Walmart, Supervalu and Walgreens joined First Lady Michelle Obama to announce plans for the opening of hundreds of stores in neglected areas of the US known as ‘food deserts’.

Walmart, Supervalu and Walgreens joined First Lady Michelle Obama to announce plans for the opening of hundreds of stores in neglected areas of the US known as ‘food deserts’. These are low-income communities with limited access to fresh food.

Eliminating food deserts is viewed as an important step towards challenging child obesity through reducing reliance on fast food chains.

By the end of 2016 Walmart plans to open about 300 stores in food deserts. Supervalu will open 250 Save-A-Lot shops, providing access to fresh food for 3.75 million people. Drugstore operator Walgreens committed to a roll out of its food oasis concept to 1,000 urban food deserts within five years.

These moves will no doubt boost public perception of the retailers as they bring food and new jobs to low-income areas and may buy them political favour.

However, in a wider sense the expansion is also necessary for each retailer.

For Walmart the move into food deserts is a good fit in terms of customer demographic and coincides with existing growth plans. Following negative US sales growth, Walmart needs to expand its presence into new markets and now has a credible political narrative to drive this expansion. The 2016 target encompasses planned openings of Walmart and Walmart Market stores. Walmart Express stores – still in test mode – are not included, although the format is a good fit to expedite future expansion. Additionally, the announcement complements Walmart’s healthier food pledge to reduce sugar, salt and trans-fats in private-label lines and make healthier food more affordable.

For Supervalu, the announced store openings are in line with existing growth targets to reach 2,400 Save-A-Lot locations by 2015. Like Walmart, Save-A-Lot operates a low-priced strategy.

Walgreens is well-positioned to benefit from the food desert initiative, since 45% of its 700 drugstores are in areas with poor access to fresh food. The food oasis format has been piloted at 10 stores in Chicago since last August and has 60%more fresh foods on offer. This is not only a welcome addition to communities but also a trip-driver to boost front-end sales, which Walgreens badly needs to offset declining margins in pharmacy reimbursements.

With retailers, politicians and communities all set to benefit from the food desert programme, it looks to be a win-win.

  • Lisa Byfield-Green, retail analyst, Planet Retail. For more information contact us on:

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