Over retailed

Art Voice, the alternative newsweekly for the Buffalo, NY region, has an interesting article on trends in retail, which really is about trends in the national market, and big box/chain retail. See "Too many stores."

My response:

In the work I've done in neighborhood and commercial district revitalization in DC and elsewhere over the past 10 years, I've come to believe that in the context of comprehensive/master plans, that there is a difference between "economic development" and "building a local economy."

In terms of retail this is particularly tricky as over the last 50 years, the retail sector has reorganized from local or regional retailers to a system of national firms, locating in centers owned by regional and national firms, who in turn negotiate national agreements. But reputable research shows that the economic multiplier impact of local businesses can be significantly higher than for chain businesses--about 15 cents/$ spent in a chain store recirculates locally, why the number can be as much as 55 cents/$ spent in a locally owned business.

But the U.S. has far more retail space per capita than exists in Europe or Canada.

The problem with the Main Street Approach to neighborhood commercial district revitalization is that it lacks the organized structure for developing and supporting sustainable development and renewal of independent retail.

I was working with another consultant in trying to develop a more structured approach and model for this, but we didn't end up working with any clients long enough to be able to set up and test the approach. The Historic Los Angeles Downtown Retail Initiative and the independent retail recruitment process for the Second Street development in Austin, Texas come closest to how I believe it should be done.

Basically I think that a structured system and process for developing and supporting retail entrepreneurship needs to be created. Generally the scale on which it needs to operate is larger than any one commercial district. You need to have a training system in place for potential retailers, while at the same time working with property owners to maintain an active inventory of available space, while also developing relationships with banks and angel investors for financing. So you create potential entrepreneurs who have fully developed concepts (see the blog entries below for more details about this concept) who you are able to link with space and financing when opportunities/vacancies arise.

The other problem is how people shop. Retail goods are commonly categorized as convenience goods (food etc.), specialty goods (such as apparel), and shopping goods (high cost items bought infrequently, involving significant advanced research.

It's really hard for specialty goods and shopping goods sellers to be successful at the level of neighborhood commercial districts, except when the district as a whole is able to develop particular categories as niches that serve larger than normal retail trade areas. (The basic metric is that you need about 30,000 to 40,000 people to support 50,000 s.f. of retail space.)

The way that Catonsville in Baltimore County has a cluster of music shops is one example. How Hampden in Baltimore City has repositioned to funky specialty and independent retail is another. (In my opinion, Hampden, Carytown in Richmond, and Frederick have the best primarily independent retail districts in the DC-MD-VA region.)

So yes, in short, we have too much available retail space for what consumer demand can realistically support.

Blog entries:

- Why ask why? Because (discusses the systems of individual businesses as well as the trends impacting commercial districts)

- Indepependent retail businesses can succeed and thrive

While it is an overview plan, the commercial district revitalization framework plan I did for Cambridge, Maryland touches on these and related issues in a significant fashion, and outlines the approach that I have learned with regard to positioning local commercial districts for opportunity within the regional retail landscape.