Avoiding Common Mistakes in Retail Attraction

One of the most common mistakes I see when commercial district managers attempt retail attraction strategies is a real disconnect between the retail they want to see in the district and the availability of space in the district to accommodate those uses appropriately. This often comes from a lack of understanding of what the retailers want and need in order to develop a successful store. Understanding retailer (or restaurateur) site selection criteria is critical not only to successful retail attraction – but to a successful long-term relationship with a retailer. There is nothing worse for your credibility or the reputation of your district than significant store turnover. Turnover communicates to potential other new businesses that an area is not a good investment – and makes your job over the long term that much more difficult.

How do you figure out what retailers need and want? Sometimes they don’t even know!

Many district managers I work with are far more interested in attracting unique specialty stores and restaurants – rather than chains – to their districts. These smaller entrepreneurs are often much less sophisticated in using market and demographic analysis for their site selection decisions, which is fine. But I encourage district managers to take the time to research and understand industry standards and guidelines – yes, even for chains – to get a good sense of what kinds of spaces work or don’t work for different retail categories. This kind of information will only help you develop better talking points for any retailer you approach.

Information about retailer site selection criteria requires some research. Two good resources include:

• ICSC’s Shopping Centers Today

• Retail Traffic

Get to know your district from the perspective of a retailer/restaurateur

What are typical space requirements for these kinds of retailers? What kinds of complimentary uses would help the retailer generate additional customer traffic? Who is the target market, and do you have enough of those people in your trade area to support the business over the long-term? Tucanos grill, for instance, is looking for 7,000 to 7,500 square feet in “middle markets” with good proximity to a movie theater/entertainment. If you were to approach Tucano’s – would you be able to bring them the kind of space that would make a meeting worth their while? (Ref: Retail Traffic, 12/16/09, “Tucanos Grill Starts to Sizzle”)

This kind of information is not always intuitive – so do your homework before reaching out to the retailers you are interested in and determine whether your district fits their needs.

Work with a Local Broker – and If you Don’t Have One, Become the Local Broker

If you don’t know your district vacancies very – develop a working relationship with local brokers. Unfortunately, many districts – the market may be too weak to attract the interest of local brokers, in which case you will need to make sure you develop and maintain a very good building and business inventory (which you should have anyway!). Consider developing an on-line list of vacancies. A simple listing of vacancies like those shown here at Urban Solutions, a great Bay Area non-profit that focuses on retail attraction in difficult urban areas, is a good start.

Even during these difficult times – there are retailers seeking good deals and good spaces. But before embarking on a retail attraction initiative, take the time to figure out if the available spaces in your district are the right ones for the retailers you want!

New Report by the International Council of Shopping Centers looks at how the Recession Has Affected Consumer Spending

A link to the report outlining the findings from an on-line survey of 2,500 shoppers can be found at http://www.icsc.org/web/RecessionBooklet104.pdf

For commercial district managers, some of the more pertinent information and findings from this survey related to the effectiveness of Loyalty Programs and Special Events in driving consumer traffic. These are two very common programs advanced by commercial district managers and so deserve a more detailed look...

Loyalty Cards – People Like Them, But They Aren’t Widespread Yet
While many consumers participate in loyalty programs offered by specific retailers, only 2% reported that they belong to a mall or shopping center program, the closest corollary to a district loyalty card. This may be due, in part, to the fact that the mall-wide programs are less prevalent and less well marketed. People did remark that they join these programs for the savings – so there does seem to be an untapped opportunity to grow consumer interest in district-wide loyalty programs.

Special Events Do Drive Retail Traffic
Not surprisingly, Special Events were an effective method of enticing shoppers to visit shopping districts. 40% of those surveyed said they attended a special event or activity at a shopping center within the past 12 months – and an additional 25% reported that although they had not attended a special event, they would like to see more special events in the future. The most widely attended events included farmers markets, crafts fairs and music events/concerts – all activities that also lend themselves to more traditional commercial districts as well. Most importantly, 58% of folks who attended these events said they purchased either food or other goods during their visit. This is good news for retailers who stand to benefit from special events put on by the commercial district management entity.

Make Sure the Special Event Actually Helps Businesses
I know, it sound simple, but I have visited many commercial districts where the district manager spends months planning special events that, in the end, do little to help local businesses grow their sales. So before you run out and put on a special event – remember that these events are a good compliment to retail only when they are planned and managed in such a way that retailers are able to benefit. For example, don’t hold special events when most stores are closed. This can sometimes be a challenge - particularly in districts where business owners are used to closing early and sometimes remaining closed over the weekend. Instead, work with retailers to engage them in the event by asking them to stay open, and then make sure that you give attendees a strong reason to go into open stores (raffles and in-store events that get them through a retailers door are two options). Also, make sure the events are held close enough to where the retail action is so that you increase the chances of attendees walking into local stores. I mean, what is the point of a farmers market as a revitalization tool if it’s five blocks from your retail stores? While the park may be a great place for a market – perhaps it makes more sense to close a side street that is closer to retailers – otherwise they will not benefit from the increased traffic you are creating.

Loyalty Cards and Special Events take a tremendous amount of work and effort - so make sure your retailers are benefiting from them before taking the plunge!

For more of the survey findings, be sure to check out the report at: http://www.icsc.org/web/RecessionBooklet104.pdf

Overcoming Challenges to Building Rehablitation

Larisa Ortiz is co-author of “Real Estate Redevelopment & Reuse, An Economic Development Practitioner’s Guide” [2000: out of print]. She has also authored articles and policy briefs on the topic of building rehabilitation, including “The Politics of Rehabilitation” [2004] published by the Rappaport Institute at the Harvard Kennedy School of Government.

Many commercial districts face similar challenges when considering the reuse of historic buildings in their commercial districts. Originally, I got my start in this field because of a deep concern for historic buildings and a deep desire to see historic buildings successfully incorporated into commercial district revitalization strategies.

