What types of businesses thrive in "poor" areas?
April 26, 2010 10:15 AM   Subscribe

The area I live in is artsy but fairly economically depressed. As a result, there are some cheap strip mall type storefronts and office spaces available. Since I've always wanted to go into business for myself, I'm especially tempted now that their are some inexpensive places available. The main questions is this: What types of business thrive in "poor areas" ? I've thought of the obvious ones; Liquor Store, Gun Store, Coin Laundry, Check Cashing, Cash Advance, Tax Prep & Porno Shop, Buy Here Pay Here car lot. None of these really interest me. Can you help me think of some other types of (legal) business that tend to thrive in poorer areas? Thanks!
posted by Hellafiles to Society & Culture (36 answers total) 6 users marked this as a favorite
Maybe a small farmer's market?
posted by jquinby at 10:19 AM on April 26, 2010 [1 favorite]

furniture/appliance rental...

The sad thing is, in a "poor area" most of operations that thrive prey on the local residents...

How about opening a good, low cost local market that sells something other than booze and twinkies?
posted by HuronBob at 10:20 AM on April 26, 2010 [6 favorites]

A small farmer's market or store specializing in produce and a few staples would be a good idea. Maybe some bulk food? A co-op-y type product line.

It's hard for people to get healthy food in the city unless you count Lay's potato chips and red delicious apples.
posted by A Terrible Llama at 10:22 AM on April 26, 2010

What about a second hand clothing/used household items shop? Or a dollar store type place that carries generic cleaning supplies, school supplies, etc.?
posted by December at 10:28 AM on April 26, 2010 [3 favorites]

yes, a small farmers market type joint would be great - establish direct relationships with growers & producers, don't get fancy with your overhead or displays to keep costs down, sell direct out of the case & sell cheap - you'll be doing the community well & they'll appreciate the access to fresh food
posted by jammy at 10:30 AM on April 26, 2010

How about a place like Once Upon A Child, (ignore the awful music) that buys gently used kids' clothing from parents and resells it to the public? I'm not suggesting a franchise, mind you, just an idea. You could make it not child-specific, too. Clothing, household; like December suggested. But there's the added benefit of people being able to get some quick cash or store credit for their clothes/stuff.
posted by cooker girl at 10:31 AM on April 26, 2010

I'm glad you're not going the expected route because most of the businesses on your list exist and thrive because they take advantage of the demographic rather than do any actual good for them. But back in my small college town, the poorer area had a little gem called the Discount Grocery Safari. It was amazing, as it carried tons of random, heavily discounted grocery items that were either surplus from local stores or unsellable at the chains because of slightly damaged packaging. I'm not sure how exactly they got their products, but the stock was always changing and had things like 10 cent cans of chick peas to high end cocktail mixers to industrial size cans of brownie mix. Plus staples like dog food and cereal.

If it's "artsy", how about an art supply store full of donated/thrifted ric rac for artists to rummage through? Basically do this Scrap Exchange.
posted by Juicy Avenger at 10:32 AM on April 26, 2010 [3 favorites]

Seconding the dollar/99c store. Chain pharmacy/general stores (Walgreens, Rite Aid, et. al.) are trepidation to set up shop in impoverished parts of town, so this is where you go for just about any non-food, cheap and disposable item you need.
posted by griphus at 10:38 AM on April 26, 2010 [1 favorite]

In my neighborhood the storefront places that seem to thrive (in that there are many of them) are:
  • hair salons
  • nail salons
  • bodegas
  • 99 cent stores
  • fried food (chicken or fish) takeout places
  • barbershops
  • laundromats
  • drugstores
  • specialty stores catering to specific ethnicities or nationalities

posted by ocherdraco at 10:41 AM on April 26, 2010

Artsy as in its popular with artists because of low cost of living? Do you suspect there will be a revitalization of the area with an influx of new younger people (like students or 20somethings, aka "hipsters")?

