News Release

Free shuttles can close the grocery gap

How inner-city supermarkets can turn a profit and improve their customers' health

Peer-Reviewed Publication

University of California - Davis Health

(SACRAMENTO, Calif.) -- Inner-city supermarkets can improve their profit margins and the health of the communities they serve by offering shoppers free transportation, according to a report released today by researchers at the UC Davis Center for Advanced Studies in Nutrition and Social Marketing. A free shuttle program also reduces shopping-cart thefts.

“It’s a way for supermarkets to do well by doing good,” said Diana Cassady, assistant professor of epidemiology and preventive medicine and senior author of the report, funded by the California Nutrition Network.

Cassady and her colleagues conducted a market analysis of low-income neighborhoods in five California cities -- Bakersfield, Fresno, Long Beach, Oakland and San Diego (a list of zip codes follows) -- and concluded that a supermarket-sponsored shuttle service would be financially viable in any of the areas. Depending on the area, estimated annual shuttle-driven revenues per zip code ranged from $545,700 to $1.5 million. The estimates assume, conservatively, that 20 percent of households without cars in each study area would use a shuttle once a week to buy $25 in groceries.

“We hope these findings will encourage more inner-city supermarkets to provide shuttles,” Cassady said. “Residents of lower-income and minority neighborhoods in many urban areas face a double bind that limits their access to fresh, healthy food, especially fresh fruits and vegetables. Not only are full-service supermarkets scarce in many inner-city areas, but many residents of these areas lack cars to get to supermarkets in other parts of town.”

Among people earning less than $15,000 a year, only one in four eats the recommended five or more daily servings of fruits and vegetables, according to data from the California Department of Health Services. Nearly half the African-Americans in California eat two or fewer servings per day. A diet poor in fruits and vegetables is a risk factor for heart disease, cancer and other illnesses that disproportionately affect minorities.

The “grocery gap” in inner-city neighborhoods has long been of concern to public health experts. A 1995 study of 21 major metropolitan areas nationwide conducted by researchers at the University of Connecticut found a third as many supermarkets in low-income areas compared with high-income areas. Last May, a study by the Center for Food and Justice at Occidental College found three times more supermarkets per capita in high-income Los Angeles neighborhoods compared with low-income areas.

The supermarket industry cites higher security costs, greater employee turnover and a bigger “shrink factor” (theft) in high-poverty neighborhoods. According to Cassady, loss and retrieval of shopping carts -- often used as wheels by people without cars -- can cost a small grocery-store chain $300,000 a year. For shoppers, the grocery gap means traveling to another part of town to find a supermarket, or buying groceries at a small convenience store that may offer a poorer selection at a higher price. For residents without cars, the situation is especially tough.

“These residents are left with little choice but to carry their groceries long distances, use precious resources on taxi rides or make multiple bus transfers,” Cassady said.

Shuttle programs solve these problems for consumers -- and also improve the bottom line for inner-city supermarkets. Stores benefit from additional shopping trips from new and existing customers, increased sales from larger purchases, reduced shopping-cart losses, free publicity (signs inside and outside the vans) and improved customer and community good will.

In their report, “Supermarket Shuttle Programs: A Feasibility Study for Supermarkets Located in Low-Income, Transit Dependent, Urban Neighborhoods in California,” UC Davis researchers detail two examples of successful shuttle programs: Numero Uno Market, a small chain of supermarkets serving inner-city Los Angeles neighborhoods, that maintains its own fleet of vans to give customers a free ride home with their groceries; and three Ralphs supermarkets, also in the Los Angeles area, that contract with a shuttle company to offer the same service.

e owns nine vans that transport about 2,298 passengers a week, the report notes. The store is among the top-grossing supermarkets in the Los Angeles area. The cost of the van program, including drivers’ wages, maintenance and all other operation costs, is less than 1 percent of the store’s gross revenues, researchers found.

The shuttle service offered by a Ralphs store on West Adams in Hollywood has a constant waiting line, said Terry O’Neil, director of public relations for Ralphs Grocery Co. Vans run daily from 9 a.m. to 8 p.m., and offer a free ride home to any customer with a store receipt for $25 or more. Customers arrive at the store by their own means.

O’Neill credits the shuttle with significantly reducing shopping cart loss at the store, and with generating good will among customers. “If you walk and you’re buying for a family, you can’t get your groceries home intact and fresh,” he said. “We offer the shuttle as a customer service to these shoppers, and many of them have thanked us.”

One section of the report is meant to serve as a business-plan template for any supermarket interested in launching a shuttle program. The report demonstrates how a store can calculate the break-even point for a shuttle service, outlines the pros and cons of leasing versus owning shuttle vans, and covers staffing needs, parking requirements, startup costs and a host of other basics. It also contains tips on everything from parking to marketing opportunities.

“Some of our members already utilize shuttles in their businesses and have found them to be successful and profitable,” said Peter Larkin, president of the California Grocers Association. “This study provides further information and guidance for those who are interested in expanding the concept into their businesses. The study should be very valuable for the industry. Shuttles not only benefit certain inner-city stores, but also help address the health concerns of the customers they serve.”

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Copies of all news releases from UC Davis Health System are available on the Web at http://news.ucdmc.ucdavis.edu

ZIP CODES*
San Diego: 92113, 92102, 92101 (including downtown and the region immediately to the south, along the waterfront, to the border of National City)
Long Beach: 90802, 90813 (bordered by the Port of Long Beach on the south and west, including downtown, and bordered on the north by the city of Signal Hill)
Fresno: 93702 (includes the area east of downtown, bounded on the north by Highway 180 and on the west by Highway 41)
Oakland: 94607, 94606 (bordered on the north by Interstate 880, including parts of downtown and areas to the northwest and southeast of downtown)
Bakersfield: 93305 (bordered on the north by the Kern River and bisected by Highway 178)

* In each zip code, at least half the households had an income below 185 percent of the federal poverty level and at least 17.7 percent of the households did not own a car. Source: 1990 and 2000 Census.

Editor: Full study and photo of Diana Cassady are available on the Web at http://news.ucdmc.ucdavis.edu/images/report-photo/cassady.html B-roll available on request.


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