Zoning

A recent New York Times article entitled “The Use Changes; the Look Stays” articulates the challenges of using historic buildings quite clearly – zoning laws that are often antiquated and do not allow for a mix of uses (mostly residential) on upper-floors.

In the case of Ossining, the New York Times noted that the mixed-use rehabilitation that allowed for the rehab of this beautiful bank building resulted, in part, from Village rezoning efforts that allowed for residential uses above commercial uses within downtown commercial district.

Zoning and building codes that prevent or discourage rehab projects are actually not all that uncommon. Some states have gone so far as to create a distinct set of codes that apply to building rehabs. See more on New Jersey’s Rehabilitation Subcode which is a national best practice in how zoning can help facilitate rehab, rather than impede rehab. The subcode creates a set of rehabilitation requirements distinct and separate from those for new construction. The reason why this is important is because often times, upgrading an older building to meet building code requirements for new buildings is impossible without starting from scratch. So what typically happens is that building codes are applied and changed on a case by case basis - which can add significant and unknown costs to a project - costs that cannot be defined at the outset of a project. This kind of risk is one that many developers will avoid - choosing instead to work on buildings and new construction where building codes and expectations are more clear cut. By clearly defining buildig code upgrades and expectations for older buildings, the building can be rehabbed in a way that ensures user safety, but that takes the guesswork out of how much these upgrades will cost, thereby removing some of the risk to the developer.

Another issue that frequently comes up is the need, although not always the requirement, for parking. In many communities, the marketability of residential apartments mean meeting the parking needs of prospective residents. Sometimes we forget this, but not every market allows for living without a car – so developers need to incorporate parking in one way, shape or form.

Financing: Not all Funding for Rehabilitation is Created Alike

As valuable as the Historic Tax Credit may be, the credit places a number of restrictions on rehabilitation, and sometimes makes a project financially unfeasible. In the case of a project I worked on in Boston many years ago that involved a former convent, the space as originally configured included a great deal of communal space for the nuns. A historic rehab would have to maintain the integrity of this communal space, i.e. leave it open, thus reducing the net leasable area and subsequently the level of debt service the project can carry.

In the case of the buildings profiled in the Times article, funding came through a variety of sources. Interestingly enough, none included the Historic Tax Credit. Instead, funding came from “$1.2 million from Westchester County, $480,000 from the New York State Affordable Housing Corporation, a traditional $2.6 million mortgage and the firm’s own equity.” I honestly don’t find it particularly surprising that Historic Tax Credits were not used for this project. Adding that layer of oversight might have further complicated the project for the developer – who indicated that it was in fact a more complicated project than they typically tackle.

In my experience, I have found that it is not uncommon for rehab projects to incorporate a mix of federal and state funds for affordable housing. Most common among this is the Low-Income Housing Tax Credit. The renovation of older buildings for the purposes of affordable housing is often the first step towards developing downtown market demand – and I have seen it serve as an effective catalyst for market rate development along commercial districts as well.

Overcoming the challenges associated with building rehab is not easy – and it does take a developer willing and able to tackle challenges and obstacles – but it is not without its rewards. The return of these iconic buildings to the housing and retail stock can be a wonderful stepping stone for overall commercial revitalization.

Retail Insights, Fall 2009: Not all Recoveries are Created Equal

As economic experts begin to suggest that the recession is over, we know that the recovery is not yet an ‘equal opportunity recovery’ for all commercial district retailers. Our commercial districts continue to see higher vacancies and our merchants continue to face challenges. The good news is that some retail sectors are beginning to see a rebound as consumer confidence has increased. As a commercial district manager, you are in a good position to help both merchants who are benefiting from this new found increased demand, as well as those merchants looking for ways to reduce costs as demand for their merchandise continues to fall or remain stagnant.

Necessities are Where It's At
Consumers do seem to be ramping up purchases, but they continue to focus their spending on goods and services that can be justified as ‘necessities’, like shoes. According to this New York Times article, "A Not-So-Guilty Pleasure", people are spending money on moderately priced shoes in part because it is a less conspicuous splurge, and certainly a more affordable one, than other kinds of splurges. And as folks decide to spend more time close to home engaged in low cost activities like hiking, walking, sports – they need more rugged shoes. This trend means that the local shoe store in your district, whether a locally-owned shoe store or a Payless, is likely poised to benefit from increased consumer spending. A targeted marketing campaign to help retailers who sell these moderately priced necessities would be well suited to today’s economic reality.

Still Not Much Good News for Stores Selling Discretionary Goods
Jewelry stores, on the other hand, are suffering, according to this Wall Street Journal article, "Jeweler's Outlook Lackluster". To survive, many stores are changing their product mix to meet demand on the lower end of the spectrum. Instead of costly jewelry, consumers are purchasing less expensive sterling silver, for instance. Jewelry remains for many a luxury or discretionary item that can be cut from the budget. Unfortunately, as the WSJ article points out, jewelry vendors that are making it are, in some cases, succeeding in part because they are closing down their storefront shops and selling entirely over the internet. Not good news for commercial districts. But this move allows them to cut operating costs dramatically, both in terms of occupancy costs and staffing.

So, keeping a jeweler in your district may mean helping them reduce their footprint and operating costs. One option that might entice some merchants to stick around is figuring out ways for them to rent counter space within other establishments. In my community of Jackson Heights, Queens, a very nice local jeweler/gift shop is located within an art gallery/frame store. The merchandise mix is actually quite complimentary. As customers wait for their order, they can peruse the store for framed art, gifts and antique jewelry. A great way to help two business owners reduce their occupancy costs – while also ensuring your district retains a healthy and balanced retail mix.

Retailers Spill the Beans about Finding Opportunities for Growth in Urban Markets

By Larisa Ortiz Pu-Folkes

Larisa serves on the ICSC Alliance Planning Committee. Larisa Ortiz Associates was also one of the ICSC Alliance event co- sponsors.