As others have said, getting money (ethically) from poor people isn't easy. Another route you could take is getting money from the non-poor in the area, like 20somethings dependent on upper class parents, and middle class young couples/professionals who live there for the culture/artsyness.

Cheap Barber Shop/salon with funky decor and a can of beer when you walk in.
Pizza place with lots of funky vegan/veggie friendly toppings named after local things
Craft store boutique.
Taco Truck. 'nuff said.
posted by fontophilic at 10:42 AM on April 26, 2010

Also: bike repair shops are badly needed in my urban neighborhood, but are often chased away by the few gentrifying neighbors who think the bikes on the sidewalks are ugly.
posted by ocherdraco at 10:44 AM on April 26, 2010 [1 favorite]

Thrift shop? Coffee shop?
posted by floweredfish at 10:52 AM on April 26, 2010

I'm no expert or anything, but if I were living in a poor area, I'd really appreciate a produce store/farmer's market. In fact, I do not live in a poor area, but I do travel to a poor area so that I can get my hands on some decently priced fruits and veggies. So, not only would you have the local neighborhood frequenting your store, but people from other areas seeking a good deal.

I'd also like a used book, dvd, cd store.

An ice cream shop would be awesome. And I've seen quite a few thrive in depressed areas.

Used clothing store.

General store.

Some sort of repair shop - bike (mentioned above), Auto Zone-type shop, hardware store
posted by Sassyfras at 10:58 AM on April 26, 2010

A few things spring to mind:

1) A business that does not depend on your location I write medical info and could live anywhere provided there is internet connection...no store front is needed so it cuts down on additional costs...there are lots of similar businesses (e.g. web pages, graphic artists, etc.)

2) A business that supports other small businesses. Do all the little stores around you have a web page? Could they put there stuff online to sell more? Create a business that helps these small businesses - web pages, accounting, etc. Have you had conversations with people in the small stores/businesses to see what they need?

3) If I lived in an area like yours and had the background, I think it would be really neat/inteesting to form a business to help people return to work. Rewrite CVs/train people in computer skills or whatever the local area needs Maybe there would even be a grant for something like that? You could occasionally host free sessions at a library or something or give a talk, etc.
posted by Wolfster at 11:07 AM on April 26, 2010

I see a lot of these type of storefronts turn into galleries or performance spaces in my own artsy, not-that-affluent 'hood. I think the bottom line is business is always a risk, but your best bet is to do something you like and care about.
posted by drjimmy11 at 11:08 AM on April 26, 2010 [1 favorite]

This is a brilliant idea -- a studio where people can sew -- sweatshop paris.
posted by bwonder2 at 11:11 AM on April 26, 2010 [1 favorite]

Independant drug stores do well in low-income areas near me. They usually have sections bigger than your typical chain dedicated to race-specific beauty and convenience needs of the local residents.
posted by WeekendJen at 11:11 AM on April 26, 2010

A pool hall has an upfront investment in equipment, but I would think the ongoing operating costs are fairly low. There might be community opposition though. A lot of people think of pool halls as the place you go to get stabbed or score weed. Sponsoring leagues and keeping it reasonably family friendly, and generally being a good community member helps out quite a bit.
posted by electroboy at 11:34 AM on April 26, 2010

Ha! Great suggestions guys, but I'm almost a little freaked out that all of you know where I live!! You have literally named 90% of the stuff in this area (that I did not mention)! There is a Pool Hall, a Chicken place, A Farmers Market (that just shut down last summer), an Autozone, a Thrift store, Pawn Shop, Tons of small "Churches", Numerous Beauty Shops, a Dairy Queen and a Tienda (Bodega?)

You guys have your finger on the pulse for sure. The one thing that isn't here is a Used Book / CD's / Video Game store..So I think that's winning so far. Anything else come to mind?
posted by Hellafiles at 11:43 AM on April 26, 2010

I live in a poor area and the thing I most dislike about it is the lack of places to eat or buy non-processed food. There are a ton of independent 7-11/Plaid Pantry style convenience stores, but how much Rock Star, cigarettes, and energy vitamin packs can one neighborhood possibly consume? As a result, I have to travel outside my neighborhood every time I want a burrito or a cup of coffee, not to mention produce. It sucks.

