A Market Looking for Legitimate Businesses : Retailers are making a mistake by writing off central cities
When flames pierced the skies of Watts in August, 1965, a curfew was imposed. The curfew was not confined to the blocks on fire. It applied to any area in South Los Angeles where African-Americans lived: 20 square miles, as far north as what was to become the Santa Monica Freeway. Any place blacks could be was officially deemed dangerous; “citizens,” news reports said, were warned their safety “could not be guaranteed there.”
The official curfew on that 20-square-mile area was dropped after the riot, but an unofficial economic curfew remains in 1991, choking the life out of that community as surely as fire did. As the four-part Times series “Abandoned Consumers: Flight of Business From South Los Angeles” so clearly points out, people continue to pay a dear price for just living in South Los Angeles.
One of the bad long-term consequences of the urban uprisings of the 1960s was that major retailers began to write off central cities, judging them too risky--too much crime, too many high insurance bills. As the exodus of fleeing business sucked the economic lifeblood from the central city, the prophecy became self-fulfilling. Crime and organized gang activity could thrive, in effect, as replacement industries. Retailer flight typically followed residential white flight; again, the assumption was that as whites moved, they took all buying power with them.
But that isn’t true. For example, median income in the predominantly black city of Inglewood is higher than in North Hollywood. Yet even when there are profits to be made, most major retailers stay away from neighborhoods perceived to be black--even as some of those areas are becoming less black and more Latino.
When business decisions are made not on the basis of economics but of racial stereotyping that’s not business, that’s idiocy. Legitimate money-making opportunities are being lost daily in South Los Angeles. And consumers are paying tourist-trap prices in their own neighborhoods, too often economic hostages of rapacious merchants who at least understand the one color that matters in business: green. That’s a lesson in basic economics apparently never learned by some sporting goods executives, to cite one telling example, who refuse to consider bringing their stores into the Baldwin Hills-Crenshaw Mall. The mall, mere blocks from half-million-dollar homes, has had trouble attracting major retailers. The excuses: “These people don’t buy our full line of merchandise. They don’t ski.”
Tell that to the many members of black ski clubs in Los Angeles. Many of their members live in affluent communities near the mall. A good marketing research team would know that--and capitalize on it.
There is poverty and crime in South Los Angeles. There also are affluent and working-class people. Smart business should look there and see a large market of consumers with routine needs and special needs waiting to be filled. The bottom line, as an executive of one of the few grocery chains in South Los Angeles put it: “I’ve never found it unprofitable.” And who knows, beyond profits, there just might be a big societal benefit when major retailers rediscover South Los Angeles.