This morning was the culmination of New York’s ICSC Alliance Program entitled “Local Chains Strike Gold in Emerging Markets.” The Planning Committee was very excited to have a great keynote and thoughtful panelists who provided real insight into how New York-based chainlets are growing and making site selection decisions in urban markets. The event included keynote speaker Aaron Fleishaker, Vice President of Real Estate for Fairway Foods, and three panelists, including Denine Pappalardo, VP of Sales for Carol’s Daughter, Jack Falack, President of Cookie’s Children's Department Stores and Seth Datz and Jason Richelson, Owners of The Greene Grape.

Each panelist represented a retailer at various stages of growth and maturity. Carol’s Daughter is a high-end cosmetics company serving an African-American clientele (investors include Will Smith, Jada Pinkett-Smith, JZ and Mary J. Blige) with nine retail stores and over 400 points of sale throughout the nation. Cookie’s Department stores is a children’s clothing store that serves an urban clientele in the outer boroughs, and The Greene Grape is an upscale wine and gourmet food chainlet with three outlets in the New York area. The panelists provided attendees, a mix of brokers, developers, and economic development practitioners with thoughtful insight on how they make their site location decisions in urban markets, whether these markets include 125th in Manhattan, Fort Greene in Brooklyn, or Fordham Road in the Bronx.

So, what did we learn today from these retailers with the foresight to establish themselves and focus on growth in urban markets? The lessons were simple and varied…

• Retailers who make money in urban commercial districts understand the value of density. They get that customers, in many cases, are not driving to their stores and are less mobile than suburban customers. These retailers see this as a ‘pro’, rather than a ‘con’. Aaron Fleishaker of Fairway Food says “the urban customer is the most loyal customer.” Another panelist, Jason Richelson of The Greene Grape, a wine and gourmet food chainlet with three locations in Brooklyn and Manhattan, agrees, ‘our customer can’t jump in a car so easily to get to the competition.’ He goes on to add that there is often less high-quality competition in urban commercial districts, which puts his stores at a distinct advantage. Although the dynamic of less competition may be changing as retailers ‘discover’ urban markets, the retailers on this panel know that the urban customer doesn’t have so many options, and as a result is very loyal to businesses that provide a quality product in a convenient location.
• These retailers are often much more intuitive about their site selection decisions. Every retailer on the panel mentioned that great foot traffic is an excellent barometer of a neighborhood’s retail potential, but when asked whether they do research into pedestrian counts before making a decision to open a new store, Falak, the owner’s of Cookies, a regional children’s department store, said flat out “no”, and his colleagues seem to agree. Instead, they seem to get to know a neighborhood first by walking the streets over and over again to see if their target customer is there. When the Greene Grape, for example, considered space in Lower Manhattan’s Financial District, the fact that thousands of pedestrians passed the location every day was less of criteria for the owner than the fact that more and more of the buildings were being converted to residential uses. “We knew that most of the people walking in front of the store were not coming in, they were getting off the train and going straight to work. But we did see families and strollers and that made us believe we could be successful” says Richelson of the Greene Grape.
• Successful urban chainlets are flexible when it comes to space. They eschew formulaic floor plans favored by national chains in favor of finding spaces (any space really) in the RIGHT location. Fleishaker says ‘if you had to wait for the right space, you would be waiting for years and the market would pass you by.’ He mentioned an experience he had while working with Modell Sporting Goods during their period of rapid expansion in the New York and Philadelphia markets. The retailer was looking at spaces in Bay Ridge, Brooklyn, ideally in a location as close as they could get to Century 21, another New York-based chainlet and well-known discount department store. They eventually found an old theatre and negotiated a favorable lease with the landlord that included a second floor balcony that had not been used in years. Modell’s renovated and put in an escalator to the second floor – in the process acquiring additional square footage for a cost significantly below market rent. Basically, they did what they could to make the space work, and in the end, ended up within a block of Century 21 - exactly where they wanted to be. Most national chains would have rejected the space that Fleishman and his team turned into a very profitable store for his company.
• There is no ‘one size fits all’ model for determining how to use precious capital. In the case of Cookies, their business model is one that lends itself to owning buildings outright. “We are our best landlord” says Falak. As a children’s apparel store, his space needs are larger and tenant fit out is less expensive than his fellow panelists, so spending his capital on real estate made sense. In the case of Carol’s Daughter and The Greene Grape, they both have made strategic decisions not to tie up capital in real estate at this time in favor of using capital for tenant improvements. “We are less interested in being a landlord than in finding space and fitting it out to the level that our customers have come to expect” says panelist Denine Pappalardo of Carol’s Daughter.

These retailers are really helping to pave the way for growth in underserved urban markets. Learning how they successfully maneuver these markets and turn a profit is a lesson that will help all of us interested in attracting a greater variety of retail to our commercial districts.

Advisor Insights: Putting on a 'Taste of' Event in your Commercial District

'The other day I had the opportunity to attend the Union Square Partnership's Harvest-in-the-Square Event. Union Square Partnership is a business improvement district in Manhattan well-known for its critical mass of wonderful world-renown eateries. Now in it's 14th year, Harvest-in-the-Square is the Partnership's marquee fundraising event that showcases more than 50 participants who provide ticket holders with small 'tastes' from their restaurants or bars. Proceeds from the event benefit neighborhood programs and the beautification of Union Square Park. With some of the city's most highly regarded food and drink purveyors in participation, event tickets begin at $125 dollars for general admission and $400 for VIP tickets. Not everyone can charge tickets that high...but it does show that people will pay for the privilege of eating great food...


The event not only helps with fund raising, it also helps to further differentiate the district as a foodie destination - and is very much in keeping with a district branding strategy that has served Union Square so well over the past decade.


In my community of Jackson Heights, Queens - also know as a foodie-destination among those seeking authentic ethnic food, we put on the Jackon Heights Film and Food Festival (now it it 4th year and going on this weekend, October 24th! Check out our website at www.jhfff.org for more info.) and so I was particularly excited to see the mechanics of this event in action. Every year our event team learns a thing or two that helps improve the event, a program of the Jackson Heights Community Journal, in a way that better meets the objectives our sponsors and participating restaurants.