What strikes me about the kinds of businesses you list that thrive in poorer neighborhoods is that, in addition to catering to the perceived needs of people down on their luck, they don't foster any sense of community. I want a place to go close to home where I can meet the other people who live in my neighborhood, where folks can congregate and feel connected to each other while eating tasty, inexpensive food or buying local produce.

Farmer's market? Taqueria? Food cart?

Good luck and thank you for trying!
posted by hollisimo at 11:46 AM on April 26, 2010

I work in a dive-y neighborood but we have tons of crazy good restaurants that people come from all over town to go to, "bad" neighborhood or not. Some restaurants are taco places and some are higher-end steak joints and Schezuan-cuisine restaurants. All of them are in pretty unassuming locales, mostly strip malls.
posted by ShadePlant at 12:15 PM on April 26, 2010

in my (rather poor, but cute) neighborhood there are two stores that both seem to be doing well (have both been here at least 3-4 years) selling discount merchandise i'm not not sure if there's a term for...you know how stuff goes from the sale rack at the big department stores to Marshall's or Ross (dress for less)...well, after there it goes to these stores...discounted discount merchandise? seems like it might be a better source of income than a 99cent store...and supply the kind of stuff you don't seem to have in the area...you might check with your local discounters to see what their deal is with selling off their older merch in bulk. A nice paint job, a big, groovy sign out front, and a good coherent layout, and you could have your own mini department store...i shop at mine all the time...
posted by sexyrobot at 12:17 PM on April 26, 2010

Food food food. Your Farmers Market shut down? What an opportunity for you. You could turn a food desert into an oasis, build community, and improve everyone's lives.

Not sure what region you're in, but a produce market could be a good idea. Not an event-type farmers' market where farmers bring their own goods and sell direct to consumers, but a market where you buy the veggies, possibly even through a broker or wholesaler, and maintain regular hours. A lot of event-based farmers' markets fail, for a variety of logistical reasons. It doesn't mean people don't want the food, but it might mean that the market analysis wasn't sufficient or hours were inconvenient...too many possible causes to guess at.

So do some market research...when do people have time to shop for food? What do they carry it home in? What do they want to eat? I can imagine a place that sold a range of fresh produce and canned, dried (rice, pasta), and maybe some meats would be great.
posted by Miko at 12:28 PM on April 26, 2010

I'd kill for a head shop anywhere near me.
posted by unixrat at 12:33 PM on April 26, 2010

also, (playing devil's advocate here)...the fact that the farmer's market went out of business might just be a big warning sign...grocery stores operate on razor-thin profit margins...often the produce section operates on a loss (the greatest profits come from the prepackaged foods on the aisles, the least from anything on the perimeter of the store)...food in general is a dicey business to get into...big startup/equipment costs, lots of licensing, health codes and inspections and what-not, lots of waste (fresh food doesn't stay fresh), massive heating/cooling bills, etc...
posted by sexyrobot at 12:43 PM on April 26, 2010

One of the best things to hit my local hood some twenty years ago was a used bookstore and performance space. Most of their income came from grants and they are still going strong. The founder is a singularly remarkable woman who can talk to the mayor or a toothless addict asleep in the doorway. If you want to look at this more mefi mail me.
posted by mearls at 12:45 PM on April 26, 2010

Combination used bookstore/coffeehouse -- there used to be a great one in Cincinnati called Kaldi's that was in a less-than-great neighborhood and yet always did well. You could stock DVDs/games/etc too if you wanted.
posted by bitter-girl.com at 1:06 PM on April 26, 2010

What about a low-cost internet cafe? Probably lots of people in the neighborhood don't have home broadband.
posted by Afroblanco at 1:08 PM on April 26, 2010 [1 favorite]

