Georgetown forum; The poor and food marketing

The poor and food marketing the topic for the eleven hundred and fifty second consecutive broadcast of the Georgetown University radio forum. Another in a series of educational and informative programs from Washington D.C. The Georgetown firm was founded in 1946. This is Russ Manning speaking to you by transcription from the Raymond Rice studio on the campus of Georgetown University historic Jesuit seat of learning in the nation's capital. Today's discussion will be the poor and food marketing participating I'm Mr. Dale Anderson food marketing analyst for the Agricultural Research Service of the U.S. Department of Agriculture. Dr. Wilford Al White director of the small business guidance and Development Center Howard University and former assistant deputy administrator of the Small Business Administration and Mr. George L. small President of P A and S small company York Pennsylvania food wholesalers and developer of jet supermarkets in Baltimore Maryland. In attempts to

alleviate difficult conditions in low income areas it's been found that the marketing of food has been neglected in much the same way housing or education has been deficient. The food marketing system which comes into full fruition in the wealthy suburbs is been accused of falling short in poor areas in terms of management facilities food quality and prices. If there are in effect two separate marketing systems for food one for the suburbanite one for the poor it's a situation which demands careful attention. Improvements in food marketing should be found either by the food industry the government or both that will benefit the poor while affording a reasonable profit for marketing firms. In addition a way should be found to bring more people in low income areas into food distribution and retailing jobs ranging from unskilled labor to private ownership while training programs and pilot projects already have been started. More needs to be done

today at the Georgetown University forum has invited three people who are deeply involved in the problems of food marketing for the board. We ask them to analyze the situation and to indicate possible solutions to press the situation as seen from their three points of view. We'll begin with Dr. White of Howard University Dr. last five years we have worked with hundreds of Negro men and women who believe that they wanted to and were ready to open up a business of their own. And the most common question they would open up with is how can I get some money. They needed capital. Our experience at Howard is that the scarcest ingredient in this matter of establishing new businesses is a matter of management skill.

There are very few individuals who haven't had experience in business who can open a business of their own and run it successfully. So for that this is the number one problem is to find people who are qualified to manage and to own these businesses which need to be opened up in the ghettos in cities like Washington. This transition how does the problem appear to you as a food marketing analyst. Well of course the success of the supermarket industry which is one of America's outstanding successes has been brought about in part by combining the operations of the wholesaler with the retailer on voluntary and property basis. The successful has said it was in setting up the structures often would select the most successful retailers and they would provide them knowledge and training and services in order to make the stores very successful. Well in the process

the stores that were somewhat further down the line not quite so successful were dropped and these tended to be picked up by we say poor sailors in terms of the services as a consequence we tended to concentrate our distribution efforts in the suburbs. And we've developed a very successful successful story here. The stars are in the city proper need some of the same attention it perhaps requires some research prize looking into the question of whether the stores in the poorer areas should be supermarkets. Perhaps there's another type of store. We know in Europe the supermarket is developed along a different character. It's a smaller store usually built in the ground floor of an apartment house and of course we have to research into some of these areas we feel there are some answers. There are some I think answers to the questions which people are asking that we have not got from the research to the actual doing. In many of our

poor localities Incidentally too the poor are not or negro we have a substantial number of poor people in rural areas that have the same identical problem. Thank you Oh no Mr Small off from the point of view of a food hole wholesaler. Well the company has concentrated prior to 1967 on the rural towns in southern Pennsylvania northern Maryland and we had great success in finding a local person perhaps a small grocer in one of the small towns in assisting such a person to open a supermarket. We found a local ownership and supplying that dealer with all the services that normally a chain of headquarters would supply to get stores that such a person could be extremely successful in opening a new supermarket and we decide about a year ago to use the same technique and apply it to the center city areas. And the first such store called

superjet was opened just about a year ago in Center City Baltimore and the last year has been one a real experience and learning for us. Yet I would say at this point well it's been great painful in some ways. I really believe that there is tremendous opportunity for the food industry to move back into this inner city areas and be successful and I think there's also a great opportunity for people from within these areas to open up their own stores and bring some of the inner city residents into the economic mainstream of America. It's just more of the saying that your company began this in rural areas. Going back to that this was in 1967 I believe this is prior to 1967 and it was a pattern that most wholesalers across the country have used in assisting independent dealers open up their own stores and wholesalers and franchise the name of the store and assisted these dealers in every way to become