Here were a few good ideas that I took away from this event that I'd like us to incorporate next year:

• Each participant chose only one or two select dishes for sampling. This made preparation and serving MUCH easier for the restaurants. The chosen dish, or in some cases drink, was described in mouth-watering detail right on the restaurant signage. The signage also helped ticket holders figure out what they wanted to try more easily than asking the server.
  
• Small single bite plates were prepared for the taking and laid out attractively on serving tables. This meant that tickets holders did not have to wait in line to be served. It was a very efficient method of serving food that also helped to ensure simple rationing.
  
• Each table had very tall attract harvest decorations that lent an nice elegance to the festivities.
  
• There were two sit down eating areas and some standing tables - but for the most part the tastes were only a bite or two - so sitting was not required.
  
• There was a red carpet for the arrival of VIP's...so very New York! That and the roving tv cameras
  
• There was lots of support staff (easily identified by their colored t-shirts) on hand to ensure that people were not walking around with empty plates if they had trouble finding a garbage right away.
  
• And finally, pick only the best...the food vendors at this event were only those known for high quality.

There is obviously so much more needed to put on a great food tasting event...but as always, the devil is in the details...so keeping an eye on quality and planning an event that works for both you and your vendors is critical.

Helping Small Businesses Improve Their Bottom Line

By Patricia Blakely

Patricia Blakely is the Executive Director of The Merchants Fund and contributor to this blog. She describes her job as a cross between the Wizard of Oz (“Ignore that Woman behind the curtain.”) and a “Buy Local” advocate on steroids.

How does a small local coffee shop increase food sales by 50% and decrease food costs at the same time? Small

businesses often struggle to get costs under control – and finding ways to finance improvements that ultimately affect the bottom line is what The Merchants Fund, based in Philadelphia, is all about.

The Fund gave Jocie Dye of InFusion Coffee and Tea in the Philly neighborhood of Mt. Airy a grant to take on a variety of investments and improvements to the store. For example, many of you might not be aware, but coffee houses often run air conditioning even during the winter months because of the heat generated by the machines. The Merchants Fund grant allowed Jocie to install operable windows up high so that she could take advantage of cool days and save money. She also got serious about food quality and hired Jill Fink, owner of Mugs Shots Coffee House in Manayunk (also a TMF company) and Angie Vendetti from Fairmount to review all their food sourcing, employee procedures, improve the green profile and basically shake everything up! All of them are members of the Independents Coffee Cooperative which is an area consortium committed to fair trade and a support group for small business.

And Then There was the Hand Dryer…

Together, they found a number of ways in which Jocie could improve her product sourcing and reduce costs from both a price and environmental perspective. In the process, you can’t overlook the small things. Take hand driers, not only are hand driers greener than paper towels, but Jocie’s staff found that it was also impossible to keep the bathroom well stocked. The small staff was always running to the restroom to replace the towels. It happened during my visit just to prove it! They also added a changing table to make the place more family-friendly.

The results of Jocie’s efforts speak for themselves, a 50% increase in food sales and decreased food costs!

The Merchants Fund has helped other small businesses with similar investments. For example, we also helped Dan Thut, the owner of Greenline Café purchase point-of-sale software so that they could get control of supply and demand.

We were excited to have a hand in helping these small businesses, but in the end, what's cool about this is how all these little companies work together and support each other.

Using Google Adwords to Promote Your District

Some of you may be thinking, what are Google Ad Words? If you've ever done a search on Google, you'll notice that advertisements pop-up on the right hand side or at the top of the screen depending on what you search for. A search for 'New York restaurants', for instance, will bring up the 21 Club, a restaurant in mid-town Manhattan as a 'sponsored link'. You might wonder how that happened. The 21 Club likely paid a pretty penny to be linked to the search phrase 'New York restaurants', and every time someone clicks on the 21 Club restaurant link (known in industry parlance as 'Pay Per Click'), the restaurant pays Google for the privilege of advertising on the Google search results page.

For commercial districts, Google AdWords can be a useful tool. Consider a district interested in promoting a growing (or existing) restaurant dining niche (something pretty common among the communities we work in). My firm recently worked on a Google Adwords marketing campaign for a business improvement district in Westchester County, New York where Google AdWords campaign were used to drive traffic to the BID's website and their "Downtown Dining Stimulus Package" (a clever play on the stimulus package making the news at the time). Whenever anyone search for "Westchester Restaurants", the BID's ad would appear at the top of the page. By clicking on the sponsored link for the BID, individuals were able to print dining coupons redeemable at participating restaurants. Google later informed us that this program was among the more successful ad words campaigns they had ever sponsored. Our Google AdWords campaign had a click through rate of almost double the typical AdWords campaign.

While this campaign was successful, there are clearly do's and don'ts with this technology. I was excited to see some of these outlined in an article in today's New York Times entitled "Real-Life Lessons in Using Google AdWords". I encourage you to give it a read before starting a Google AdWords campaign....

Tales from Philly: Small Business Marketing at its Finest

A few weeks ago I had the distinct pleasure of interviewing business owner James McManaman, owner of Absolute Abstract, a ‘frameless’ art store with two locations in Philadelphia, one on 13th Street and the other on East Passyunk Avenue where I was doing some work with the local BID.

James is an excellent businessman who puts into practice all the strategies that we consultants often preach about.

Location, Location, Location
James opened his second store on East Passyunk after attending an evening social event sponsored by the East Passyunk Business Improvement District (EPBID). It was an eye-opening experience for the entrepreneur, who knew about the neighborhood, but professed to being surprised at the changing neighborhood demographics. With its evening traffic of restaurant-goers, the district was a perfect fit for his inexpensive frameless art. It met the need of potential customers who were wandering the streets in the evening looking for something to do before or after dinner. In a stroke of good luck, he found some space in the district that was ‘retail ready’ – it had been a gallery before going vacant and needed very little, if any tenant improvements. What a coup!

