The Downtown Curmudgeon

Update on the Reassessment of Our Use of Social Media

2012-01-28T11:56:00.001-05:00

I am now on LinkedIn and, as I suspected, I can see its utility and regret not having signed up before. But, it takes quite a bit of time to figure out what your profile should look like and then make it so. Next on my agenda is to figure out which groups to join and how my participation in them can benefit DANTH,Inc and still be fun for me.

Ben Burgess, of the NorthStar Group in Annapolis, MD, is leading us through our reassessment and he quickly suggested that I get on Twitter. This astonished me because, of all the social media, I held Twitter in the lowest esteem and saw little likelihood of ever using it. Perhaps, that was because, in my curmudgeonly way, I saw tweets as being constant electronic intrusions sent by total narcissists who thought that the the world's population had an abiding interest in where they were, who they were with, and every single thing they did (including their body functions). However, Ben pointed out that my view of tweeting was somewhat jaundiced, and that it could be a much easier and effective way for me to leverage something that I have habitually done for years.

I do a lot of research on the Internet and almost daily come across a piece of information or an article that I want to share with people I know and/or work with. This behavior feels like a natural way of sharing with them, but it is also a good marketing tool that can maintain and build key professional (and personal) relationships. Ben convinced me to also send these articles out via Twitter. Let's see how many followers I attract by June 1st.

I signed up to follow Richard Florida on Twitter. Always an interesting guy. But, he tweets so often that I expect his thumbs may have shriveled from so much use on his smartphone's keyboard. I'll never tweet as often as he does. Nor do I want to.

Next week we will be looking into Facebook and YouTube. I actually have been wanting to use YouTube for several years. I always take photos of downtowns when I do my consulting assignments and when we just travel because I find them invaluable tools in my work. But, ever since Flip, the small pocketable camcorder, appeared on the market, I have wanted to start using short movies instead of the still photos. The movies can capture the essential dynamic qualities of a downtown that the simple photo usually cannot -- at least, in my hands. Moviemaking, takes time to learn and I felt I lacked the needed time. But, I am probably wrong about that, too -- I see teenagers and even my 7-year old grandson making short movies on their cameras.

Facebook, is another story of me feeling uneasy. I see it as requiring duplication of the work I put into our website and my blog, while having enormous privacy problems. Let's see whether this old curmudgeon can learn new tricks about it, too.

DANTH Is Reassessing Its Use of Social Media

2012-01-23T11:43:00.000-05:00

The Downtown Curmudgeon works for DANTH, Inc and since I recently have been arguing that downtown small business operators need to learn how to use and benefit from the "social media," it seemed appropriate that we should take another look at Facebook, Twitter, Linkedin, YouTube , etc. Other small business operators might be interested in our experience, so I plan on doing a few postings on it.

We also will assess moving this blog from blogspot and integrating it into our website, www.danth.com.

I found this brief article -- http://usat.ly/wpZY5h -- full of good advice about how small businesses should use the social media. Content, it argues, is critical. Thanks to Phil Burgess for sending it to me.

Office Development -- We now have all the office space we need

2012-01-13T11:32:00.010-05:00

For several years now, I have been arguing that a New Normal has emerged for our downtowns and that the business operators, landlords, developers and district leaders who do not recognize that they must adapt to that fact are likely to face severe economic losses. My recently reported research on multichannel retailing (see my last blog posting below) combined with some some recent news items about movie attendance, housing and office development have strongly confirmed my argument. This posting will focus on office development.

For much of the 1970s and 1980s office development was seen as the economic engine that would drive downtown revitalization in such major cities as Richmond VA, Charlotte NC, Cleveland OH, Philadelphia PA, Seattle WA. Los Angeles CA, etc. Office development primed revitalization efforts were also mounted in smaller cities such as New Brunswick NJ, (population 55,181) and White Plains NY (population 56,853) and in suburban communities such as Morristown NJ (population 18,457), and Garden City NY (population 22,371).

Many of these office driven revitalization efforts failed to achieve their goals and the downtowns had to add residential, retail and entertainment components to their revitalization strategies. Nevertheless, office development has remained a critical revitalization asset for many downtowns.

