1. Urban Purchasing PowerThe purchasing power of older and of lower income areas is undervalued. There are at least two reasons why this is so. The first reason is that typical market assessments use household income as the indicator of market capacity. This kind of assessment neglects the fact that the density of these areas is usually quite high. Recent analysis by Shorebank found that Chicago's South Shore community has twice the purchasing power per square mile than does all of the North Shore's Kenilworth, Chicago's "wealthiest community" (as measured by income alone).7 The second reason is that lower income communities have a higher fraction of cash transactions than for the economy at large. Since cash transactions tend to be undercounted, market potential is again underestimated. 8 Because of the failure of the retail market to develop or re-develop in lower income areas, significant retail purchasing power is "leaking" out of these neighborhoods rather than being cost-effectively served by new facilities within the communities themselves. Michael Porter and the Boston Consulting Group found that the poorest seventeen zip codes in Chicago have a retail gap against consumer demand of at least $1.8 Billion.9 The total purchasing power within a two-mile radius of a single rail transit stop in low-income West Garfield Park is $2 Billion a year. 10 The sponsors of each study are pursuing a strategy of using their findings to mobilize investment. Shorebank Advisory Services' "Neighborhood Markets" group is initiating a new type of market research service to provide advance intelligence on emerging markets.11 The Initiative for a Competitive Inner City is advising national retailers on the location of significant service gaps, and the Local Initiatives Support Corporation is linking national retailers with capital, locations and community development capacity. 12And CNT has formed a partnership with Chicago United and Hispanic Housing Development. Known as Connections for Community Ownership, this venture was launched to link retail franchisers with minority entrepreneurs willing to locate within inner city transit-oriented development districts in Chicago. This is being done in conjunction with the "greenlining" of the Chicago Transit Authority.13 Interestingly, in a sense none of this recent activity is "brand-new." Prior to the rapid expansion of automobile ownership and roadway investment, the expenditure density associated with potential transit stop locations at activity centers helped justify transit system expansion in most American communities. 14More recently, part of the winning argument (circa 1973) in favor of preventing the original South Shore National Bank from leaving their community (presented by Northwestern Kellogg School dean Al Drebin and Touche Ross managing partner Dennis Chookazian, later CEO of CNA Financial) was that the income, savings and expenditure densities existed for profitability and therefore a proposed relocation abrogated the bank's responsibility to serve. 15The Comptroller of the Currency agreed, and what become the community development financial institution movement was born
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