Nondescript Big Box Storefront
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Have Cities Become More Welcoming to Chain Stores?

In the Northern California city of Stockton, the city council in January quietly repealed a “Big Box Ordinance” that banned stores over 100,000 square feet containing full-size groceries for nearly two decades.

The legislation passage in 2007 came amid public opposition to the development of a south Stockton Walmart and was designed to “address concerns with the potential impacts of discount superstores.”

“Stockton is open for business,” Councilmember Kimberly Warmsley told Stocktonia in January. Any size store could still be rejected through the permitting and approval process.

“We don’t want like five Rite Aids on one block or area,” Ms. Warmsley said. “We just want to have potential, see what’s out there. We know that small businesses are the heart of Stockton. And so we will work closely to ensure that we’re preserving the integrity of small business all the time.”

Such legislation was fairly common around 2007, but bans or limits on big boxes or national chain stores appear rarer these days outside of some pushes to ban dollar stores. Addressing traffic and parking often seem to be of greater concern than protecting mom-and-pops.

Target has found particular success opening stores in urban centers, ending 2022 with 147 locations under 50,000 square feet. In early 2021, John Mulligan, Target’s COO, said Target saw more real estate opportunities for stores under 100,000 square feet. “As a group, these new stores are generating higher-than-average sales productivity, above-average gross margin rates and strong financial returns,” he said.

The city of Palo Alto in Southern California is considering easing restrictions on chain and big box stores after a study found the proliferation of nearby Target and Costco locations “cannibalizing the retail offering within the city.” The open-air Stanford Shopping Center’s success in the city also impacts downtown traffic.

Responses to a related article on Palo Alto Online found some residents apprehensive about the arrival of big box stores. Still, one argued, “Hate to break it to the PA [Palo Alto] Fiefdom, but it is now the 21st century and PA has lagged behind other communities in providing useful amenities.”

BrainTrust

"Big box stores have their place in most cities but careful consideration must be given to their impact on traffic flow, appearance, and distance from downtown areas."

Bob Amster

Principal, Retail Technology Group


"Idealism is a finicky friend that requires courage, conviction and sacrifice. Cities need money and national chains and big box stores are a great source of revenue for them."

John Lietsch

Chief Operating Officer, Bloo Kanoo


"This may be an opportunity to look to Europe for examples. In my travels I’m always impressed by the range of both local and national merchants found on downtown streets."

Verlin Youd

SVP Americas, Ariadne


Discussion Questions

DISCUSSION QUESTIONS: Have cities become more open to national chains and big box stores? Are chains still a threat to mom & pops and the vibrancy of local communities?

Poll

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Neil Saunders
Famed Member
1 year ago

Cities should not stand in the way of big box stores. It should be up to the local population to determine the success or failure of chains based on where they wish to shop. That said, it is reasonable for cities to ask big boxes to contribute to costs and changes — traffic adaptations, etc. — that may be required to facilitate their opening.

Dion Kenney
Reply to  Neil Saunders
1 year ago

A fair point, from an economic utility perspective. But it’s the local populations that give local government the authority of zoning regulations to manage the aesthetics, business activities, and location of development — objectively, to prevent the kinds of deep-pocketed changes that aren’t consistent with community goals and standards. And it can get pretty ugly at town meetings when they feel their representatives aren’t doing their job.

Neil Saunders
Famed Member
Reply to  Dion Kenney
1 year ago

In theory, yes. In practice, not really because people usually vote in officials on a whole bunch of issues not just on zoning. And votes in elections don’t, in my view, beat the millions of “votes” each and every day when people decide where to shop and ultimately which retailers succeed and which don’t.

Dion Kenney
Reply to  Neil Saunders
1 year ago

Haha! Well, maybe so, but you should see the turnout at Town Meeting when someone proposes opening a new tattoo shop or liquor store! (I’m not advocating for more tattoo shops or liquor stores)

Dion Kenney
1 year ago

The economics of the mom-and-pop shop have been challenged for a long time, and from many different directions. Chain stores provide an easy to set up, easy to run operation using proven products, processes, and marketing. Plus, scale allows them to run the backend operations like a corporation while reducing the per store cost burden. The downside is that, as every retail niche becomes more standardized and omnipresent, every community begins to look like everywhere else.

John Lietsch
Active Member
1 year ago

Idealism is a finicky friend that requires courage, conviction and sacrifice. Cities need money and national chains and big box stores are a great source of revenue for them. Mom-and-pops are businesses and as such they are threatened by competition of any kind. National chains and big box stores are a formidable competitive force that will undoubtedly threaten smaller businesses. Thankfully, some mom-and-pops, like my bike shop, are extremely specialized and offer services that are difficult for bigger retailers to replicate.

