Arlington Woods, a predominantly African-American neighborhood in Indianapolis, has seen big-box grocery chains close one after another over the past few years. The area is a food desert with no full-size grocery store within a 4-mile radius.
“When you need a gallon of milk you’ve got to travel five miles,” says Terry Coleman, who has been living in the neighborhood for more than 34 years.
Now, medical device manufacturer COOK Medical is locating a new plant to the underserved neighborhood, and the company is building a new grocery right next to the plant. Coleman and other area residents are excited.
“We only about maybe five minutes from there,” Coleman says. “So it’s really going to enhance the area. That store is going to be a part of our community.”
Based in Bloomington, Ind., the multi-billion-dollar family-owned manufacturer will invest nearly $2.5 million to build Indy Fresh Market, the new 15,000-square-foot grocery store, and local organizations such as IMPACT Central Indiana, a multi-member limited liability company, will provide capital and inventory.
Pete Yonkman, president of COOK Medical, says it was never part of the business plan to have a grocery store, but they heard from so many people that food access was a problem.
“They had five grocery stores leave in the last five years and so you have 100,000 people with no access to food,” Yonkman says.
Once construction is complete, COOK Medical will turn over the store’s operations and ownership to Michael McFarland and Marckus Williams, two young local entrepreneurs who live in the neighborhood. The two men are in their 30s and are childhood friends. They will manage the store through a rent-to-own model and expect that within a few years they will have 100% ownership of the store.
“So our projected sales, we should be able to pay it off in two to four years,” McFarland says. “So that’s not bad to own your own grocery store.”
They bring with them a lived experience and an understanding of the challenges that face area residents daily. They have also been operating a small convenience store called Wall Street Grocery at a nearby strip mall.
McFarland and Williams are shutting down their convenience store and starting a shadowing program at local grocery store chains, and a training program with the National Grocers Association to prepare for their future role at Indy Fresh Market.
This model of corporate social responsibility (CSR) is unique, according to Kash Rangan, Harvard Business School professor and co-chair of the school’s Social Enterprise Initiative. He says there are three different ways business go about their CSR efforts.
“The first model is to write a charitable check. That model has gone out of fashion, nobody does it these days. The second model: I do work, but it has to be aligned [with] my business,” he says. The expectation, especially in publicly owned companies, is that the CSR work will directly or indirectly increase consumer loyalty and eventually generate profit for shareholders.
In this case, most of COOK Medical’s grocery store customers are highly unlikely to be customers of their business too. So, Rangan says, this is the third model.
“You’re mainly driven by the community,” he says. “The positive aspect of this is you’re solving a real problem.”
For the community to reap the benefits of this new store, however, Rangan says COOK Medical can’t have a hands-off approach once they pass on the ownership to the local entrepreneurs. With the company’s resources and connections, ongoing support will prevent this store from shutting down and abandoning the neighborhood like other big grocery chains did not so long before.
Even then, with limited financial resources, the community might not reap the benefits of this new grocery store, says New York University Global Public Health Professor Niyati Parekh, who studies nutrition, chronic disease and food insecurity.
“There has to be incentive programs and education,” Parekh says.
She gives examples of programs that provide store credit the more fresh produce you buy. She says capitalizing on this community-led project by investing in such programs could set this grocery store model apart.