City retailers ignoring millions

The city-commissioned study that sparked Mayor Gavin Newsom’s demand for a recount of the 2007 U.S. census also produced numerous other eye-openers. Aside from finding that the census undercounted San Francisco’s 864,000 population by 100,000, the neighborhood-intensive report also said city aggregate household income is $15 billion more — 56 percent — than the census claimed.

These invisible residents and their allegedly nonexistent income are located primarily in inner-city neighborhoods that are traditionally difficult for federal census-takersto survey. Social Compact, a market researcher that focuses on in-depth analyses of historically undervalued communities, collects data from real-world market sources such as local tax assessments, building permits, consumer credit bureau applications and utility bill payments.

The resulting local statistics reliably identify hidden populations, incomes and micromarket opportunities that traditional methods miss. Social Compact’s new San Francisco report says The City’s 12 lowest-income neighborhoods actually boast median household incomes ranging from 39 percent (Bayview-Hunters Point) to 91 percent (Western Addition) higher than in the 2000 census.

Yet because these inner-city districts notoriously lack basic business facilities, residents must spend hundreds of millions of dollars on retail outside their neighborhoods. The report estimated that in 2007: Western Addition residents spent $194.1 million on retail outside their neighborhood; the Excelsior spent $141.7 million; and Tenderloin residents spent $32.9 million on retail goods outside their neighborhood and $52 million in grocery stores beyond downtown.

This citywide sales drain also means nearly $1 of every $3 San Franciscans pay for retail purchases is spent outside The City. The lost profitability could potentially support 1.8 million additional square feet of full-service grocery retail within the neighborhoods. There is also ample potential to expand neighborhood banking services; the study found that more than one-third of San Francisco households have no documented credit history.

So hard evidence now shows that city neighborhoods previously believed incapable of supporting convenient local businesses actually would provide significant opportunity for shops, groceries, restaurants, banks and all standard commercial amenities. City government should smooth the path for small businesses to invest in these neighborhoods.

More than a think tank’s market analysis will be needed to persuade business owners to put up their hard-earned cash for a venture traditionally believed to be high-risk. City Hall needs to do its part by offering incentives for small businesses to locate in these lower-income areas.

These incentives do not need to hand out hard cash. Meaningful business help could include special fast-track aid with the exhaustive permit process, possible temporary tax-and-fee credits during the first years of operation and enhanced police visibility. If ever there were a win-win situation, helping deliver long-needed business conveniences to underserved neighborhoods has to be a classic win for everybody.

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