Ken Morris
Trusted Member
1 year ago

With new stores, communities should listen to the voice of the customer. Cities, in an effort to combat the food and basic clothing deserts, have become more open, but maybe not so welcoming. But many are open to a mix of chains and mom-and-pop stores. At the same time the bigger box stores, looking for growth vehicles, have embarked on a campaign to create smaller footprint locations that are much more likely to fit in an already crowded and zoning board complicated urban setting. Town centers are a good option, with open air and smaller footprint versions of big box stores. And let’s not forget that it’s an omnichannel world. A store is not just a store any more. It’s also a distribution and pickup center.

Some of the big box bans were reactions to the huge-footprint brands changing the landscape of communities. I believe that what we’re talking about here are retailers and customers agreeing to agree on a footprint that’s a fit. Maybe there’s a need here for a third party to mediate between the communities and the big brands.

Bob Amster
Trusted Member
1 year ago

The character (charm or the lack thereof) of every city is derived from the stores that operate on its heavily trafficked sidewalks. Independently owned businesses are, almost by definition, different than chain stores and offer local entrepreneurs the opportunity to own their own business where they live. Big box stores have their place in most cities but careful consideration must be given to their impact on traffic flow, appearance, and distance from downtown areas.

Richard Hernandez
Active Member
Reply to  Bob Amster
1 year ago

Yes, 100 percent true. I live in a municipality that is very determined not be overrun by large big box stores and the traffic, etc. that they might bring to neighborhoods. Independent businesses are given priority to grow and are nurtured — many of these businesses have been in the neighborhoods for decades. I don’t see the municipality changing that stance anytime soon.

Gary Sankary
Noble Member
1 year ago

As a Stockton native, we would be happy to have ANY company open a store. Stockton has some enormous economic and social challenges, and any new development would help bring more vibrancy to the community.

Comparing Palo Alto to Stockton illustrates the more significant issue here. There is a serious difference between the NIMBY crowd who don’t want a chain store in their toney, walkable, cute, and very privileged neighborhood and people in urban cores who are living in impoverished neighborhoods where social issues and poverty are the norms. Those folks have been dealing with the food desert issue, lack of access to essential services, etc. So, no surprise that these cities and their leadership want to improve the lives of their constituents by doing everything they can to attract new development to build back their economic base and provide services for their communities. Palo Alto, Los Gatos, and other quaint little enclaves may not need development for the same reasons. I also believe that this argument is a red herring for the real issue–they perceive these brands, and their customers (to be honest) as being detrimental to their carefully curated lifestyles.

Rich Kizer
Member
1 year ago

Have cities become more welcoming to chain stores? I hope so. During my 29 years of department store experience, we found that the foot traffic generated by the department stores caused higher foot traffic in the area, and local retailers upped their game as well. And then we found new retail blooming along with other retailers, as in restaurants and businesses such as insurance agencies and varying services locating themselves “in the action.” It developed a movement of more customers as well. .

Dick Seesel
Trusted Member
1 year ago

There is a mixed-use development north of Milwaukee called Bayshore, bordering both city and suburbs. In its 60+ year history, it’s evolved from a strip center to an enclosed mall (with a now-defunct Sears and Boston Store as the anchors), then to a “lifestyle center” with many tenants who were frankly too high-end for the demand. (The Apple Store is an exception.) Now that shuttered Boston Store has been converted to a much-needed Target store in the neighborhood, alongside Kohl’s, Total Wine and a sudden boom in apartment housing.

This is not an exact parallel to the Stockton situation, but it illustrates the positive impact that big box stores can still have, especially if they fill voids for fresh foods and other essentials. In this case, a moribund “town center” is becoming a viable place to shop again.

Verlin Youd
Member
1 year ago

This may be an opportunity to look to Europe for examples. In my travels I’m always impressed by the range of both local and national merchants that can be found on downtown streets. Great to see national retailers like Tesco, Waitrose, Marks & Spencer, Intermarche, and others using different store concepts, shapes, and sizes to deliver customer value. Most of these national chain locations are surrounded by local businesses that profit from the traffic generated by the larger players.

Craig Sundstrom
Craig Sundstrom
Noble Member
1 year ago

Well, I hate to break it to the writer for “Palo Alto Online” but no one in that tony burgh is suffering. That having been said, this kind of do-gooder legislation – which is probably a generous assessment, since (just plain) meddlesome is an equally descriptive term – is generally ineffective. Retailers simply locate nearby – outside the jurisdiction of the restrictions – accomplishing little (but creating inconvenience). And even if it is successful, is that what citizens really want? Seemingly not, since the chains wouldn’t open if people didn’t patronize them.

Anil Patel
Member
1 year ago

A lot has changed in the last 10 to 15 years, particularly in online retailing. Today, online shopping has become a big part of customers’ lives and it will grow even bigger in the coming years. As a result, protecting the traditional mom-and-pops will become even harder for the city’s lawmakers.

In my opinion, any city would have to adapt itself to the changing needs of customers and let the customers decide what they want. With new stores opening, customers can have a variety of products right there in the city. Otherwise, by not allowing big box retailers to open new stores, a city risks losing business to competitors outside of the city.

Therefore, the decision to repeal the ordinance and reduce the restrictions on “big box retailers” is the right thing to do for Stockton.