Photo: Small Business Saturday/American Express
Retailers must unite to bring dying downtowns back to life
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Doctor’s blog.
In New York City, a series of recent studies found a 27 percent retailer vacancy rate in the tony Upper West Side of Manhattan and a 20 percent vacancy rate in fashionable SoHo.
It seems even NYC has the same problem that bedevils many downtown shopping areas around the country. Shoppers and merchants want to know — what’s going on?
Are landlords at fault because quality merchants don’t want to open downtown?
Let’s face it — it’s easy to complain about city councils who don’t do anything about parking, infrastructure or a million other things. But why do merchants think politicians should act before they themselves do?
Beyond making sure your own store isn’t among the reasons shoppers no longer head downtown, local merchants should band together.
Have a meeting and brainstorm why shoppers aren’t shopping downtown. Are stores closing at 5 p.m.? Are they closed Sundays? Is there no convenient parking? Is it hard to find sales help? Is the street filled with dingy windows? Get those with outdated stores to commit to cleaning up.
Encourage those who want to change to buy a half whisky barrel, fill it full of planting mix and colorful annuals like petunias, put it in front of their store, and take care of that one planter. That colorful planter becomes a visible signal to the rest of the merchants that they take their business and merchant community seriously.
If you offer some type of a once-a-month stroll-and-savor event to get people to discover downtown, make sure you place a heavy focus on local establishments to get customers to return on other days.
When enough retailers have fixed up their businesses and banded together, your local city officials will see something is happening and they’ll want to support you, a much better alternative to being told they have to support you.
Then tell your officials what you want: a renewed focus on the city center, new parking, more restaurants, a tax on landlords who are sabotaging your efforts to make downtown a vital retail shopping district, a façade improvement program, a branded entertainment district, or even retail sales training for all the merchants.
Stretched to the max with declining revenues and growing infrastructure and pension obligations, cities and counties aren’t looking for ways to spend, but to save. But when officials see your businesses are looking for a hand, after doing the hard work on your own stores and building a coalition with other stores, they’ll know you aren’t just coming to them with problems and looking for a handout.
Discussion Questions
DISCUSSION QUESTIONS: How should local merchants work to support their downtown shopping districts? What holds back merchants from working closely together? Do you have any examples of downtowns that have undergone a revival? What worked most successfully in the effort?
Poll
BrainTrust
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
Joanna Rutter
Marketing, Dor
Yes, retailers have to draw from as wide a catchment area as possible.. Downtowns often include museums, galleries and other browsing (i.e. traffic) opportunities, and can provide affordable housing, so why not retail? Small format and boutique stores hold great appeal and can add color to what would otherwise be a stagnant downtown.
These days, the idea of cross-selling is very difficult in practice. People either shop or eat or go to an attraction and eat. They don’t usually eat and shop or shop and go to an attraction, other than a museum gift shop.
Not only in the U.S., but around the world, people are moving into cities. I believe more than 70 percent of the U.S. population is now considered urban. With all this migration into cities, there certainly cannot be a lack of retail shopping demand. Perhaps retailers need to define what their urban audience truly wants and needs, including things like free local delivery because they are walking to the store and cannot carry merchandise home, etc. These shoppers are not traditional shoppers, and need to enjoy a very personalized experience.
The other thing is that people in the suburbs don’t need to go to the city to shop. They have everything they need, other than the walkable experience, out closer to where they live.
Agreed, Richard.
There are a lot of sensible self-help ideas here. Local merchants should most certainly take advantage of this thinking.
That said, I maintain my view that councils have a responsibility to ease burdens on retailers and traders. In many, though not all, cases, councils are uncommercial and lack any imagination.
Where this is the case, maybe local business people should stand for election and change things. That’s what the phrase “government of the people, by the people, for the people” means: everyday people with real-world experience, making sensible decisions for the benefit of all; not career politicians with no clue making policy which is as useful as a chocolate teapot!
There are examples, in very small communities, of retailers as active also in local politics, and there are some good ones.
As a stark comparison, one corridor in Toronto has become a vibrant shopping street for both big brands and small. Despite the same problems with limited parking and congestion, the Queen Street and Spadina strip is vibrant. In fact, it looks like a long shopping mall with a vibrant beat outside. It evolved from a largely rundown part of the city. Bob, you are right. It took retailers who took an interest in keeping their own areas clean, fresh looking and continually changing. As a heavy traffic corridor it has become a destination, and vibrant.
