Shopkeepers Fight Back : Blacks Join With Koreans in a Battle to Rebuild Their Liquor Stores

Black merchants are fighting public pressure to limit the rebuilding of liquor stores, joining Korean shopkeepers in a battle that may show that people are lining up along economic, not racial, lines.

Joseph Solomon, president of the Southern California chapter of Cal-Pac, the black beverage and grocers’ association, says his organization will be talking soon with the Korean-American Grocers Assn. to mobilize against the growing campaign to limit the number of liquor stores in southern Los Angeles.

On Wednesday, the City Council voted to require public hearings before the rebuilding of each liquor store, responding to church groups and others who argue that liquor stores are a financial and moral drain on the community and should be limited. The move could delay the start of rebuilding of stores by six months.

“It’s not fair. On top of the loss, to get this is a double hit on the head,” says Shirley Ford, whose store on 103rd Street, which employed seven people, was burned out during the riots.

“It’s anti-business,” Solomon says. “The (politicians) don’t understand a lot of black entrepreneurs are doing a good business.”

More than 60 liquor stores in southern Los Angeles are black-owned. Many were looted and some burned during the riots. Their proprietors say that as taxpaying businesses, they should be allowed to reopen. The corner stores provide essential groceries and baby supplies as well as liquor, they argue.

In addition, black landlords of buildings in which Koreans operate liquor stores fear that the restrictions could hinder their ability to rebuild and collect rent.

John Murray, founder of the Southern California chapter of Cal-Pac, lost the building he owns at Western and 78th to arson. He hopes that the liquor store in that building--one that he used to own and that is now run by a Korean--will be able to reopen.

For all their cultural differences, black and Korean liquor store owners have a lot in common, business people from both groups say. Most Koreans bought their stores from black owners, who taught them the ropes.

Liquor store owners of all races form a weary and wary club who say theirs is one of the most grueling and dangerous--and profitable--retail businesses around.

While the stores are seen by some in the black community as an abhorrent symbol of exploitation by “outside” owners and centers of alcoholism and violence, many successful black merchants see the corner shops quite differently.

For many black entrepreneurs, as for Jewish immigrants before them and Korean merchants after them, the liquor store was a means of upward mobility. In the late 1960s and ‘70s, most liquor stores in black communities were black-owned, according to Solomon. When those owners sold out in the 1980s, mostly to Koreans, it was often at substantial profit.

Today, only a minority of liquor stores in black neighborhoods are in black hands--largely because the owners have retired and their children have chosen to go to college and enter other professions.

“Working in a liquor store is not something you want your kids to do,” says Jerry Smith, who sold his liquor store to open a magazine distribution business.

Conversations with black merchants show that generational change and regulatory shifts in the liquor industry are important reasons behind the enormous--and culturally fraught--shift from black to Korean ownership.

Before 1965, most liquor stores in the black community were Jewish-owned. But after the Watts riots that year, many white store owners fled. A large number of their stores were bought by black entrepreneurs who--for the first time after years of discrimination at banks--found credit available through government-backed loans.

Many of the stores thrived. And Murray is proud that the power of the liquor store owners, who organized product boycotts through Cal-Pac, helped to significantly increase black employment in the liquor distribution industry. Cal-Pac has also awarded more than $800,000 in scholarships to local students since 1973.

But by the late ‘70s, many shop owners were exhausted by the business. “Seven days a week, 20 hours a day, no vacations, people stealing. That’s slave labor. I wouldn’t buy another liquor store,” says Ed Piert, who now owns the Vagabond Bar on Prairie Avenue.

They wearied of the violence too. “I stared down the barrel of a gun nine times” says Murray, describing the terror of robberies at the two liquor stores he owned. He wouldn’t let his relatives work in the stores because of the danger. “I left that business running,” he says.

In 1978 came the last straw for many: Liquor prices, formerly fixed by the government, were deregulated, and volume buyers such as supermarkets and convenience store chains began driving small stores out of business.

Just as liquor store margins began to shrink, Korean immigration swelled. The coincidence of deregulation and immigration created a massive turnover in the liquor business. Because they used cheap or free family labor, Koreans were able to make a profit when some stores with substantial payrolls were struggling to break even.

Black owners were deluged by offers they found hard to refuse. Many took the opportunity to sell their stores and open restaurants, trucking businesses, retail outlets, or to invest in real estate. Some store owners say they had offers from black entrepreneurs to buy their stores, but chose Korean deals because they offered higher prices or involved less credit.

Murray says that businessmen sold stores they had bought in the mid-’60s for two times monthly gross sales--roughly $80,000 at the time, depending on the store--for five times monthly gross, or about $300,000.

Many Koreans had financial resources that black entrepreneurs lacked. Many brought substantial savings with them from Korea. Many buyers also had access to credit from Korean banks, including new, locally based banks they set up. Many used government-backed Small Business Administration loans. Others took advantage of informal Korean mutual-aid financial networks known as kye.

Meanwhile, African-Americans had few black-owned banks to turn to, and faced discrimination at mainstream banks. Many believed that the SBA loans they had fought to make available to minorities were not available to them. Nationwide, 10% of SBA loans in dollar terms went to Asians, including Koreans, and 2% to blacks in 1991. This difference in access to capital, say some black businessmen, fuels frustration in the black community.

“Until banks make loans available to blacks as much as other people, there’s going to be resentment,” Murray said.