Advertising in the 21^st Century
James understands that his that the process of building a clientele is organic. He doesn’t believe in too much advertising, instead choosing to donate art to events in the neighborhood and building good will that generates buzz for his business. He also piggy-backs on EPBID’s evening social events by raffling off art and providing gift bags to participants and truly understands the power of great visual merchandise display. He takes extreme care with his window displays – changing them every three days!

Also critical to James’ success is his email distribution list of 3,000 customers. He makes every possible effort to get every person’s email and is the quintessential provider of customer service. He makes every effort to greet every single customer who walks into the store, telling them first about his strong concept of ‘frameless, affordable, custom-sized’ art. You can’t be in the store for more than ten seconds before hearing these buzz words. As a customer, I was immediately intrigued (anything ‘affordable’ intrigues me these days – and I’m not alone!).

James also created a website where customers can purchase art and provides free consultations. In fact, customers can send a picture of the wall they want ‘designed’ and he will create an assemblage of art to meet the customers needs. What a great concept!

It’s Not Just the Store, It’s the District
James understands that his business is not successful in vacuum. He was instrumental in helping to form a merchants group at his first store in Midtown Village, and is at it again along East Passyunk. He knows the power of district marketing and is pushing for a map of the district that can be distributed in all stores. He is also committed to helping his next door neighbor (a long standing district merchant) improve their window display. On the day he went to speak with the owner, he found himself standing in the near empty store for 20 minutes before the merchant came to help him. Undeterred, he plans to go back and find a way to help the merchant, while ensuring they are able to ‘save face’ even as they accept his help. This from a man that won’t let customers go ten seconds without being recognized and greeted.

Overall, I say kudos – and what a fantastic addition to this already bustling commercial district!

Want to Know More about Chain-lets in New York City’s Outer Borough?

Find out more about the 'Little Empires' the New York Times is talking about and hear from the businesses that make these retail concepts happen in emerging urban markets.

Don’t miss an exciting event (sponsored in part by Larisa Ortiz Associates) in collaboration with International Council of Shopping Center's (ICSC) NYC Alliance Program entitled “Local Chains Strike Gold in Emerging Markets” on the morning of October 20th, 2009 at the New York City Bar Association.

The panel discussion will include representatives from three metro-area “chain-lets” (Carol’s Daughter, The Greene Grape and Cookie’s Department Store) that are seeking and finding opportunities for growth in the outer boroughs. Keynote speaker Aaron Fleishaker, VP of Real Estate for Fairway Foods will also be on hand to explain how his company has taken advantage of opportunities in markets that others have shied away from. For more information and to register, please go to ICSC website http://www.icsc.org/apps/meeting_display.php?meeting=2009A13

Exploring the ‘Chain-let’ phenomenon

Many towns have them - local entrepreneurs who run successful local businesses and decide to open more, either under the same name or different names. These additional retail or restaurant outlets can be a great fit for districts where affordable rents still offer opportunities for entrepreneurs to test both new and “tried and true” concepts. From the perspective of commercial district managers, these less formulaic retail additions to the local business mix can also help create a more compelling shopping destination.


The Trend is Hitting the Mainstream Media
The New York Times highlighted this trend today in an article called “Brooklyn's Tide of Chains, Decidedly Local" . The piece explored how the phenomenon is changing the retail dynamics of Smith Street, where entrepreneurs are opening related concepts along a single street and creating a cluster of retail and restaurants that have defined the area as a regional destination for shopping and eating.

The phenomenon is by no means limited to Smith Street (although the clustering of single-owners in one area is a unique element). On a visit last year to Michigan, I visited downtown Lansing and had dinner at wonderful restaurant called Tavern on the Square, located in the heart of downtown on one of the city’s most attractive historic streets. A little investigation uncovered the fact that Tavern on the Square was but one concept of a restaurant group called Urban Feast. With four restaurant concepts in Michigan, all located in emerging downtown areas, this restaurant group is helping to revitalize long overlooked commercial districts. Although I wasn’t formally scouting for retail prospects at the time, I immediately thought my client in Grand Rapids (the Michigan outpost of the Local Initiative Support Corporation), when I realized that Urban Feast also had a concept called Grand Woods Lounge in downtown Grand Rapids.

A visit to Grand Rapids to help train a local group of community leaders in the use of “neighborhood market profiles” (a wonderful market data product originally created by the non-profit market analysis firm MetroEdge for the City of Chicago) afforded me the opportunity to visit the Grand Woods Lounge. In another interesting stroke of luck, one of the workshop participants knew the owners and indicated that they are in fact looking to expand with the addition of other restaurant concept in the area. What an exciting coincidence! We used the opportunity to discuss how the market profiles they had just received could be used to make the case to Urban Feast that some of their commercial districts were ripe for new restaurants. For more information on LISC MetroEdge, go to their website at: http://www.metro-edge.com/

Welcome to our newest Commercial District "Advisors"!

In August, the Commercial District Advisor put out a call for new 'Advisors' to contribute to our blog and quarterly newsletter. This is part of our growing effort to make sure the information on this site is useful to our readers and deeply rooted in the newest research and practitioner expertise available to the field. We were so pleased by the reaction from our subscribers!

Today we are happy to announce three new Advisors who will be contributing to the blog regularly. These practitioners and institutions face the challenges of commercial district revitalization every day with great passion and commitment. We hope you will join us in welcoming their input and expertise to the blog!

Practitioner Advisors

John Ungar

“My passion is making business owners get excited about their business again and encouraging them to make improvements that will increase their revenues.”

John Ungar has worked in the community development field in for 12 years and is currently Executive Director of the Mount Airy Revitalization Corporation. Over the course of his career, he has overseen business improvement efforts on three different commercial corridors in Philadelphia. His experience includes business recruitment and retention, implementing façade improvement programs, special events, providing technical assistance to businesses and to business associations, and implementing large scale public streetscape improvements.