Great discussion – I live in a mid-sized market, Jacksonville, FL, and the downtown dilemma is ongoing here. My take is that our problems around growing and maintaining evening and weekend traffic stem from the fact that we have the beach 30 minutes away. There is virtually no retail downtown and efforts such as the Jacksonville Landing have been a bust. One thing that does draw, however, is the monthly “Art Walk” where local retailers set up to sell their products and music, food and drink is added to create the event. Local merchants should look at creating more opportunities like this to build a more vibrant ecosystem of people that can sustain retail downtown.
Retailers are a crucial element in downtown revivals. Well-coordinated and organized efforts can incentivize real estate developers and will go much farther and faster to effect a turnaround. Technology, media and service sector employers can also provide a boost to downtown attraction.
But let’s face it, the critical path resides with city councils and transit authorities to make downtowns attractive and easy to work and live in. If you can’t attract people to live there, any downtown shopping revival work will fall short.
True. I forgot to mention that the Urban Land Institute is very active in this space. These reports, dating up to 15 years or longer, are still very much relevant:
Ten Steps for Developing Successful Town Centers
Ten Steps for Rebuilding Neighborhood Retail
Ten Steps for Rethinking the Mall
Reinventing Suburban Business Districts
Reinventing America’s Suburban Strips
There are certainly a lot of good ideas in the article but — with all due respect — it misses the critical point. Downtown properties are standing vacant in many cases because landlords believe they are worth more than merchants are willing to pay out in leases. The landlords have read all those same stories about the in-migration to the cities too, and many are charging top dollar for space — even if that means it is standing vacant. Another point the article misses is that, in cities like Detroit when those hipster masses return to the urban centers, the retailers who have been serving those communities are often forced out in favor of national players with deeper pockets. The foundation of this problem is urban economics and the law of supply and demand. All the cultural retailer-bonding exercises in the world are fine, but they don’t change the fundamental nature of the problem.
While inventive and engaging activities by local merchants help a great deal to keep commercial districts vibrant, I have to agree, Ryan, that the landlords are the culprit in many big cities. We’ve seen so many terrific, well-loved stores and cafes forced out due to rent hikes from landlords that apparently smell money that’s not really there. Many storefronts sit vacant for years while the landlords hold out for high rent. Maybe a real estate expert can explain the reasoning — makes no sense to me.
I have been out of the commercial real estate scene for a number of years, but to your point Rick, more than once I saw the negative unintended consequences that a successful small business had on its neighborhood. A business would gain a cult-like following and elevated reputation within its community and the landlord saw this as a green light to raise rent for that and surrounding properties. Not to say that increased rent for a transitioning or newly hip part of town is unwarranted, but unfortunately instead of rewarding tenants for increasing the value of their investment, landlords were punishing their success. This put companies in a tight spot because their identity had become ingrained with this specific location and its community, so moving even a few blocks away could be detrimental to their business.
The original article began talking about NYC Mayor De Blasio’s proposal to tax landlords leaving downtown buildings vacant in hopes of higher rent. I encourage you to read the original post.
DC charges 5x the normal rate for vacant properties, but it’s easy to get around it if you are a commercial property owner, just put up a for lease sign, but blow off all the queries. Other cities, like Toronto, stupidly reduce rates for empty properties, instead of charging more.
Sprucing up downtown areas is not the solution to the decline in downtown shopping. This avoids the real issue of declining business and the reasons for it. People don’t want to drive, fight the traffic, pay for the parking and then walk around for hours when they can just go online, click and buy. Freight is easy, free and returns are no hassle. What is there not to love about this model? That is the real issue that local merchants should be focused on, not planting some flowers in a barrel in front of their store.
The downtown area in Black Rock, Bridgeport has undergone a huge shift over the past few years. And the change can be attributed to exactly what Bob said — a strong group of people coming together with the same goal of making our community a better place. Many local entrepreneurs have opened businesses like coffee shops, yoga studios, retail stores and more. And residents really appreciate supporting the small businesses in the area. It’s individuals, not the local government, that organize neighborhood cleanups and community events.
