There are myriad problems with living in a low-income neighborhood, of which, one of the more salient of those problems is the fact that the choices to buy food and other household goods within that local neighborhood are often rather limited, and of which, despite the fact that the rent has to be a lot cheaper for those businesses in that neighborhood, the pricing and quality of goods so sold, is typically meaningfully higher than it would be in a comparable neighborhood of a higher socio-economic level.
The first thing to understand from an economic level is that higher prices for goods so being sold in a particular local distressed area, does not necessarily equate to more profit and better gross margins for that company. For instance, mom and pop stores, don’t have the pricing power that a Walmart or similar has, so that the cost of those goods being bought and transported to them is often going to be appreciably higher, and that higher cost, often logically translates into a higher selling price. Further to the point, in a neighborhood marketplace in which frequently there is plenty of unused business space in low-income areas, the fact that other companies aren’t coming in to conduct business there, presupposes that even with, in theory, the higher sale prices being asked for goods, this doesn’t necessarily equate to higher profits, or else, those businesses would have already located there.
So then, while on the surface, it might seem pretty common place that there is a perception of price gouging being suffered by the residents of low-income neighborhoods, this typically really comes down to them ignoring the fact that the cost of doing business in those low-income neighborhoods, including security, “shrinkage,” safety, insurance, and so on and so forth, is appreciably higher, most of the time. This would seem to more than imply, that residents of low-income neighborhoods would typically be far better served by having an anchor store, such as a Walmart, which would bring in not just more competitive prices and a more comprehensive amount of goods, but also would serve to bring in more retail stores, because of the traffic that having a Walmart or similar, generates.
Additionally, from a business perspective, perceptions matter, and when businesses don’t feel all that welcomed, or don’t feel all that comfortable in where they are doing business or proposing to do business, then the best and the brightest of them are going to hesitate to locate there, and instead it’s often going to be a lower echelon of business enterprises that will take a gamble, so to speak, in a low-income neighborhood. All of this is pretty much saying that those that are residents of lower-income neighborhoods need by their own volition, to basically put forth a better effort to attract businesses to their neighborhood, which typically means doing their part to beautify and to improve their neighborhood, as well as seeking legislative help, tax set asides, obtaining money earmarked for local development and improvement, and so on and so forth.
It is a shame when good people that are seemingly stuck in a decaying and forsaken low-income neighborhood can’t seem to catch a break, not even with a retail store that serves them well; but in a capitalistic society, it’s almost always about the money, and the demographics of doing business in low-income neighborhoods makes for a rather sad tale, and those that have little or nothing, just end up paying what they have to pay, even when it costs them more.