Sunday, January 18, 2009

Retail Audits: Helping your Local Businesses Survive the Recession

The small mom-and-pop businesses in our commercial districts, along with almost every other retailer, are struggling these days. Consumers have less cash to spend, and if they do have cash, they are increasingly cautious about spending it. And we know that retailers are clearly feeling the crunch. December was a dismal month. With the holiday season now over, many retailers are taking a look at store receipts and in some cases deciding to close shop. How do the stores that remain make it through these difficult economic times?

Commercial district managers sometimes find themselves in a difficult position when they see a retailer in distress. They may notice things like service, cleanliness and poor merchandise issues that may be driving customers away. But sometimes telling the manager or owner about a problem just doesn't work. Instead of being open to constructive criticism, the owner becomes defensive about their store. But in this market, owners can't afford NOT to address the reasons why customers aren't walking in the door or returning for a second visit.

A few months ago I was in Florida working with a client on a leasing plan for their commercial district. The district was adjacent to a local hospital with over 5,000 employees. As part of our work, we conducted a roundtable with the employees to get their impressions of the district and the retail mix. Within the past year, a well known BBQ placed had opened up in the district. However, the response from hospital employees was surprisingly negative. With relatively short lunch hours, they didn't have time to stand in long lines to order and wait for food. Not only that, but they also didn't like the level service and cleanliness of the place. One participant told me that they went with a group of 8 or so people - and all of them agreed that they would likely not go back. The district manager told me that she had spoken to the owner about the concerns, and had gotten resistance. The last thing the district manager wants is for this restaurant to close. So, what to do?

While one-on-one feedback from a perceived 'outsider' may not work, there is another tact. Developing what I call a 'Retail Audit' program is one way to engage businesses in assessing their strengths and weaknesses in a way that is less confrontational. Retail audits are sort of like secret shopper programs that malls and large retailers do on a regular basis. In fact, many years ago I worked at Starbucks where quarterly assessments by secret shoppers played a critical role in ensuring quality control across their many stores. The inherent competition between stores to score high on those assessments helped to motivate managers and employees, who would sometimes receive rewards and bonuses as a result.

Engaging retailers who voluntarily agree to participate, and getting 'secret shoppers' to assess their impressions of the business is a valuable tool in helping businesses become more competitive. It works like this - businesses and 'shoppers' are recruited by the district management organization to participate in the program. Shoppers are then asked to visit each store and fill out an on-line questionnaire after their visit. This questionnaire helps identify the array of problems that may be keeping customers away. The assessment identifies immediate problems, and includes a series of no- and low-cost solutions to addressing those issues. In some cases, the problems may be more programmatic and require funding, training, etc. In these cases, linking businesses to a financing or training programs for small businesses becomes part of the recommendation. The district management organization can choose to work closely with a certain category of business (home goods stores or restaurants, for example) depending on what kind of marketing niche they occupy in the local marketplace.

In this economic climate, this is an exciting, relativley low-cost way to help your businesses remain competitive in the marketplace.

Friday, January 16, 2009

Drive Retail Traffic: Using Vacancies for Art Galleries and Pop-Up Stores

Many of the neighborhoods where I work have problems with vacancies. There are lots of reasons why this fact, too many to go into here (perhaps another post?). As a commercial district manager, there are ways to 'hide' those vacancies until the spaces get refilled. In Los Angeles they have started a clever program called "Phantom Gallery LA". The program takes vacant storefronts and turns them into temporary art installations, creating visual interest along the street and increasing foot traffic. This not only helps adjacent businesses, but it gives local artists a place to exhibit their work...and make a sale or two while they are at it. If marketed in partnership with a restaurant week, this could help drive traffic in a targeted way to local restaurants who may be struggling through these difficult economic times.

Another interesting concept are retail pop-up stores. Clothing and furniture retailers in particular are using this pop-up concept to get in front of their target customer for short periods of time. This is really not too different in theory than those tacky Halloween and Christmas Tree shops that pop up in the mall every so often. Target recently opened up four"Bullseye Bodegas" along major commercial strips in Manhattan over a four-day period. IKEA recently did the same in Toronto, Cananda to announce the release of their 2009 catalogue. As vacancies rise and rents fall, landlords may be more willing to take on this novel approach to filling their space - and help turn the vacancy into a district asset.

Resource Link: BusinessWeek "The Making of a Pop-Up Store" - Gap, Nike, and Target are among the retailers developing Pop-Up Stores.

Shopping Centers Today, "Windows of Opportunity", Oct. 2008

Image: Phantom Gallery LA storefront

Why Commercial District Revitalization will Reduce our Energy Dependence

Everyone is talking sustainability these days - but what does that mean for our commercial districts? For me, being 'green' is more than simply using fewer resources in my everyday life, it is about supporting the redevelopment of places that epitomize what sustainability really means. The compact land use patterns of our mixed-use commercial districts not only help reduce driving, particularly when housing is part of the mix, they also create the kind of density that supports alternative transportation. Simply put, people who live close to their work, or near shopping options, don't need to drive there. Finding ways to support investment in these communities is part and parcel of the larger sustainability discussion, not to mention the upcoming urban infrastructure discussion.

Public policy can either help or hinder the revitalization of our commercial districts, through incentives for mixed-use development projects that create density and bring residents (who are then captive customers), or infrastructure investments, such as streetscape improvements and public transit, that make the district a more attractive place to live, work and shop. As the debate continues - and it will as the discussion of public sector infrastructure investment continues - let's not forget to include commercial district revitalization as a key component of that discussion.

Image: Fruitvale Village, an often cited mixed-use developement project in Oakland, CA incorporates mixed-use development at the site of a transit station.

Tuesday, January 13, 2009

Starting with Low-Cost, High-Impact Strategies Get Results

It seems appropriate to be talking about Barack this week. Let's take a moment to reflect on the campaign and another interesting lesson learned. The Obama team made a critical, early decision to go after small caucus states where Clinton did not have a presence and the cost to the campaign per-delegate vote was very low. The impact, however, was felt far and wide, and gave the campaing a credibility to forge new alliances and raise more money. Winning Iowa significantly changed the race dynamics in a way that made more people believe it was possible for him to win. And as a result, more people signed on. This is a powerful lesson for our commercial districts.

I once heard Kennedy Smith, the former Director of the National Main Street Center tell an audience, when you start this work you have 20% of the people for you, 20% of the people against you, and the rest are just waiting to see. In this case, Iowa was the first part of that 20%...and made the rest of it possible.

What Commercial District Managers can learn from Successful Campaigns

Regardless of where you stand on the political spectrum, I think we can come to agreement that the Obama campaign was a success. Not only did the candidate win the election, but the campaign applied some of the strategies I talk about every day with our clients. The philosophy was well put by Jon Carson, Field Director for the Obama Presidential Campaign:

“You can have the most inspirational candidate, you can have the best organizing philosophy in the world, but if you can’t organize your data to take advantage of it and get lists in front of the canvassers and take these volunteers and use it in a smart way to figure out who it is we’re going to talk to – I mean, the rest of it is all pointless” (The New Yorker, Nov. 17th, 2008)

This rings so true for our work on commercial districts too. We often talk a lot about the need for data collection, but what happens once the data has been collected? Communities need to learn how to harness the data and organize it to take advantage of it, get it in front of the decision makers and stakeholders (including property owners and brokers) to help them figure out what retailers to talk to and what businesses to support and help grow. In my work, I often tell communities that market analysis is important, but it's only a small piece of the puzzle. How you interpret it, what you do with it, and how you use it to define your strategic allocation of resources is what differentiates successful execution from a plan that sits on a shelf.