Landlords, city councils and retailers have to be committed to a vibrant retail sector downtown to make it work. Without a vibrant retail sector, why do people want to live downtown? Without people living downtown retail outlets may not have enough constant traffic for retailers to be viable outside working hours. City councils need to understand the necessary balance between business, living spaces, entertainment and retail. Collaboration and vision are necessary for success.
I remember when Boulder, Colorado turned their downtown Main Street into the Pearl Street Mall back in the 1970s. And it created an instant success — a place to gather and shop as an alternative to the big stores oriented to drive-up shopping. So it can be done.
However when Denver quickly tried the same idea with a downtown mall, that mall never drew a set of shops that made it worth being a destination. I wish I knew more of the history. But Boulder’s mall was made with retailers in place. Denver’s mall didn’t stop the flight to the suburbs and many retailers disappeared after it was put in.
Clearly a downtown revival won’t happen without individuals willing to fund and build the stores that will draw people to shop. If those shops are in place, then an effort like this can work. If those shops aren’t in place, then there needs to be commitment that they will come or an effort like this is likely doomed.
Boulder’s advantage is that it is a college town. Burlington VT and Charlottesville VA also have similar, reasonably successful downtown malls. They have lots of residents proximate and many of them don’t drive. But at the same time, Boulder is a great example because they don’t leave stuff to change. The mall is very much managed.
This article from the 12/20/2005 issue of the Longmont CO Times-Call is quite instructive: “Still one-of-a-kind: Pearl Street Mall remains jewel in Boulder’s crown” but you’ll have to access it from your local library’s article database.
Good points. What’s interesting in Denver is that Larimer Street is the area that turned into the stroll/shop area — although it’s not a large area. Partly, where Boulder converted to a mall an already thriving shopping area, Denver tried to force the 16th street mall to be what it wanted — where Larimer had a more interesting set of local shops.
I’ll have to look up that article. Thanks.
New York City is clearly the best example of merchants, developers and political leadership working together to create a much more vibrant retail scenario. Compare New York City in the ’70s to now. Totally different town. But it’s also an exception. Most small towns in the U.S. have been decimated first by Walmart and “mall America” and again by Amazon, and sometimes for good reason; merchants, developers and government not working together to stop the incursion.
In either case, it’s a highway with many paths. Success is not all on any one side; developers, merchants and politicians have to work together. I have a friend who just opened a store with a deal that he will pay the developer a percentage of sales for the first year, then could back out of his lease or go to regular rent. For my friend, without the burden of a fixed fee, and a year to get things going, it was an offer he couldn’t refuse. And oh by the way, the city guaranteed to help with updates to infrastructure and safety. Not a guaranteed success, but a tribunal of teamwork that at least gives it a good shot.
Some of the towns in the U.S. that lost all their merchants need to start to think in a similar fashion. And for what it’s worth some of the old downtown areas, like a Newark, Chillcothe, Somerset or Portsmouth, Ohio, are pretty damn cool spots (attention hipsters!) waiting to happen.
Most commercial property owners expect retailers to pay for the privilege of activating their space, but that is changing some. And some larger companies are even becoming more hospitable to independents, recognizing that uniqueness is valuable. The Philadelphia Inquirer had an article on this topic recently which was quite interesting, “How Bryn Mawr Village found its Main Line shopping niche.”
This has already happened in my city. A new downtown arena was the spark that resulted in mixed-use developments, hot restaurants and a slew of new retail establishments, including a giant Bed, Bath & Beyond. Here, “walkable” is the new buzzword in real estate.
It takes all sides working together to make a revitalization effort work well. Retailers, city councils, community members — everyone has to be in sync or it just doesn’t work. All of these ideas on the merchant side are good ones and serve at least one very important purpose — showing that they care enough to do SOMETHING. Sometimes that’s all it takes to get the conversation going. Too often these projects never make it past the talking stage without some sort of incentive.
Power to the merchants! Unite, brainstorm, work with your reps to push forward policies and ideas that work for your city … then hold them accountable! Downtown Raleigh, NC retailers do this very well.
What is being proposed here is main street merchant democracy, as opposed to a council oligarchy or letting apathy and fear rule your town. Consider it endorsed.
It should be obvious to everyone that downtowns are “dying” — and have been for 3/4 of a century — for reasons that are far beyond the control of local merchants. And while I wish everyone well in their efforts, the idea that “getting together” and planting flowers is going to materially change that is … uhm … fundamentally flawed.
