Census figures have just come out and the long standing argument that the census undercounts urban areas is bound to become part of the story. In fact, the State of California is already prepared to argue that they were undercounted in 2010 by 1.5 million.

Cities are where the undercount typically happens. That is because ‘hard to count’ populations reside in urban areas. In fact, the last census is estimated to have resulted in an undercount of 1 million people of color in New York alone. The undercount not only affects the amount of Federal dollars heading to New York, it grossly under represents to retailers the opportunities for  business, as most retail market analysis is based on census figures. If those figures are off, then businesses will come to inaccurate conclusions about market potential in urban areas. Consider that an undercount of 1 million individuals at a median income of approx. $22,000 per person represents $1 BILLION in unrecognized income – and you realize how much is at stake.

The International Council of Shopping Centers (ICSC) completed a survey of retailers in 2004, in partnership with Business for Social Responsibility, and asked them why they didn’t invest in urban areas underserved by retail. The second most cited obstacle to investment in underserved markets was an “insufficient concentration of the retailer’s target customer”. A Census undercount contributes to that fallacy.

Yet not all retailers are avoiding urban markets. In fact, this September chain behemoths Walmart and Target unveiled “urban” strategies – and the announcements cited both the diminishing opportunities in the traditional suburban marketplace and the unrecognized opportunities in the urban marketplace.

Will a 2010 Census undercount further reinforce the stereotype of limited buying power in urban areas, or will the success of stores like Target and Walmart put the debate to rest?