Institutional Advisors

Social Compact
Social Compact is a nonprofit, nonpartisan coalition of business leaders from across the country committed to promoting successful investment in lower income communities. Working in close partnership with community and corporate leaders over the past decade and a half, Social Compact has pioneered the “DrillDown,” a methodology to analyze inner-city markets and create accurate, business-oriented profiles of “emerging” neighborhood markets. Drawing on business disciplines and community strength, these DrillDown profiles have a strong track record of catalyzing sustainable, private investment, benefiting communities and businesses alike.

LISC MetroEdge
Since 1998, MetroEdge has been at the forefront in collecting and analyzing a wide variety of local and specialized data sets and is one of the leading pioneers in developing urban metrics that often demonstrate untapped demand in urban markets. MetroEdge has demonstrated success in combining the power of national and local market data with strategic technical assistance and consulting services in its efforts to help non-profit commercial district management entities and public sector clients move effectively from planning to implementation.

Seven Reasons Why Your Market Study is Gathering Dust on a Shelf

Contributed by LISC MetroEdge

LISC MetroEdge is a non-profit market analysis firm and one of the leading pioneers in developing urban metrics that demonstrate untapped demand in urban markets. They provide market data coupled with strategic consulting services to non-profit commercial district management entities and public sector clients.

A few years ago, Accenture, a management consulting firm, launched a campaign featuring Tiger Woods. One of the print ads that jumped out at the MetroEdge team was the one that showed Tiger Woods in a moment of deep thought holding a pad of paper. To his right is a vertical line that ‘maps’ his thought process. It simply says 40% Information/60% Interpretation. The analogy to commercial district market analysis was strikingly clear to all of us. So many communities spend significant time gathering market data, but then fail to do what is arguably more important than the data...interpretation and action based on the information in hand. Instead, the studies they undertake sit somewhere on a shelf gathering dust. When someone finally wants to use the information, it needs to be updated because the data has already gone stale!

Most of the time, our work at MetroEdge is with communities that have never engaged in the rigorous process of information-based decision making. Instead, they have pursued ‘gut-based’ decision making that is based more often on whim than fact. Take the community with no grocery store within its boundaries. In community meetings, residents clamor for a grocery store they can walk to. The decision is made that the local community organization will pursue a grocery store operator for a piece of vacant land, all without every asking a critical question - is there enough unmet demand in the market to sustain a grocery store? The end result can sometimes be years of wasted resources, both human and financial, in pursuit of a vision or goal that at the outset was quite difficult, if not impossible to attain.

We try hard to help communities make better decisions, ones that help local community organizations and government agencies avoid the wild-goose chase in pursuit of unattainable outcomes. This process begins with not only helping communities gather good, accurate information about their market, but more importantly, by helping them INTERPRET and then ACT on this information.

In our experience, there are a few ‘market analysis’ pitfalls that communities might try to avoid. So here they are…

Seven reasons why your market analysis is gathering dust on a shelf

1. Most market analysis is well intentioned, but it stops at the 40% information point. Communities are often left hanging without much guidance when it comes to interpreting data and then making the hard decisions around resource allocation required to to use the information to take appropriate action.
2. The consultant never visits the market, and therefore the information gathered and presented doesn’t reflect the real qualitative differences in your community. Quantitative data, like census data or other demographic data, notoriously misses the market, especially in urban markets. Without a site visit, a consultant may find it difficult to tell and incorporate the ‘soft’ side of the analysis. For example, are you actively addressing any crime problems with a local beat cop? Are there local merchants who are taking care of their storefronts and helping to coordinate district-wide advertising campaigns? Is there a retailer that, despite the odds, is attracting a larger than expected market share? Is there significant development on the drawing board that will change community dynamics? All these questions will not be answered by data that reflects a snapshot in time – regardless of how fresh the data is.
3. Lots of data, with little to no interpretation that tells you what it MEANS. Numbers are only one tool in your arsenal. As a smart man named Albert Einstein once said “Not everything that counts can be counted, and not everything that can be counted counts." Sometimes too much information gets in the way of making sure the data gets utilized by players on the ground.
4. The report drops on the floor with a loud thud. Most people see a pile of paper and think, “I’ll look at that later when I have time”. We saw this problem so much over the years that we have taken a radical new approach to market data – we stopped creating traditional written reports for our clients. Instead, we create a succinct executive summary that helps clients figure out what data is important, and what isn’t. This is something that can easily be distributed and absorbed by most stakeholders. We also provide a powerpoint presentation that presents our findings, analysis and interpretation (including all of the data gathered) in a way that can be used by the client as a communication tool for the purposes of building coalitions and attracting additional stakeholder support. We fully expect our clients to take the presentation, pull it apart and customize for different audiences.
5. Stakeholders were never engaged in the process, so they got the report at the end and didn’t even read it. Good consensus building can and should be accomplished during the process of gathering market data. Don’t miss the opportunity to do so. At MetroEdge, we insist that our partners identify and engage a ‘stakeholder’ committee to help collect data, hear our findings and provide feedback on what interventions these findings begin to suggest for the group. What we have also found is that in communities where successful commercial revitalization action may require action on a contentious issues, the failure to collaborate means that not everyone is necessarily in agreement of the baseline facts, or worse, they read and interpret those facts differently than their peers and come to different conclusions. Arguments ensue and nothing gets done. What works much more effectively, is to engage your stakeholders in a process by which 1) the stakeholder group first agrees to a set of questions they want answered by the study; 2) the group then selects a consultant they collectively trust who is responsible for producing the market data; 3) the group then listens to the information provided by the consultants; and 4) the group uses this agreed upon baseline information to develop solutions that incorporates the market data obtained and the interests of the stakeholder group.
6. The analysis is not connected to an on-going planning or visioning process. Someone told you needed a market analysis, and you did it, but now you don’t know what to do with it.
7. The analysis did not end with a set of concrete interventions that reflected the on-the-ground reality of available resources (both human and financial). Instead, the outcome was a laundry list of implementation items, rather than a set of clearly identified strategies with roles and responsibilities identified. We recently worked in a community where a market study resulted in laundry list of 'to do' items on a 10 page spreadsheet. The list included great ideas, to be sure, but it didn't help the district manager figure out which of those ideas were the MOST IMPORTANT of the bunch. Every concept was treated equally, leaving the manager overwhelmed and with no strategic direction about how to move any of the action items listed and in what order.