good supermarket operators and we are now trying to do the same thing with Negroes in center city areas. Now this was at a time again going back to prior to 1967 and which is the general store as we know what is being or was being phased out are you saying that that you're turning that trend. No not necessarily. We're really talking more specifically about a regular supermarket and many of the country towns across the United States today. Within the last 10 years or probably had a new independent owners opening up independently owned supermarkets and these have been really highly successful and have been the basis of large independent wholesalers being very successful in the last decade. How does this tie in Mr Anderson with what you were saying about possibly him there being different types of stores. I think first we want to. I would like to comment on this we've done some research to find out what makes a

low cost store this fits very closely and of course to the marketing to the poor. The first identify a Bell item was that the stores were owner operated the owner on the premises. The second identifiable item was the wholesaler which served them the better of the whole set or the more successful the retail operator. The third item was that the use of floor space was intensive. They made good use of the investment that they had in their facilities and as a result of these three factors we've been supplying parroting the idea that possibly we could come into these urban areas not necessarily poor. Where you have a very high land cost where you have a very high insurance costs and by building stores which made high use of floor space crammed a lot of goods into a relatively small area. Still making them attractive that your costs you could overcome these higher costs that we find in the urban area.

Needless to say it seems to me this backs up mistress morals concepts totally because we're simply trying to provide those things which he's been successful at in a new environment. We talk in Europe of course where they have a very high land cost and been faced with this problem for years and their typical stores of course are much smaller than ours and cram a considerable amount of goods into the same area. How would the store that you and Mr Smith are talking about compared to the average chain market installation in the city. Well actually I don't think there's any finer supermarket in the in the Greater Baltimore area than this first superjet store that is open its brain knew it has fine facilities and physically there's none better. Unfortunately just having sex and physical physical facilities isn't by along side the sole answer that is needed because there are some very basic problems that need to be solved to make a story like this really be

successful. Now you talk about the fine facilities and in terms I'm not talking so much in terms of quality my question directs itself to in terms of in terms of size how does it compare size it's a as large as any supermarket you'd find in a typical shopping center scattered around the suburban area. Well how much owner investment are you talking about then for that. Well we normally. Do you know industry is run find an investor who will buy the land and build a store for us and Lisa to a corporation that is owned by the people that live in the area and we have going out and trying to get local ownership perhaps several hundred or even thousands of local residents within perhaps a mile or so of the site. These people really are the people who are trying to get to be the owners of these superjet stores to bring ownership into the inner city areas and then keep the profits right there with what sort of an investment on the part of these big term co-op. We really have to have anywhere from

200 to 300 thousand dollars put into each supermarket by the local residents in order to operate it successfully. Why is it that this type of an operation has a success potential in the neighborhood that perhaps and they and pay or Safeway or whatever happens to bay might not happen. Well that's a that's a tough question to answer except to say that we think that if people with live within a community have ownership in the community in going to the supermarket rather that this gives them a greater loyalty perhaps to making that store successful. Also we're talking about inner city residents that mainly gets them into the economic mainstream and makes them feel a part of all of American business which is solving a problem and. We think this alone is worth something. You don't think you would imply that changed or can't be successful because some have

invested some very beautiful facilities and taken very close recognition of the needs of the people in the area who are selling wouldn't let out only to Mr Small makes those very important that is ownership by the neighborhood. This will help reduce costs of operating the store and it will attract customers into the store who might not otherwise come. What we're talking about poverty areas to begin with and what you're telling me is that you're going to get $200000 out of that poverty area to get a store started now that that's something I don't quite understand why it's laying out tonight please. It's there to be had and you know to regret that the people are more than willing to put the money into it but the real the real great problem frankly is you can build the greatest remark in the world but if you cannot operated properly you cannot get the loyalty of the people and even the stockholders won't support a store that was not created as well as the suburban supermarket. And this is where we are having a problem at the present time.

Dr. Wright you were saying at the beginning that the scarcest ingredient is a management skill. What sort of a program do you have at Howard University to help overcome that. We have two programs. First we will counsel individually with a prospect a businessman or with an actual business man and we do this on his premises and give him her the same kind of service set a larger corporation would get from the firm of consulting engineers. In the second place we have a training program which we call group counseling. I tended a meeting last night when there were about 25 prospect of owners of businesses in the Negro community and they were down there learning about the problems of ownership because many of them have a desire to become an owner of a business had very little knowledge of what

