Pretty predictable: business "pioneers" and failure in emerging retail districts

Image: Tim Carman of the Washington Post.

The Washington Post reports, in "Ray’s: The Steaks at East River closes for renovations" that the east of the river restaurant opened by the acclaimed Arlington County restaurant group is "closed for renovations," which usually means never to reopen.

Market development in emerging commercial districts is very difficult, especially if you have limited experiences with those kinds of audiences which likely is the case for Michael Landrum. (Wilson Blvd. in Clarendon is nothing like Minnesota Avenue SE.)

(Also see past blog entries "The "soft side" of commercial district competition," "Why ask why? Because," and "Independent retail businesses can succeed and thrive.")

The funny thing is that I was talking about this general problem with Suzanne yesterday, after we re-reviewed the commercial districts in Arts District Hyattsville (when did Pulte Homes buy EYA out of the residential development and why haven't I read anything about it?), Mount Rainier, and along 12th Street NE in Brookland.

The issue is the tension between being a business recruiter and proponent of your commercial district versus recognizing that business owners put up their own (and investors) money and if they fail, they destroy value. Not to mention that if they fail it doesn't help your commercial district market itself to other proprietors.

While I never wrote about it, I thought Michael Landrum of Ray's was crazy to open that restaurant, unless he got a lot of financial incentives to do so--including free rent--and I don't think he did.

(A lot of what happens in emerging commercial districts is that people with either or both limited experience or limited funds open a place that ends up being "deficient" in terms of its offer and value equation, and they fail. This only makes it harder to trigger revitalization in the commercial district overall.)

This comes up in Los Angeles too, as LA Times columnist Steve Lopez is leery of the more than $2 million in incentives provided to a restaurant to open in South Los Angeles. See "At L.A. City Hall, the handouts just keep coming."

And I write about these issues in the occasionally updated post about "Richard's Rules for Restaurant-Based Revitalization," which discusses the essentiality of restaurants to commercial district revitalization. They provide a reason for people to re-sample a commercial district, as well as allow people to stay longer because they can catch a bite to eat and/or go to the restroom.

For commercial districts in that lack population density, neighbors have to become proponents-frequent customers in order to generate the kind of revenue necessary for success. That's why general cuisine at good price points works best.

I also wrote about the neighborhood restaurant initiative program in Boston in 2005, in this entry, "Neighborhood Restaurant Initiative -- City of Boston -- and restaurant-driven revitalization." The Boston program doesn't provide that much money--$100,000--in return for a commitment for a least 10 jobs, but it helps.

Relatedly, the Post also has a piece about the high value aspirations of the Golden Triangle Business District in DC's central business district, "Golden Triangle BID hopes recruiter will add luster to retail offerings." Apparently, they aren't happy with Dress Barn, which is in a high rent location and obviously has been doing well enough to remain in that location for a couple decades, because it doesn't have the image positioning that they are looking for.

As I have argued elsewhere, retail mix planning is a process with multiple phases. You work with what you have, and you strategically plan your mix of retailers, services, and attractions by daypart and day of the week to maximize customers throughout the day and into the evening.

Think of Dress Barn as an asset, because they are one of the few apparel retailers even present in the Golden Triangle at the moment, and work forward.

This is an image from an old presentation. I have an updated discussion of this and related concepts in the Cambridge Maryland Commercial District Revitalization Framework Plan (2009) on pages 16-18 and in "Daypart and age-group planning in mixed use (commercial) districts.