A recent article in CoStar’s e-newsletter reported on the major findings of a symposium of office development experts convened by BOMA. A summary of their findings should put downtown leaders on notice:

“We already have all the office space we likely will need.... But to remain competitive, the existing stock of commercial real estate must be reconfigured to keep pace with an increasingly mobile, Internet-connected workforce; ongoing changes in technology, and to support the way companies are structuring their staffs to foster more collaboration and efficiency, while also addressing the values and attitudes of new generations of workers.”

Increased telecommuting, flexible work schedules, the untethering of workers from desks to enhance collaboration and increase face-a-face client contacts have combined to increase employee density in major office buildings and reduce the demand for office space. For today’s office worker, according to one of these experts, the ideal situation may be:

(W)here you go into the office two or three days per week and work remotely the other days, which reduces our carbon footprint by 20% - 40% and has a huge impact on improved quality of life.”

The potential negative impacts of the New Normal’s static demand for office space are:

Fewer new downtown office buildings will be built

Existing downtown office buildings that are not configured to meet the new work habits of office workers will have languishing leasing efforts. A lot of existing downtown office buildings may have to be renovated if they are to be competitive
Downtown retailers and eateries will have a significantly reduced office worker market because the telecommuters and flex-timers will spend much less time in the district.

Of course, downtowns also too often suffer from the fact that major office tenants provide incentives (cafeterias, subsidized meals and concierge services) and work pressures to keep their employees from leaving the building at lunchtime. Furthermore, the retailing many downtowns is often too weak to motivate substantial office worker patronage.

But, there is a potential upside for downtowns that can provide a dynamic, experience-rich environment. As the CoStar article notes:

“The lesson for companies (and the investors and building owners who want to have them as tenants) is that younger workers prefer to work in a more dynamic, experience-rich environment, such as an urban- type setting offering different entertainment, cultural and transportation options.”

Dynamic downtowns will consequently continue to have a distinct advantage in a highly competitive office market, while listless downtowns will probably be weaker competitors than ever.

The CoStar article can be found at: http://www.costar.com/News/Article/Will-We-Need-Any-More-Office-Space-/134483?ref=100&iid=261&cid=DC6077B43E67ACADB224FF6D0AF89AB6

N. David Milder 011312

Downtown Multichannel Retailing

2011-11-08T15:09:00.000-05:00

DANTH, Inc. has just released a research paper I wrote on downtown multichannel retailing. I prefer to think of it as backdoor retailing, with electronic and non-electronic variations. In any case, the topic is important because downtown retailing is undergoing an enormous change -- one that will not be reversed even when the economy recovers from our Great Recession -- towards multichannel/backdoor retailing. Downtown merchants and leaders who do not adapt to this new paradigm will be left behind, more dross produced by capitalism's creative destruction.

You can download a free copy of the research paper at:
http://danth.com/storage/pdf/Multichannel.pdf

N. David Milder

On the Passing of Steve Jobs

2011-10-06T09:14:00.004-04:00

I greatly admired Steve Jobs for his ability to innovate, but most of all for his view about how to live your life. The latter is captured in this quote from his 2005 commencement speech at Stanford University:

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

Too many downtown organizations are staid and stale. A strong dose of Steve Jobs's philosophy would do them a world of good. They need to follow an important Jobs dictum: Think Different! Also, they certainly could benefit from a Jobs-like fanaticism that their programs are well-designed and actually work, producing strong positive results. As a downtown business recruiter, Jobs, who strongly opposed asking consumers about the new products they wanted, would never ask local residents for the names of specific retailers that recruitment efforts should target.

These organizations also could definitely benefit from the kind of strategic vision that Jobs displayed since he returned to Apple's helm.

And one more thing. In 2007, I bought an iMac and immediately had a lot of problems with it. On a whim, I emailed Steve Jobs and detailed my problems. In response, I received a call from Apple and about a week later a technician came to my office and completed a thorough overhaul of my iMac. Is there another CEO in the USA you can email and get a similar response?

A CURMUDGEONLY VIEW OF BID STREET CLEANING PROGRAMS

2011-06-30T18:16:00.003-04:00

Can Clean Be Overrated?