If there is a school or college near then you could be a small bookstore specializing in cheap textbooks and novels.
posted by meepmeow at 1:18 PM on April 26, 2010

Plus, you'd have basically no overhead. You'd just need storefront space, an internet connection, and some cheap desktop PCs. You could also sell beverages from a refrigerated case, and make money that way.
posted by Afroblanco at 1:20 PM on April 26, 2010

Seconding sexyrobot's comment. I lived in (and worked in longer) the city of Detroit for many years. Right now I guess you could describe about 80% of the city as "poor." The city sorely lacks grocery stores and places to buy fresh produce outside of Eastern Market. Several grocery chains have tried and failed at maintaining stores within the city limits. The drawbacks that led to closure were loss prevention (TONS of shoplifting), insurance costs (high crime area), and staffing - it became next to impossible to find prospective employees from the area who could either/or pass the drug screening test or who didn't have a felony record.

Depending upon exactly how "poor" the neighborhood is that you're considering, I've read multiple studies that say when the economy is in the toilet the few things people will still spend their meager dollars on are liquor and cosmetics. When I worked at a company located in a very poor neighborhood in 2003, the only active businesses within a five mile radius were braiding salons, nail salons and party stores (also known as liquor stores or convenience stores).
posted by Oriole Adams at 1:58 PM on April 26, 2010

A CrossFit gym has a low initial equipment cost. See Steve's Club as an example in a poorer area (Camden, NJ.)
posted by ctmf at 3:11 PM on April 26, 2010

I think chains are pretty distinct from independently owned stores for all those reasons. In a small independent, there are no shareholders and no prescribed profit margins or quarterly targets. Hiring decisions are not complicated by company policies like drug screenings and can be based on performance potential. Shoplifting is much easier to perceive in a small store than in a large store with many hidden aisles. I know that chain groceries have a history of failing in poor neighborhoods, but these are some of the reasons - their business models are not well adapted to those communities. In the United STates prior to 1950 - in other words, prior to the rise of grocery chains - independently owned corner stores and small groceries were extremely common in poor neighborhoods and inner cities. It's not that it's impossible to run small groceries in cities - it's that chains, which have grown to dominate the distribution of commercially produced foods, cannot find ways to generate enough profit in those neighborhoods.

It leaves a niche that can be filled by a good manager. That niche is, in fact, so attractive that many small business owners fill it by opening "convenience" stores that charge exorbitant amounts for regular goods that would be a third the price in a suburban supermarket. People shop there because they have little choice - when you walk everywhere, it's hard to just walk over to the lower-priced competition, who may be miles away. But you don't have to play that game to make money selling food.
posted by Miko at 4:21 PM on April 26, 2010 [1 favorite]

The used book/DVD/CD idea seems like it could be viable; maybe you could also have a wall (or walls) dedicated to showcasing work by neighborhood artists. This might be especially valuable if your neighborhood is plagued by graffiti, as the perpetrators could perhaps be channeled into practicing more socially acceptable art forms if a space was available for them to show it. I also like the used clothing idea, sort of like St. Vincent de Paul stores used to carry.
posted by motown missile at 12:59 AM on April 27, 2010

From Businessweek: Indie Grocery Stores Beat Back the Bigs and Strategies for Independent Grocers.

Basically, you can't beat large stores on price. They have economies of scale in purchasing and razor thin margins, so you have to win customers with service and innovation. Whether that's prepared foods, local produce or offering home delivery, it's really up to what local the local demand is for.

Also, try Progressive Grocer, industry trade mag for independent stores.
posted by electroboy at 8:25 AM on April 27, 2010 [1 favorite]

Just googling around, it looks like chain grocery stores have a profit margin of about 2%, which makes me wonder why anyone would operate a chain grocery store. If I had the capital to invest and wanted to make a better return, I could open a savings account.
posted by electroboy at 8:41 AM on April 27, 2010

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