responsibilities go along with this desire. And these two programs have been developed over a period of five years now so that we reach in the neighborhood of 300 Negro men and women who are interested in going to business for themselves in the course of 12 months. These people that come to you have the money that Mr. Small. Seem to think is present in the poverty area. No not very many of them. And I agree with Mr Small If there is money there the money is with the professional people are the people who have moved up into the middle class in the past they haven't invested their money in the community that are about doctors dentists people sick or ECT. Yes that's right and for example we work with five trade associations all of the members of whom are negroes. One is a dry cleaning Capitol drycleaning Association. Now there's a physician a surgeon who is a

member of this association. He's a surgeon in the daytime. He runs a dry cleaning plant in the evenings and he has one the finest writing plates the city washing bar none. So worth the money is there but it has to be attracted back into the community into the ghetto and that's what is beginning to happen now. Vanish from the oh I'm sorry I just like to add one thing to that. Actually our experience has been that the average low income Negro family is willing to put in some money into the supermarkets even if it's only $10 and a lot of the money for these super jet stores has come from the lowest income class of people. You know what how are they able to put in as little as $10 a share or co-op basis you know it's done as a corporation is form and this is been done largely through the ministers in the churches they form a corporation and they preach from the pulpit really and they ask for their members

to invest money in one or two or as many series as they can afford and therefore you get a very broad base ownership into these super markets which is very desirable really because you spread it around and the more people that have an investment in it the more they talk about it and the more the Negro community knows about it. And this is one of the real advantages to a broad based ownership. Mr. Anderson if you had an opportunity to get a reading from. The big chain stores as to how they regard this type of operation I think certainly the change stores are interested in this area and are doing some things in terms of establishing stores in the area and their reactions. Perhaps they're not able to have a share ownership in this to their structure but they certainly are bringing people from the area you know as store managers. I teach a class and food store management at American University and I have some of the store manager trainees from this area who are quite bright young people who of course have to get a lot of

training before they're going to be store managers but they will be certainly I think any indication of success for this change is the move in the areas that chains tend to be successful when they operate similar type stores we have few examples of a change store that operates two or three different types of food stores and perhaps one of their problems has been to come back into these get over our low income areas and operate a store that's been in any way different than that which they're successful with in their total operation. And these kind of story that I was speaking about a smaller store was to try to reduce the amount of investment that would be required to get an independent into it or even a change store to reduce the store size down where you can find lots in the city because of the very difficulty that you have of bringing together size Allana large enough to operate in this structure a course might op open up the opportunity for a new type of a food chain or for a new type of

independent owner in food stores. We already have some people who are interested in this. Talking about the mom and dad type stores I used to say you know the store which now is being built in several areas. One form is being called an opportunity store. It's geared in designed to be used by just the type of people we've been talking about. The it's a prefabricated store. It can be put up as I understand from the bill in about four days time if it's unsuccessful it can even be moved. It has about thirty five hundred to four thousand square feet carries a complete line of items but is not it does not have expensive processing on the premises in other words it is geared to operate economically in that location. And I've been told that in one instance the owner was able to. Begin operating the store for an investment on his part about eighty five hundred dollars. And this of course was with the help of the small business in ministration and others who were interested in this kind of a program.

This of course would remove the D some of the problems of trying to establish stores in these area by bringing the investment down to where some of these people can utilize it. Come make a point there are talking about smart type stores that one problem we have had it with opening a large modern supermarket is that a certain amount of the people that live in the area are not stockholders don't believe that it really is black on. They are very suspicious and they think that the work of Negroes get all this money to put up a modern supermarket. And I think it's really a front for white people and this is something we really had to overcome and it was a problem that we never really expected. Well in a number of cases I think their fears have been justified and they are going to yes on the basis of past experience. I would like to ask Dr. Y. However how he feels about what you know he said in the beginning that if there are in effect two separate marketing

systems for food one for the suburbanites and one for the poor in the inner city do you feel that there have been two marketing systems doctor who in one sense and that sense is this that in the low income areas you have a few large stores in the grocery field. You have more small stores rather small store operates at a higher total cost in terms of the typical types we've had in the past. This means that their expenses are higher their margins are higher. They keep open evenings. They service the neighborhood more for weekend supplies and evening supplies emergency supplies whereas the typical family in the ghetto will perhaps buy watch a twice a week. I decide to ghetto in large quantities at the larger stores so that.