A market analysis is like a hammer in a tool box. Like any toolbox, it takes more than a hammer to build a market. And in our opinion, interpreting the data is even more critical than having the data in the first place…

For more information about LISC MetroEdge please contact Jake Cowan at JCowan@lisc.org or go to our website at http://www.metro-edge.com.

The Future of Retail: Is the Recession Shopper Here to Stay?

By Larisa Ortiz Pu-Folkes

Larisa Ortiz Pu-Folkes is principal of Larisa Ortiz Associates. She brings over 15 years of international, national and local experience as both a consultant and practitioner to the field of commercial district revitalization.


What a great weekend! I just returned from presenting and moderating at the annual International Downtown Association (IDA) conference in Milwaukee, WI. Over the next few weeks, I'll be sharing some of the insights gleaned from some of the sessions I attended on business improvement districts and downtown revitalization.

The session I moderated, entitled "Retail Graduate School: Retail's Future" had two very knowledgeable speakers, John Archer of Urban Marketing Collaborative and Michael Stumpf of Place Dynamics, both of whom addressed significant retail trends that are poised to fundamentally change the way we approach downtown revitalization in the years to come.

Is the Recession Shopper Here to Stay?
As experts debate the impact of shrinking consumer confidence and spending power over the long haul, both Mike and John believe that there are deep fundamental shifts in demographics, employment and consumer trends that go deeper than any short term impact we might see from the current recession. A few trends that readers should keep in mind include the following:

• The market is aging. As the baby boomers (what one speaker called the 'reluctantly aging') pass their peak earning years, they are by necessity spending less. This aging consumer is more likely to focus on 'wellness' and increased spending on health care.
• Consumer spending habits are changing. Admittedly, we don't yet know whether this will help local mom-and-pops or big chains more, but according to the research presented, retailers hoping to squeeze every possible shrinking dollar from customers can't afford to ignore the multitude of ways that shoppers buy these days. That means a retailer must have a bricks and mortar AND internet presence AND catalogue presence to increase their bottom line. Consider this...the average shopper who buys from a retailer whose goods are only available on-line will spend $157 annually. But if that same retailer also has a bricks-and-mortar location, annual spending by that same shopper jumps to $485. This is good news for our commercial districts - they will continue to be relavent as these consumer buying shifts take place.
  
• Less aspirational shopping. The jury is still out on whether shoppers newfound interest in 'less is more' will outlast the recession. But our panelists suggested that even after the recovery, credit will never flow as easily as it did before, resulting in spending power that reacheds only 85% of pre-recession levels.
• Dual-Earner Households will command the marketplace. As we all know, dual-earner households have less time to shop and shop on weekends by margins of 2 or 3:1 over traditional households. And what does traditional mean these days anyway? This all begs the question, are the stores in our district catering to these dual-earner households? Are they open when members of these households need to shop? Do they provide convenience and speed of service? The writing is on the wall for retailers who ignore the households where the money is...

These trends go beyond the current spending habits of the typical 'recession shopper' - and we should clearly begin taking them into account as we plan for the future of our commercial districts.

The Merchants Fund – A Friend to Philadelphia Businesses

By John Ungar

John Ungar is Executive Director of the Mount Airy Revitalization Corporation. He has worked as a community development practitioner in Philadelphia for over 12 years.

As commercial district managers and advisors, one of the biggest challenges is getting business owners to make improvements. Skeptical business owners may not see the benefit of making their storefront more attractive. Even if they do, they often lack the desire or ability to make the investment. Often, the only way to make these ideas a reality is to help secure funding for the project. Depending on the neighborhood where your commercial district is located, government resources may be available. However, there are many communities where businesses are not eligible for government funding is not available, but they still need financial help.

The Wadsworth Avenue commercial district, located in the East Mount Airy section of Philadelphia is one such case. Wadsworth Avenue is the main shopping district for this stable middle-class African-American community. The Mount Airy Revitalization Corporation (MARC) manages the commercial district. MARC had completed major public streetscape improvements such as lighting and landscaping, but many of the storefronts still needed upgrades.

The City of Philadelphia offered resources to businesses on designated commercial districts in low to moderate income neighborhoods. However, Wadsworth Avenue businesses were not eligible because of the income level of the surrounding community. Fortunately for Wadsworth Avenue and similar commercial districts, Philadelphia is home to a small foundation dedicated to helping small businesses. The Merchants Fund has played a key role in supporting Wadsworth Avenue businesses where other resources were not available.

Patricia Blakely, Executive Director of The Merchants Fund, understands the needs of small businesses and their important role in our community. “Small business is the backbone of healthy communities and a vibrant local economy. Buy local is not just a catchy marketing phrase; it is about the building blocks of our economy and keeping money flowing.”

MARC directed several businesses to submit grant requests to The Merchants Fund. In just over a year, six businesses on one block received grant awards. In addition, The Merchants Fund awarded MARC a grant to hire a marketing consultant to conduct customer surveys and “mystery shopper” reviews. The project helped merchants engage customers, evaluate the customer experience and improve their customer service. The results of these grants are clearly visible to shoppers.

Most of the businesses used their grants to make major improvements to their storefronts, including Lee's Boutique, shown in before and after images at right. Many business owners were then inspired to invest their own money to complete their projects. Area shoppers have responded positively, and many of these businesses have reported an increase in sales and new customers. By working with businesses one at a time, The Merchants Fund has helped fuel the district’s revitalization. “Wadsworth is more vibrant each time we help a store or restaurant owner. “

An International Model for Filling Retail Vacancies?

