Earvin "Magic" Johnson, the basketball legend, is hoping that businesses will follow his lead and locate new stores in Prince George's County when they are thinking about where to put their next ventures.
Johnson himself is involved in negotiations over turning US Airways Arena into a shopping mall, and he opened his first Washington area Starbucks Coffee store last week in Hyattsville.
Johnson and Howard Schultz, Starbucks Coffee Co. chairman and chief executive, were on hand at 3601 East West Hwy. March 1 to celebrate the opening of the Starbucks Coffee store. It's one of 16 Starbucks locations owned by Urban Coffee Opportunities, a 50-50 joint venture between Johnson's privately held company, Johnson Development Corp., and Starbucks.
Speaking before a cadre of television cameras and fans in the outdoor parking lot, Johnson voiced his social mission: "Johnson Development is just trying to bring the urban community and minority community to a whole [new] level," serving the population with "the best of the best."
The new Starbucks--the first Urban Coffee Opportunities store in the Washington area--is the basketball star's second business investment in Prince George's County. Last year, Johnson Development announced that it would open a 19-screen Magic Johnson Theater in the proposed retail-and-entertainment complex where the vacant US Airways Arena stands now. That theater will break ground if there is agreement on a land lease among the county, arena owner Abe Pollin and Cordish Co., the Baltimore-based developer of the retail complex.
Speaking in an interview, Johnson said he has spent a significant amount of time in the county and noted the lack of retail and restaurant venues available. "It's just shocking to me," he said. "Companies still have that fear of coming into minority communities, for some reason."
In the last two decades, the county's affluence has risen along with the African American population, which now accounts for about 60 percent of the county's residents. The county's average household income of $63,285 in 1999 is higher than both state and national averages, according to data service Claritas Inc.
Retailers' lack of interest in communities like this may be changing, Johnson said. Johnson, who said being involved with business and wielding influence in communities through dollars gives him "the same kind of rush" as being on the basketball court, said "more companies are looking for that African American dollar."
Schultz, who has opened stores with Johnson Development in Cleveland, Los Angeles, Atlanta, Detroit and Harlem, said other companies' chief executives are noting the profitability of Starbucks stores located in "underserved" minority communities and are starting to follow suit.
Schultz said the recently opened Harlem store, at 125th Street and Lenox Avenue, brought him this comment from friends: "Howard, you're crazy. It'll never make money." But that store is profitable, like all of the Urban Coffee Opportunities stores, and has attracted an Old Navy clothing store down the street, Schultz said.
Experts studying corporate investment in urban areas note the same trend.
"Companies want to align their corporate philanthropic effort with their business strategy," which means doing well for the neighborhood and for the bottom line, said Dierdre Coyle, spokeswoman for Initiative for a Competitive Inner City, a Boston-based nonprofit research group. In the past five years, more and more companies are developing strategies to tap the dense, "underserved" populations in many of the country's urban areas, she said.
According to a 1998 study by the research group, urban retail amounts to an $85 billion-a-year market, or 7 percent of the domestic retail industry. On average, 25 percent of those markets are underserved, the study found.
Ned Hill, a professor at Cleveland State University, said inner-ring suburbs such as Prince George's County are the next target for retailers. Inner-suburb housing markets are booming as anti-sprawl efforts cap growth in outer suburbs, and that means a boost in retailing and food shops within those close-in communities, he said.
The localities where Urban Coffee Opportunities stores open stand to benefit because all locations are staffed by local residents, Schultz said. In addition, the venture helps to fund the Starbucks Foundation's literacy program, which last year donated $500,000 to programs to educate many minority, disenfranchised children, he said.
Kenneth T. Lombard, president of Johnson Development, said the partnership eventually plans to open 20 to 25 stores in the Washington area. All of Johnson Development's ventures--including his four open Magic Johnson Theaters, his partnership with T.G.I. Friday's restaurants and the Starbucks stores--are turning profits, Lombard said.
So why did Johnson, an avid tea drinker, choose coffee shops as his economic development tool?
"We don't have a lot of social places in our community," Johnson said, draping his 6-foot 9-inch frame over the Starbucks coffee counter. When Johnson Development surveyed minority communities, the thing residents most wanted was a coffee store, which can serve as a community and social gathering place, Johnson said, flashing the characteristically charming smile that adorns the walls of the Hyattsville Starbucks.