Violent crime's effect on retailers

When violent crime surges in low-crime areas, retail businesses there seem to suffer more than their counterparts in areas with normally high crime rates, according to research from Ohio State University, Columbus.

A study of business activity and crime in five cities indicates that, when the number of homicides increased dramatically in low-crime zip codes, there were significant reductions in the growth rate of new retail and service businesses as well as employment in existing businesses. Surges in homicides in high-crime areas had no significant effect on local business growth.

The results show how the impact of violent crime extends beyond areas where it is most prevalent, contends Robert Greenbaum, assistant professor of public policy and management. "It is not just the levels of crime, but the fear of crime that affects the decisions people make.

"The fact that violent crime is rare in low-crime areas makes any increase all the more shocking and frightening. Customers are less likely to visit businesses in the neighborhood, and entrepreneurs are less likely to open a new business."

In medium-crime areas, homicide surges had some negative effects on business, but not nearly as much as in the low-crime areas. The study found no real effects on businesses when surges occurred in high-crime neighborhoods. "In high-crime areas, a surge may not even be perceptible to many people," Greenbaum concludes. "Businesses and customers are already aware of the high crime rate and have adjusted their expectations."

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