Yes, of course merchants should belong to the local association, and work with city governments to assure as much as possible a safe and clean environment, but they also need to have realistic expectations of why they’re there and what they hope to accomplish. Trying to bring 1948 back isn’t going to work.
For my money, urban shopping districts succeed best when they are hyper-local. That means a preponderance of independent merchants who live in the community.
Replicating the regional mall store assortment on Main Street seems like a poor answer. These commercial neighborhoods thrive on foot traffic; they are not drive-to destinations. The type of merchants matter,
Even in the face of gentrification, merchant associations can be instrumental in preserving design standards and engaging neighborhood residents. However, when Orchard Supply or CVS wants to take over a double storefront at above-market rents, that presents a tough battle.
Here in Tucson, AZ, we are enjoying a downtown revival that has been powered by two main factors — an active community development effort and the installation of a modern streetcar line that has stimulated new business investment along its path. In the past 5 years, we have seen new residential, hotel and restaurant projects that have instilled pride and optimism.
I wish this were that simple. I used to believe that department stores especially were a “technology” that still had relevance to urban centers. Now I am less certain. Most chain companies — and that includes department stores — aren’t mentally situated to participate as leaders in local commercial district revitalization efforts. Companies like May especially shut down their city stores, even when they were successful, without regard to local sales, but because of various corporate mandates and policies.
Business improvement districts generally do a decent enough job “wrangling” the various stakeholders, but it’s hard. As a former commercial district revitalization manager, I actually hated working with merchants. They generally were small minded, and thought they knew everything about marketing and developing “a district.” The property owners weren’t much better. Herding cats is not easy. Independent retailers are independent for a reason, and planograms were invented for chain stores so that they could hire people who didn’t have to be able to think and be creative.
In bigger districts this is less of an issue, but BIDs there tend to be very much property owner focused, which creates other tensions. In any case, tons has been written about this, there is the International Downtown Assn. and the National Main Street Center which work with BIDs and Main Street groups, etc.
The other problem is that local retail is bifurcating to convenience retail, mostly lower priced, and specialty retail. Traditional districts are more about specialty retail and knowledge based convenience (like hardware). It’s tough for boutique retail to make it in those districts, which are now focusing on food, at least in strong markets.
The problems in NYC are common in strong markets. The way commercial property is valued is higher than the space is worth from the standpoint of actually selling goods. Plus the impact of e-commerce, discounting, etc. In such situations, I recommend the creation of a community development corporation specializing in owning or master leasing retail space and renting it to great stores. The only example I know of this is SEMAEST in Paris. They control more than 700,000 s.f. and have helped more than 700 businesses. In the districts they work in, they’ve had significant impact on reducing vacancy rates.
This post was taken from my blog. It’s not a treatise on urban development, it was simply saying smaller merchants need to get their act together before lambasting city council or thinking there are grants out there to help them. That said, the vehemence of some commenters that online is the only way to go, it’s the way of the world, too big to change, is discouraging. Retail isn’t just Amazon or AI or predictive analytics; much of it is and will continue to be powered by individual stores.
Many years ago, the comedian Sam Kinison did a skit on world hunger; starving babies in the desert. Kinison’s guidance was to “to stop sending them food.” Rather they needed U-Hauls and luggage so they could move to where the food is. He screamed “You live in a desert and nothing grows there!” This isn’t too far from the same problem when retailers locate in the wrong part of town.
At the most basic level, unless the retailer owns the building, it’s easier, faster and probably less expensive for them to go where their best customers may be. Spending years to gentrify a community is probably futile. Few retailers have the time to wait that long. Beside, they’ll be greeted with higher rent by their landlord anyway.
Yes, help yourself; work together and try to get politicians involved. But don’t fight a losing battle because you dream of a robust retail business ever returning. We live in a consumer centric time; too easy to buy online. Your customers have probably moved and you need to do so also.
Re/ working together. Far too many retailers hesitate to work with other retailers. There are lots of excuses. Some are stubborn. Some are mad the market has changed. Many blame others for their problems. Some think they’re doing great because they don’t know the business their missing — it’s easy to miss the enormity of the marketplace. Sometimes they’re so product focused they can’t imagine that someone from another category might help them. And other times they’re afraid they’ll lose their independence. The sad part is many consumers perceive independence as isolation.