In the suburbs in the field of groceries the big stores have the great bulk of the business in the ghettos the small stores have the big buck so you have two systems in that sense because each one is attracted to the area where they're most suitable Spanish and do you have any comment on that. We've got a number of other problems one of them is just delivering food into the city. As you begin to look at the whole problem of bringing food and delivering it many of the stores that operate the small mom and pop or the delicatessen type stores. First of all they haven't concentrated their orders we're going wholesale or they might get 25 or 30 deliveries. This in turn ties up streets and the smaller stores of course do have a benefit because we do know that in. In the real poor areas the people have less money to spend they don't do the block purchasing because they don't get that much money ahead. Some of them don't have the transportation which a supermarket calls for. And so that we have some special needs that

it's true that some of these large supermarkets are certainly going to succeed in the inner city. There's also going to be a need for an improvement I think in the small store operations. Well act another thing that comes to mind too as you are. I don't mean to interrupt you but your supermarket operation is Cash and Carry and on the smaller stores they run a ticket frequently for people too so that they can go from payday to payday don't think this is done by some I don't believe that this will be a successful measure of good retailing. Certainly when we talk about small stores I think one of the things you have to recognize is they're going to have to be a store that people can be proud of. They're not going to take it cheap. A junk operation is going to have to be beautiful attractive and something to be proud of in their neighborhood and within our list there's going to have to be some training as Georgia spoke about not just of management but of the people that work in the stores. We know the problem of laborers undertaking some training programs as a pilot operation and buying them or to train produce people

from the very lowest income areas. The problem of Agriculture has worked with this since before 1950 in training people to work in the stores in our area are extension people have worked with this Department of Commerce has a national marketing Advisory Committee which has a task force working on some of the same problems in the American Marketing Association has been cooperating with this assembling knowledge and information about the problems that are here. That's actually how we got into this workshop from which this group grew. But these research functions do need to proceed the actual application. We need knowledge certainly about what a little succeed and we need demonstrations. And this of course is perhaps we've had a little bit to emotion much emotion and not enough in determining basic facts about what our problems are in these areas. Mr. Smith speaking about the basic problems. And they experience that you're gaining. Are there changes that you have made

in your operation in the inner city. We made quite a few changes and one of the most important really is the fact that we are integrating the stores faces we can we recently started with all Negroes because it wasn't only growing weed it turns out we find that both the consumer and the employees want integration and were quite surprised at this really or not really surprised in the sense that it's more of a factor than we realized it would be. They are very concerned over the fact that it is integrated. There are many reasons for this game because I think they would YOU know it isn't a black area and they all want to join Negroes want integration and therefore they want to go to a store where they find it and I think the employers prefer it too. So there are many advantages to it really. And we started it the wrong way it was an all black store and now we're trying to integrate it. Are there other changes that you've made that come to mind.

Oh merchandising changes and then of course manpower has been the greatest problem really. We've learned that a Negro must go through the competitive process to earn his right to a management position. And you can't rush this. Just as you can't take a high school basketball player and expect them to make the Boston silly sets you have to go through the appellate process and they're great thanks and they're in a hurry and you can't really speed it up and this is probably the biggest lesson we've learned. Really that's white or negro or whatever anybody. Absolutely Dr. White we have just one minute remaining and I would wonder if you had any summary sorts that you would like to give us. Well across the country as a whole there are places where research is being carried on and one of the most successful ones that I am familiar with has done for the small business opportunity corporation in Chicago. And in this particular case their report illustrates

more specifically than any place I've seen before. What's actually going on in Chicago and I feel that this is research is now bearing fruit and we have an idea what can be done what can't be done. And with the interest across the country. This this will get down to the level of the individual businessman and the individual customer very quickly. Kevin thank you very much for your discussion of the poor and food marketing. Our thanks to three experts Mr. Dale Anderson food marketing analyst for the Agricultural Research Service of the U.S. Department of Agriculture Dr. Wilford Alawite director of the small business guidance and Development Center Howard University former assistant deputy administrator of the Small Business Administration and to Mr. George L. small President of PVA investment company. York Pennsylvania

food wholesalers and developer of jet supermarkets in Baltimore Maryland. If you have attended the weekly discussion program in the Dillard stone university radio forum broadcaster which was transcribed in the Raymond Rice studio on the campus of historic Georgetown University in Washington D.C. next week you will hear discussed. College students and the drapped panel at that time will consist of Mrs. Betty better executive director of the scientific manpower commission and editor of manpower Commons and Mr. Michael Tigar attorney at lot of Williams and Connelly and editor of the Selective Service Law reporter. This program has been presented in the interest of public education by Georgetown University. Your moderator why last banning this program was distributed by the national educational radio network.