Meijer Plans Detroit Supercenter, Michigan Plans to Reward New Food Stores

Last Updated Sep 11, 2009 5:04 PM EDT

Michigan is ready to grease the wheels for retailers who want to bring their act to the state, and Meijer is in a position to gain.

Earlier this summer, word got out that Meijer had been assessing a property at Eight Mile Road and Woodward in Detroit, an exercise watched with interest by a city left for dead by economic developments that have been battering it since the Volkswagen Beetle took flight on American motorway and a fellow by the name of Sam Walton decided that he had a great idea for a new store.

In mid-August, the Detroit Free Press reported that Meijer indeed would build on the site, calling it a "huge win" for a sputtering Motor City. Meijer spokesman Frank Guglielmi cautioned, however, that the store and when it will open are not altogether in the retailer's hands. Unlike most Meijer projects, which the company works itself, the retail space at Eight Mile and Woodward is being developed by a third party who "still has a lot to do" as regards bringing the whole project home, Guglielmi said. A purchase agreement has been signed, however, and Meijer is going forward with the project.

Now, the Michigan departments of Agriculture and Treasury have developed Public Act 231, which provides incentives for retail food businesses that expand, improve, or open in underserved areas, and Detroit's that. The parties involved estimated PA 231 could lead to approximately $852 million in sales and 3,020 additional jobs in Michigan.

Meijer is set to spend $90 million and create 600 jobs with its new store on Eight Mile and Woodward, according to reports.

While the purpose of PA 231, as stated, is to provide underserved consumers with better access to food, the jobs are certainly important in a state with among the highest unemployment rates in the nation. Rewarding Meijer might also have been playing through certain political minds, even if way, way at the back. After all, Meijer is a Michigan company that, at the beginning of the economic downturn, promised to invest heavily in the state and has. Much of its recent store growth has been in its home state even though its market area stretches from Ohio to Illinois. And the state government could hardly be blamed for wanting to promote a local success story after the troubles so many Michigan companies have suffered in recent years, and not just in the auto industry. Kmart has closed dozens of stores in what had been its home state after a bankruptcy filing and its purchase by Sears, which moved the discounter store chain's headquarters to the Chicago suburbs.

Meijer won't be the first supercenter operator to open shop in Detroit. Kmart opened a Detroit supercenter many years ago, and it's still in operation on Telegraph Road, one of the few full-line food and general merchandise stores the company continues to run in southeastern Michigan. How the new Meijer location might qualify for tax breaks under PA 231 isn't quite clear yet as the proposal is new that it's hard to say how it will apply. Suffice it to say that, in as bad a shape as Michigan finds itself, the jobs created alone would justify the tax breaks.