I found a new magazine today - New American City. What a great magazine! I am attaching a recent article in the magazine.

Issue 9 - Segregation & Integration - November 2005
CORPORATE RETAILERS AND THE AMERICAN GHETTO: How Starbucks May Help Save South Central
by Josh Sides



The recent opening of a Starbucks in the notorious Los Angeles suburb of Compton may offer area residents much more than a three-dollar latte. It is, of course, another example of the decade-old trend in which major corporate retailers target "urban markets" in America's poorest minority communities. But the project, a joint venture with Magic Johnson's ambitious Johnson Development Corporation, might also be a blueprint for an entirely new way of thinking about inner-city revitalization: a way that emphasizes civic discourse just as much as it employs more traditional paths to revitalization, like economic development. Recent Economic History Since the 1960s, policymakers sympathetic to the plight of African Americans and other minorities have sought to expand both employment and consumer opportunities in America's ghettos. However, four decades of well-intentioned federal and local employment initiatives have failed to mitigate the decline of decent jobs in inner cities. In South Los Angeles, the historic home of greater L.A.'s black community, this decline is particularly apparent in the flight of thousands of unionized automobile and steel jobs from the regionUs manufacturing center. While South L.A.'s manufacturing base has continued to grow, it has not grown in ways that portend an economic revival for the region. Well over half of the regionUs manufacturing employees work in low-paying and non-unionized apparel and textile industries, and thousands more toil away in food processing plants. Far worse than the inferiority of jobs has been their scarcity: the unemployment rate among African Americans is now about twice that of all workers, and far higher for black youth. Until recently, things were hardly better for inner-city consumers. Inner-city retail had begun to decline across America in the 1950s, when white flight and urban decay destabilized the market. In Los Angeles, the 1960s were marked by violent riots, which scared off many of the remaining white retailers. Stalwarts tended to offset the risk of doing business in the ghetto by overcharging customers who lacked the means to shop elsewhere. This problem hit particularly hard for residents without cars, since Los Angeles has historically provided little public transportation to better shopping opportunities in the suburbs. It is little wonder then that residents of Watts, one of South L.A.'s tougher communities, have always complained about the inadequacy of consumer options in their neighborhood. Nor is it surprising that small retailers were the chief targets of destruction in both the 1965 and 1992 riots. But the situation may be turning around for residents in South L.A. and other poor, minority communities throughout the nation. A new model for development has begun to shift the way businesses, planners, and policy makers conceive of the inner city. Long overdue, this shift has the potential to permanently change what we mean when we say "ghetto." Looking to the Inner City Beginning in the mid-1990s, large corporate retailers turned their attention to the "last retail frontier," the American ghetto. This made good business sense: in a "conservative" 1998 estimate by the Boston Consulting Group and the Initiative for a Competitive Inner City, America's inner cities represented more than $85 billion in annual retail spending power--equal to the total purchasing power of Mexico. Retailers have been encouraged by the nationwide decline in crime and by the increased attractiveness of cities to affluent families, gays, and grumpy commuters. Almost overnight, Target, Home Depot, Wal-Mart, and dozens of smaller retailers began to infiltrate historically black ghettos. Equally important in luring corporate retailers to the inner city has been the phenomenal growth and economic progress of the nation's Latino population. Reflecting a nationwide trend, the famous "black community" of South Central Los Angeles is now more than 55 percent Latino. As the Latino population grows, so does its purchasing power: a recent national estimate put the Latino market at $400 billion. In Southern California, that purchasing power has been most evident in the housing market, where Latino homeownership has surged by over fifty percent in the last decade. Corporate marketing has tuned into these growing inner-city demographics: in 1998, Target launched its own magazine for Latinos, Familia, and mailed it to over 750,000 thousand Latino households in California. And a recent Wal-Mart television advertisement features a young African-American woman who was recently hired by the retail giant, and who emotionally expresses her gratitude. Corporate retail forays into the inner city market, however, have not been without controversy. Across America, minorities--particularly African Americans--have protested what they see as "ghetto colonialism": massive corporate entities eviscerating neighborhood character, exploiting local poverty, replacing no jobs with bad jobs, busting unions, flouting environmental protections, and intensifying traffic congestion. From Chicago's South Side to East Oakland, residents have marched, picketed, and petitioned city councils to keep "big box" retailers out. A recent debate in Inglewood, a predominantly minority suburb just south of Los Angeles, exemplifies this tension. In April 2004, Wal-Mart spent $1 million on a campaign to convince voters to pass a city measure allowing one of its "Super Centers" (the size of 17 football fields) to open without conducting environmental impact reports, traffic studies, or public hearings. The referendum confirmed the suspicions of many residents, who resoundingly voted it down after weeks of heated protests. "They