Jue Insight: The Gentrification Effect of Retail Amenities: Evidence from Whole Foods Market

Abstract

We study the effect of premium grocery store openings, i.e., Whole Foods Market, on their surrounding communities. To identify this amenity premium, we compare narrowly defined neighborhoods that host a Whole Foods Market with similar communities that receive non-premium grocery stores. We find that neighborhoods experience significant increases in high-income, prime age, and skilled residents over five years following the opening of a premium store. Whole Foods openings also lead to higher house prices and shifts toward income-elastic retail and services in surrounding areas. We argue that individual businesses can generate amenities that significantly affect neighborhood dynamics and trigger gentrification.

Keywords: Gentrification, Grocery Stores, Neighborhood Change