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Grocery Store Developments To Get A Boost From New Federal Anti-Hunger Initiative

A new strategy proposed Wednesday by the Biden administration takes aim at ending food deserts across the country, in part using federal dollars to aid in the establishment of grocery stores, farmers markets and other access points to fresh foods.

President Joe Biden announced the National Strategy on Hunger, Nutrition and Health during a conference this week. The goal of the proposal is to end food insecurity among the U.S. population, a nagging problem that has existed for decades but has been exacerbated by the pandemic and declining economic conditions.

President Joe Biden on Thursday, introducing the National Strategy on Hunger, Nutrition, and Health

"If you can't feed your child, what the hell else matters?" Biden said during his speech kicking off the White House Conference on Hunger, Nutrition and Health.

Food deserts, although the administration doesn't use that term, are a well-known phenomenon referring to places, both urban and rural, without many or any standard grocery stores.

If enacted as written, the program will impact the grocery industry in a number of ways, even encouraging development of stores where few exist.

The administration's plan directs the Department of Housing and Urban Development to "promote regulatory flexibilities" that allow owners of HUD-assisted properties and public housing authorities to use federal funds to renovate or maintain spaces to improve food access. That is, pay for likes of food pantries, but also public gardens and small grocery stores on those properties.

Not only that, the plan proposes using various housing programs, such as Community Development Block Grants, Section 108 loan program funding and Choice Neighborhood funding, to support food access.

The kinds of food-related entities that might be funded that way include neighborhood markets, grocery stores, farmers markets, urban gardens, food incubators, or the conversion of vacant buildings into food hubs, though the plan doesn't specify how much federal funding might ultimately go toward creating such food-access points in poorer neighborhoods.

Though not commenting specifically on the administration's proposals, JLL Managing Director National-Retail Tenant Representation Geno Coradini told Bisnow that publicly supported incentives are necessary for the development of food stores in some parts of the country without them.

"Grocery businesses want to do the right thing and locate in food deserts, but the business models often don't work, and development can't happen without incentives," Coradini said.

The grocery industry is well aware of the problems of underserved communities, Coradini added. Even such retailers as dollar stores, often maligned for their lack of food offerings, have upped their food game in recent years.

"Dollar stores are carrying more produce and other food than they used to, and perhaps 10% to 15% of their sales is now groceries, up from very little as recently as 10 or 15 years ago," Coradini said. "Still, the assortment isn't there, not like in a standard grocery store."

The grocery industry is also responding to the change in consumer buying habits in this period of high inflation.

"Consumers are evaluating their whole wallet and looking for ways to save," Tanya Moryoussef, a manager at the Kearney Consumer Institute, an internal think tank at Kearney, told Bisnow. "In a nutshell, they are looking for deals in any way they can find them."

The proposal comes when the grocery store industry, following a spike in sales and profits during the worst of the pandemic, is coming down to earth — especially as consumers change their buying habits in the face of high inflation, and grocers face labor shortages and other challenges.

The plan is a mix of actions that can be taken by the executive branch, others requiring congressional action and yet more depending on the cooperation of local agencies and private entities. Thus, it isn't clear which parts of the plan will be enacted, or what their long-term impact will be.

Still, it is clear that the administration has put its full weight behind the collection of initiatives.

Many of the proposals are only of indirect concern to the grocery industry, such as increased funding for various federal food programs, putting more information on food packaging and promoting physical activity among the population.

An interior photo of the first Amazon Fresh grocery store, outfitted with a smart kiosk using its Alexa voice control technology.

Nearly 40 million Americans live in areas where grocery stores are not nearby, according to the Department of Agriculture. Those with limited access to nutritious food tend to be lower-income and people of color. Eliminating food deserts was a goal of former first lady Michelle Obama, and unsuccessful proposals have been made in Congress to address the problem.

"My school is in what's considered a food desert, where there isn't access to grocery store choices," said Nadia Torney, who is a teacher and school director at The Upside Down Organization in Parkville, Maryland, and who participated in the conference.

Students at her school may have access to a grocery store by bus, but not within walking distance, she said. Much closer are liquor stores, fast-food restaurants and local carryouts.

"Accessible means that people would have as many healthy food options nearby as [they do] more unhealthy options that might be quicker, but don't do the job for our bodies that healthy foods do," Torney said.

The program includes a directive to the Department of Transportation, through implementation of the Bipartisan Infrastructure Law and Inflation Reduction Act to promote transit, bicycle and pedestrian improvements, one goal of which is to support food access.

Other parts of the Biden plan call for policies that promote the unionization of the food industry, including for workers who grow, produce and process food, transport it to grocers and stock grocery store shelves. The administration also plans more vigorous enforcement of antitrust laws in the food sector, with special attention to transactions that might lead to higher prices and reduced food access in vulnerable communities. 

The grocery industry has consolidated in recent decades, following Amazon’s acquisition of Whole Foods and with giants such as Walmart, Target, Costco and Dollar General increasing their market share in many places.

Independent grocers have taken note, and assert that the big food retailers are hurting competition and preventing better health outcomes for much of the population. The administration seems to agree with that thinking.

The administration's proposals would also encourage local governments, nonprofits and businesses to take steps to improve food access. Local initiatives are already under way in cities to bring grocery stores to underserved areas, but progress is slow.

Still, local organizations are coming up with innovative ways to deal with food access issues, DC Central Kitchen CEO Mike Curtin said at the conference, and the federal government needs to encourage that. 

DC Central Kitchen, which serves farm-to-school meals in Washington, D.C., schools, and delivers produce to corner stores in District neighborhoods, recently worked with local authorities to make WIC benefits accessible in corner stores for the first time.

The organization also developed its new headquarters in southwest D.C.’s Buzzard Point neighborhood, a 36K SF facility that includes production and training kitchens, but also volunteer workspace and meeting facilities, and the nonprofit’s third social enterprise quick-service café offering on-the-job training. There is space in the building for other tenants as well.

"The idea that DC Social Kitchen is the anchor tenant of a mixed-use development might be the first time this has ever happened in this country," Curtin said. "It's community development, not charity. I would like to see [the idea] expanded nationwide."