need to come in through the front door in the light of day," said Inglewood Councilwoman Judy Dunlap, "not sneak in the back at night." Hope in Southern California The defeat of the Inglewood Wal-Mart, however, should not sour policymakers, planners, and activists on the prospect of corporate investment in the ghetto. As the case of Starbucks reveals, corporate investment can be a boon for companies and residents alike. The new Starbucks in Compton is one of almost seventy "Urban Coffee Opportunities" (or "UCOs") that have opened throughout the country since the unique partnership between Starbucks and the Johnson Development Corporation began in 1998. In addition to serving as anchor businesses in sagging commercial districts, the UCOs also provide desperately needed jobs for the young and unemployed. And they provide more than just a meager salary. Unlike many other large corporate investors, Starbucks offers comprehensive health care packages to even part-time employees. When combined with the stock option offering new employees receive, the health package lays the foundation for a sustainable, if modest, career. Two years ago, a Starbucks opened at a new $60 million, 22-acre shopping center called Chesterfield Square at Slauson and Western Streets in the heart of South Central. Approximately one mile from the infamous intersection of Florence and Normandie Streets, where trucker Reginald Denny was brutally beaten during the 1992 riots, the new mall also features a Home Depot, a Food 4 Less, and a Subway sandwich outlet. On opening day, Starbucks received over two hundred applications for employment--a sign of the intense demand for work in the area. Shortly after the grand opening of the mall, Helen Wilkins, a longtime African American resident of South Central, told a New York Times reporter, "It has really changed the neighborhood a lot. It has provided jobs--a lot of jobs--for our youngsters to keep them off the street." On a recent Saturday morning, black and Latino residents of the Chesterfield Square area crowded through the entrance of Home Depot, filling carts with tools, hardware, and potted plants. Significantly, shopping may soon become one of the few American pastimes where race no longer matters. But to view the opening of the Starbucks UCO in Compton in purely economic terms would be to overlook much of its significance. The coffee shop is also important for the deceptively simple reason that it is a safe, quasi-public space for people to talk. In Southern California, the reckless underdevelopment of public space and overuse of private transportation has left the region with an infamously detached, disengaged citizenry. In parts of Compton and in vast swaths of South Los Angeles, such isolation is compounded by violent crime. There, public playgrounds and parks--as well as streets--have been monopolized by gang members who define and defend it as "their" private territory. Coffee shops and bookstores are one solution to this problem. More so than Wal-Mart or Target, the coffee shop--at its best--is not simply a place for the exchange of commerce, but also a place for the exchange of ideas. National Trends Residents have likely warmed to the Johnson projects, at least in part, because they are perceived as coming from within the community, and Magic's conspicuous appearances at ribbon-cutting ceremonies reaffirm this for potential patrons. But there are signs that African Americans don't require the imprimatur of black celebrities to welcome corporate interests into their communities. The Chesterfield Square across town is not black-owned, and neither is the impressive Harlem USA complex in Harlem, featuring a nine-screen Magic Johnson Theater, an Old Navy clothing store, and several other retail outlets. Nor are black consumers solely interested in "practical" retailers of household essentials. In 2003, bookseller Borders opened a new store in Detroit's badly depressed downtown. Its brisk business has surprised store managers. Behind the scenes, there are also organizations pushing for the very kind of investment that has made Magic Johnson famous all over again. One of the most important has been The Initiative for a Competitive Inner City (ICIC) in Boston, a non-profit organization founded by Harvard Business School Professor Michael E. Porter. Porter and his colleagues have been conducting research and sponsoring initiatives for inner-city investment nationwide since the organizationUs founding. Distraught by the persistence of inequality and "the fact that too many of our citizens [were] not enjoying the prosperity that America enjoys as an economy as a whole," Porter founded the path-breaking organization in 1994. "Without a viable business base," Porter continues to preach ten years later, "you [cannot] have a healthy and viable community." In San Francisco, Business for Social Responsibility (BSR), a non-profit business association dedicated to stimulating ethical business practices, has been working to bring development to inner-city communities since the early 1990s. Matt Hirshland, Senior Manager of Communications at BSR, is heartened by what he sees in the inner-city Starbucks and Borders enterprises. Those business ventures have succeeded, he surmises, "because they make residents feel that they are truly stakeholders in the business." That communal investment resonates with his work: "We are helping businesses to be responsive to the demands, values, and environment of the communities in which they do business." It may be too soon to call these developments "the future," nor is it at all certain that ghetto investment will be a centerpiece of the next American city. But one thing seems clear: Starbucks is doing more for South Central than anyone expected. Beyond just bringing commerce to places too-long overlooked and overcharged, these developments may help end the debilitating sense of social, political, and economic isolation that still threatens ghetto life.