Vacant retail spaces are a challenge on many commercial corridors. Keeping those vacancies from negatively impacting retail sales for the rest of the district is increasingly critical to the health of these districts. As folks in the field know, the impact of vacant storefronts creates a “spillover” effect that reduces overall foot traffic and contributes to a perception of the district that can hurt other businesses in the district. Lower retail sales hurt the tax base and can put struggling businesses over the edge...resulting in more vacant storefronts. Finding creative ways to fill these vacancies, even temporarily, is an important on-going strategy for commercial district managers seeking to prevent this downward spiral. While this is not a new topic for readers of this blog, I was pleased to see a recent article in the New York Times ("Pop! An Empty Shop Fills With Art) that speaks to this trend. Landlords also chimed in on the benefit of filling these spaces with non-paying/low-paying tenants. One landlord mentioned the added value of having the spaces occupied as they provide opportunities for other potential tenants get to see the space in use.

The British government has also begun to engage in this effort. They have created a $5 million dollar 'revival fund' that helps "hard-hit areas to transform empty shops into something useful, like showrooms for local artists" in addition to an $800,000 fund to "help artists and arts organizations turn vacant high street shops into artistic spaces." Could this be a model for hard-hit communities here in the US?

Multiple Retail Vacancies? Hold a District-Wide Retail Open House!

We all know successful commercial districts when we see them. These are districts where we WANT to shop and spend leisure time. They typically offer shoppers a great mix of interesting stores within walking distance of one another. But how do you get to that level of success if your district is struggling with multiple vacancies and potential tenants are hesitant because there is just not enough ‘there there’ quite yet? This is the perennial chicken and egg problem…you don’t have shoppers because the business mix and density of retail is lacking, yet, the business mix and density of retail won’t happen if you don’t have shoppers. What do you do?

Filling multiple retail vacancies at the same time can help address these problems. Easier said than done…but a District-Wide Retail Open House is a good tool to help you market and fill multiple spaces at once. Two communities I have worked with recently have chosen to go this route. In Brooklyn, NY, the Pratt Area Community Council (PACC) recently held a “Rolling up the Gates” event that allowed entrepreneurs and brokers to tour over 16 available commercial properties on

Central Fulton Street

on a single day. And the buzz leading up to the event resulted in two spaces getting signed before the event had even happened.

In Philadelphia, the East Passyunk Business Improvement District (EPBID) takes a similar tack. The organization sponsors an Entrepreneur’s Luncheon where they provide potential tenants information about the district, retail vacancies opportunities, and help them connect with landlords to fill vacancies along the street. The hard work

So, how does a District-Wide Retail Open House work?
In the case of PACC, the event started with a welcome reception at a local restaurant that allowed property owners and potential business owners to network. A packet was handed out to all participants that included: an event flyer, a handout that included information on every available site, including address, square footage, rent/lease rate and contact information for the broker or landlord. PACC had also recently completed a MetroEdge market analysis, and these market profile summaries were distributed to participants. The profiles highlighted retail categories with market potential, including significant demand in general merchandise, grocery stores and full-service restaurants. The message to attendees? The market in and around

Fulton Street

was ready and able to sustain their business.

The main focus of the event was the self-guided tour of available properties, which began after the mid-morning reception and ran until 7:30 pm. During this time, prospective tenants were provided with maps and property specifications and were invited to visit the 16 retail-ready spaces. The owners of these spaces rolled-up their gates and were available during the day to meet prospective tenants and discuss possible lease terms.

Local artists also enlivened several vacant storefronts during this event by converting the vacant spaces into one-day art galleries and performance spaces for passers-by to enjoy. These installations combined paintings, fashion, music and dance to invite visitors into the spaces and present different interpretations of the space's potential.

Reflecting on the event, Dale Charles, PACC's Director of Economic Development says, "We see our Open House on Thursday as a pilot project that created a strong foundation to make this a regular event."

District Recession Survey – Results are In!

Thank you for a great response. This survey was distributed to over 2,000 practitioners in the field of commercial district management and revitalization all around the country. These findings help highlight the challenges that many of our commercial districts are facing. Here’s a quick run-down of the results, including who’s feeling the pinch and who’s doing well despite the downturn.

Who Responded?

Survey respondents included:

• 50% - Community-Based Organizations
  
• 25% - Business Improvement Districts
• 12.5% - Main Street Programs
• 12.5% - Other

Commercial Districts fell into the following categories:

• 62.5% - Primarily Convenience Retail
• 31.2% - A Mix of Convenience and Specialty Retail
• 6.2% - Primarily Specialty and Destination Retail
  

What did they say?

69% of respondents believe that the economic crisis is moderately affecting their district, while the remaining 31% believe that the crisis has significantly affected their district, resulting in sales decrease of more than 25%.

75% of respondents report their districts have seen an increase in vacancies, while 43.7% have seen more graffiti and vandalism. More loitering and petty theft and crime are affecting 31% of the corridors.

Businesses are Getting Creative

A number of respondents shared with us how their businesses are facing these difficult challenges. In some cases, restaurants are doing more promotion and hosting night activities to maintain the consumer flow. In others, merchants are increasingly taking advantage of free marketing via emails and networking, or have stepped up marketing by offering free samples, book readings, musical performances, specials, etc. These efforts seem to be paying off.

Some store owner's are also getting innovative and partnering with other store owners to share commercial spaces. In one case, a hair salon and a barber shop decided to combine their spaces to avoid rent increases and share the cost of rent and utilities. This was clearly a win-win for the neighborhood and the business owners. The salon was a much needed neighborhood service, and both stores were able to reduce their operational costs in the process.

Some Retail Sectors are Doing Better than Others

People are sticking to buying the basics. Respondents indicated that fast food chains, simple low-priced diners and restaurants, and grocery stores are maintaining or seeing less of a drop in their sales volumes despite the downturn.

Another respondent noted that car repair businesses and the local hardware store have seen slight increase in sales, likely due to people opting to maintain their cars and current homes rather than trading up at this time.

Thanks to everyone who responded - and keep checking the blog for more great articles and research!