Michigan taxpayers subsidize gourmet Whole Foods store

Senator Debbie Stabenow (D) and Detroit Mayor Dave Bing (D) were on hand on May 14 at the ground breaking of a new Whole Foods Market location in Detroit. Joined by Whole Foods co-chief executive Walter Robb, the two politicos wielded ceremonial shovels to inaugurate the construction of a 20,000 square foot gourmet supermarket located in mid-town Detroit. Based in Austin TX, the national foods retailer plans to open the facility in 2013 and employee 60 to 75 people.

Midtown Detroit is an area that is actually seeing some growth, even while the rest of the Motor City sees stagnation. Located in Midtown are Wayne State University, the Detroit Medical Center, the Detroit Institute of Arts and Orchestra Hall.

A statement from her office declared “Senator Stabenow has long been a champion of this project and was critical in moving it forward. The new store is set to open in spring 2013, will create over 60 jobs and will provide Detroiters with a new source of fresh, healthy food.”

The project has had its critics, however. In 2011, Mayor Bing and incoming Governor Rick Snyder (R) inked an incentive package that including $4.2 million in state and local funds. One of the key components of the agreement is the new market tax credit, which only requires that businesses benefiting from it remain in operation for 7 years after first receiving the incentive.

Proponents of the project point out the success of what has been dubbed ‘The Whole Foods Effect,’ which refers to the phenomenon of increased real estate values in areas where a Whole Foods store is announced.  Whole Food mines data on spending and customers located in proposed sites. Reportedly, its most basic criterion is 200,000 people, many of whom who are college grads living within a 20-minute drive.  Favoring the Midtown Detroit location is its demographics: average household income of new home buyers is nearly $113,788, making it the highest in Detroit. Unlike the rest of the city, Midtown is facing a housing shortage stemming from financial incentives offered to residents who move in.

Retailers and other businesses appear to hope that Whole Foods longer operating hours will keep customers in the area after dark. Like a cinema, a Whole Foods store can turn a neighborhood into an extended-hours district. By remaining 16 hours a day, a Whole Food store can augment evening foot traffic and thus make other nearby businesses thrive. Observers note that this was the case when Whole Foods located onto P Street in Washington DC, some 13 years ago. But gourmet food and extended hours are not a sure bet, even for a retailer like Whole Foods. In 2008, Zaccaro’s – a gourmet grocery store – opened in Midtown, but closed its doors in less than a year.

Since Detroit residents spend over $200 million per year at suburban groceries, the business is there. Detroit has too few grocery stores, as do other metropolitan areas such as equally troubled Flint MI. Whether a city with crumbling infrastructure and outmigration can sustain a gourmet store, rather than one that offers affordable staples for cash-strapped Detroiters, remains to be seen.
 



Spero News editor Martin Barillas is a former US diplomat, who also worked as a democracy advocate and election observer in Latin America. He is also a freelance translator.

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