Urban retail blatherings
For more than a year, I've been intending to write a piece on the new phase of retail development being hyper-activated and experiential. The Union Market area is one example. The Mosaic District in Merrifield/Fairfax County is another. But that piece is still percolating. In tthe meantime, the points in "The long term shake out of local retailers and independent commercial districts" from 2013 are still relevant.
1. GIS for store site selection isn't new. Yesterday's Post had a story, "Wendy’s uses mapping software from Calif. firm Esri to pick new locations," about how miraculous it is that retail chains use GIS systems to shape store selection.
Um, this has been the case for decades, retailers using GIS to pick stores, although the process continually changes and becomes more powerful coincident with improvements to GIS software systems.
In my 2006 piece, "Why the future of urban retail isn't chains," I discussed how those kinds of demographic software systems undersell urban locations in favor of the suburbs.
2. Retail chains can change and put stores in cities. But I guess the title and thrust of my 2006 piece is wrong, at least for strong real estate markets like DC or NYC--JC Penney just opened a department store in Brooklyn, and supermarket chains like Kroger and Giant have rediscovered the city, and supermarket chains like Safeway are upgrading their urban stores in part by redeveloping single use supermarket sites into supermarkets on the ground floor with housing on top.
Urban retail #4: how to prevent the coming failure of the DC region's Giant Supermarket chain").
Big chains have rediscovered the cities. And in some cases, like Walmart, smaller stores.
Although the DC market specifically hasn't been marked by a lot of creative experimentation by "local" retailers, because we don't have many locally-based retailers of a significant size any more (although there are some chainlets like Lou Lou, Dawn Price Baby, South Moon Mountain, and the Real Cool Hardware Stores affilated with Ace Hardware Cooperative, etc.).
See for example, "It ain't true: chain retailers are entering the city, but not necessarily on the city's terms," "Another point about urban retail: Whole Foods, Design within Reach, and American Apparel" and "Urban retail #3: Ace Hardware Express and Unleasheashed by Petco" from 2012.
This piece, "Retail Action Strategy," links to some of my best writings on urban retail.
3. The opportunity for independent stores is more narrow and lies in traditional commercial districts with unusually-sized spaces, often owned independently, not by big real estate companies, compared to the large and open spaces necessary to support big stores.
4. Just as brick and mortar storefronts need to be engaged in e-commerce, it helps branding for people to be able to see storefronts associated with e-commerce businesses. Today's Post has a story, "Online shopping is the future. So why do so many Web retailers want to be in stores?," about how amazing it is that online commerce sites are adding "brick and mortar" storefronts to support and extend their business reach.
Probably the most important book I ever read on these kinds of issues was in 1988, when I read Maximarketing. It's about "direct marketing" (of which e-commerce is a variant). The point the book makes is that marketers need to maximize their use of all of the channels that are at their disposal to move product.
5. Relatedly, "sales" and "sales advertising" are other kinds of events that push people to commit and to buy. People need reminders. That's why, unless you can be the absolute market leader, like WinCo, a supermarket chain based in Boise, Idaho, "everyday low pricing" doesn't work as a marketing strategy, because people need reminders to go and shop for things that they don't necessarily need.
That's where Ron Johnson got JC Penney's totally and completely wrong (The 5 Big Mistakes That Led to Ron Johnson's Ouster at JC Penney"," Time Magazine).
6. Delivery services like Uber's new service will always be niche, for higher income segments ("Uber delivering convenience store goods in DC but only in wealthy neighborhoods," Post) . Whether such businesses can scale--except on the race to the bottom standpoint of poor driver-messengers desperate for money being forced to continually lower their asking prices--is an open question, although I think unlikely.
E-commerce options do broaden the ability to provide more such services a little more cost-effectively, but the demand isn't high enough to make these big businesses worthy of stratospheric valuations. Good thing for entrepreneurs that Wall Street and venture capitalists haven't figured that out.
If home delivery were so great, PanAm International or MegaMart, Latino supermarkets in the area that will drive patrons home if they spend at least $50, would dominate the market.
7. Did anyone notice that in a market basket comparison of four DC-area supermarket options--Safeway, Giant, Walmart, and Harris-Teeter--Giant had the lowest price? See "Food desert no more: the tightening battle for D.C. grocery" from the Post. I like Giant well enough, but except for their newest store at 8th and O Streets NW, they mostly don't have the specialty items I am searching for.
8. Walmart's same store sales keep dropping, but the smaller store formats, Express and the Neighborhood Market supermarkets, are doing comparatively well.
9. Greater Takoma has been highlighted by the Express as a hot DC neighborhood ("Takoma and Takoma Park share a hippie history that lingers today"). That's basically my neighborhood.
One of the reasons we chose to live here (we actually live in Manor Park, the neighborhood that borders Takoma) as opposed to somewhere else is because there was a commercial district core--albeit in Maryland, right on the border with DC (although part of the commercial district is in DC too) + a "short walk" to the Metrorail station and close enough (five miles) to downtown.
A big reason for the area's success is the Metrorail station--large parcels around the Metro are getting developed for housing, and as housing is added and housing in the greater neighborhood turns over, there are new customers for retail.
But the other is that there is an active commercial district revitalization planning, management and recruitment organization, the Old Takoma Business Association, which runs a Main Street program that is recognized by the State of Maryland, but not DC. Even so, it gets occasional grants from DC (e.g., for a facade program a few years ago). But the group, with the assistance of the City of Takoma Park!!!! actively recruits quality retail businesses, for example a hardware store and a restaurant affiliated with Jeff Black called Republic are in the Maryland side, but they help recruit businesses to the DC side too.
The City of Takoma Park does this because they recognize that a strong commercial district in the DC side helps the Maryland side, and vice versa.
A sorry problem is that the Takoma Theatre is vacant and the cantankerous owners prefer to redevelop the building as condos rather than "let it go" (a la the Frozen movie) and let others take it on and bring back a multipurpose theater and arts facility.
Were there an active theater there, it would help draw more patrons to the commercial district, especially to restaurants, and it would distinguish the commercial district from most others in the area.
The building is one of the most intact neighborhood theaters still extant, although it has been closed up for many years.
Travel: In Salt Lake City, a dynamic enclave gives new life to a neighborhood"). One of the distinguishing elements of that commercial district is the Tower Theatre, which is run by the Salt Lake Film Society.
If only... Next time we're there, We'll have to take in a showing.
10. Unfortunately, the Express article didn't mention the restaurant that sealed the deal on why we chose the Greater Takoma neighborhood, Middle Eastern Cuisine. (Plus it has two supermarkets within easy biking distance, a Giant, just over the border in Maryland, and a Safeway.) Mark's Kitchen is over-rated in my opinion.
We really like Middle Eastern Cuisine. It's basic Middle Eastern food that's very good, the prices are great, the food is consistent, the service is decent, and now they also have a separate bar called Olive Lounge, located in the back, although it's a bit noisy.
At the time I had been working in Brookland and eating in Colonel Brooks Tavern a lot, and their food was way overpriced and inconsistent. So by comparison, Middle East Kitchen seemed like a great draw and asset.
11. Speaking of Market Basket, a supermarket chain in Greater Boston, strife between ownership factions (not unlike the dynamics that pushed the ownership of the DC area Giant Supermarket company to a Dutch company) is destroying the company. Employees loyal to the CEO who was ousted have walked off their jobs, and the operations of the stores are grinding to a halt (Market Basket Saga in Massachusetts," Boston Globe).
I am always interested in stories of "value destruction" (DC Government is full of them) but this doesn't seem to be necessary.