Data for Good

Data Snapshot: Bringing Retail to Chicago's South Side

Mastercard's data-driven insights may help to better understand the economic impact of redevelopment efforts in a historic neighborhood on Chicago's South Side.

Data Snapshot: Bringing Retail to Chicago's South Side

May 15, 2018

Some call Pullman Chicago’s Rust Belt. Sitting just 15 miles south of Chicago’s Loop, it was once a hub of manufacturing. Yet the neighborhood of Pullman, like many manufacturing towns, fell on hard times. But now, with a shift to a service-centered economy, Pullman may be getting a new lease on life.

Pullman was America’s first company town, where in the 1880s the workers at the Pullman rail car factory and their families lived, worked and played. At its height, the company employed 6,300 workers, including Michelle Obama’s great-grandfather. Later, the predominantly African American neighborhood was home to Ryerson Steel, one of several steel plants on the city’s south side.

But by the 1980s, Pullman’s fortunes were following the downward spiral of manufacturing in America. By the 2008 recession, its fortunes would hit bottom, with rising foreclosures, unemployment and poverty. Home prices in Pullman recorded some of the largest drops in the city, leaving many families underwater on their mortgages.

But today, it might just be beginning to turn around. Since the early 2000s, the neighborhood has seen $250 million in economic development, according to the Jennifer Bransfield, vice president operations at Chicago Neighborhood Initiatives, which is responsible for spearheading much of the development in the neighborhood, helped along by city-issued Tax Increment Financing (TIF) incentives. That development includes various new retail stores, a Whole Foods distribution warehouse and a $30 million Method soap factory that employs many locals, among other new businesses.

As the story below shows, Pullman retail and consumer spending are also on the rebound.

People are shopping and spending more

The Mastercard Center for Inclusive Growth has been analyzing the effects of economic development in neighborhoods – in part by leveraging insights based on Mastercard’s anonymized and aggregated transaction data. One example of this insight-mining is an initiative that examined the economic growth potential of merchants as a result of increased traffic from bike-sharing programs and free Wi-Fi in New York City neighborhoods, another is how local crime may affect retail. The Center most recently turned its attention to Pullman.

To better understand the unique impact of the investments on Pullman, Mastercard analysts compared spending and retail trends in Pullman to those citywide. This comparison demonstrates that the effects were not just a result of an improving citywide economy.

The first notable finding is that cardholders in Pullman have more than doubled since the development began, in contrast, the growth for Chicago was 14 percent. Cardholders are a proxy for the number of shoppers.

This rise is in part the result of all the new retail going into Pullman, Bransfield thinks. Prior to 2012, Pullman was a retail desert. “For a long time, people had to buy their milk at the Citgo gas station. There were two gas stations and a McDonald’s,” she said. “That’s about it.”

Furthermore, digital payments grew by 86 percent between 2012 and 2016. In contrast, Chicago as a whole saw only 17 percent growth.

People rely heavily on cash

Pullman residents are much more likely than Chicagoans as a whole to use cash. In Pullman, ATM withdrawals for cash or cash-back transactions at stores make up nearly 40 percent of the spending totals. The Chicago-wide average is only 7 percent.


In part, this pattern is a legacy of the financial hardship that many Pullman residents have experienced. Cash is still king when you live from paycheck to paycheck, said Karen Biddle of the Center for Financial Services Innovation, whose US Financial Diaries are one of the most comprehensive insights into how low-income families budget and spend. Cash has an immediacy that banks do not, she says.

“Cash can also lend itself to budgeting in a way that digital doesn’t yet. We call it envelope budgeting,” she says. Families put their cash for groceries in one envelope, daycare money in another. “It’s tactile and real. When the money’s gone, you’re out,” Biddle said.  The high reliance on cash could also be a case of fewer ATMs and banks in the area, she notes. Currently, there is only one bank branch in the neighborhood.

Research backs up these patterns. A Pew Research survey finds that 38 percent of lower-income Americans make nearly all of their purchases in cash. In contrast, only 10 percent of those making more than $75,000 a year rely on cash. Seniors are also more likely to use cash, which fits the demographics in Pullman as well.

Spending peaks at the end of the month

Another pattern related to low-income families is the end-of-the-month spikes in spending that the data reveal. These spikes are driven largely by government remittances for social benefits.

Interestingly, the data also reflect a spending plummet in mid-June 2017 that appears to coincide with a three-day stretch of gun violence on the south and west sides, with dozens wounded and two killed.

Bridging data gaps to understand community wealth

We are only beginning to explore this rich set of data, but for urban planners, community organizations and business, it can be an invaluable resource for its timely and highly responsive insights.

In a recent blog post, Michelle Thompson, a researcher and the Mastercard Center Public Interest Technology Fellow at New America, underscores the significance of how Mastercard’s data-driven insights—coupled with citizen scientists’ rich neighborhood knowledge—can give “businesses a more accurate idea of community wealth, encouraging them to expand their services into previously untouched neighborhoods and give residents more choice and new opportunities.”

Bransfield and her team at CNI agree. It’s not been easy, she says, to entice retailers to locate in Pullman. But with insights like this, “it will get easier. We can help them to see that there is a market here. It may not be the most affluent, but there is spending power here.”

The Center’s data and analytics team, Melinda Rolfs and Ed Lee, and Mastercard data scientists Evelyn Zhang and Jessica Farrell contributed to this report.