their stores are devoted to conventional supermarket categories like dairy, foods and other refrigerated products even though they operate as drugstores," he said. "These companies almost operate as mini supermarkets in inner cities."
Discussion Questions: Please give your view on opportunities and the challenges faced by retailers looking to open stores in inner-city neighborhoods. What retailers, in your opinion, have done the best job of operating in the inner-city?