An online article that recently drew my attention and got me thinking was “America's Dirtiest Cities” (http://travel.yahoo.com/p-interests-40390415) by Katrina Brown Hunt. It begins by posing the question: “Can clean be overrated?” It then notes that a survey of the readers of Travel + Leisure magazine found that “America's dirtiest cities happen to include some very popular tourist destinations” (e.g., New Orleans, Philadelphia, Los Angeles, Memphis, New York City, Baltimore, Las Vegas, and Miami). Hunt goes on to note that “visitors gauge 'dirty' in a variety of ways: litter, air pollution, even the taste of local tap water.”

What drew my attention was not which cities were or were not on the “top dirtiest list” -- for such lists tend to be not very useful -- but, the fact that a group of people who are evidently very interested in being tourists found very popular cities to be “dirty.” Hunt’s question “Can clean be overrated?” seems to me to be a very legitimate one to ask, especially by the leaders of downtown business organizations who spend huge parts of their annual budgets on street cleaning operations.

Should Clean Streets Be A BID Priority? Are Dirty Streets That Big A Problem?

A few years ago while managing a Special Improvement District in a city in New Jersey I gave tours of the district to many developers and savvy commercial brokers. Invariably, they would comment on how good the district looked and the lack of litter on the sidewalks. At the same time the city’s political leaders, especially the mayor, were pressing for cleaner sidewalks. How clean did the sidewalks have to be to be considered clean by the local politicos? I thought it was all a bit too anal and somewhat tragic: sidewalk sanitation was getting all the attention of the political leadership when their focus should have been laser beamed on bringing redevelopment projects into the district. Their priorities were all fouled up. Ultimately, we succeeded in getting the local UEZ to pay for the litter cleaning crew, though the SID still had to manage it. Later on the city’s public works department took on the entire street cleaning responsibility and cost burden.

Quite frankly, that was where I felt the responsibility belonged in the first place. Street sanitation was long a city government responsibility, but in hard fiscal times, many of them successfully off-loaded that function and its cost to special downtown districts. By the late 1980s, as the number of BIDs quickly grew, dealing with “crime and grime” famously became their primary programs -- and budget lines. But, I never saw any real evidence or serious study proving that clean sidewalks resulted in either more shopper visits or a significant reduction in the fear of crime.

To the contrary, my own research at that time failed to confirm such relationships. In 1984, for example, I did a telephone survey for Regional Plan Association (RPA) of 600 residents in the trade areas of three outer borough downtowns in New York City -- Downtown Brooklyn, Jamaica Center in Queens and Fordham Road in The Bronx. A Pearson correlation analysis found a weak .12 association between how clean the respondents rated their downtown’s sidewalks and how often they visited that downtown.

Clean streets are often viewed as one of the signs of social disorder hypothesized by James Q. Wilson and George Kelling in their famous Broken Windows article to foster the fear of becoming a crime victim. While the RPA survey did find an interesting correlation of .26 between how clean respondents rated the sidewalks and how safe they felt in their downtown during the day, there were two other variables -- the downtowns overall attractiveness and the types of people respondents expected to find there -- that statistically had twice the explanatory power of the clean streets variable. Furthermore, the correlation between clean streets and how fearful respondents felt while downtown after dark, when fear levels are highest, dropped to .15.

My own conclusion at the time was that while the clean streets factor was one of many that, when aggregated, could impact on how attractive trade area residents felt their downtown was, it was getting a disproportionate amount of attention from downtown leaders and far too big a share of their BIDs’ budgets. I felt a lot of them would be better off if they shifted a lot of their street cleaning expenditures over to improving facades, stimulating nicer store windows, attracting quality business operators and developers, etc. Nothing has happened in the intervening years to change my views. If anything, they have been harden by my SID management experience that I described above and by my observations that some BIDs were paying for sidewalk cleaning services they could not really afford, given that their budgets were less than $250,000/yr.

Among New York City's BIDs, those with revenues under $250,000/yr allocate a higher proportion of their annual expenditures on street cleaning, 32%, than the other BIDs, followed by those in the $250,000 to $499,999 revenue category (see the table above). The largest BIDs, with revenues over $5 million/yr only allocate about 20% of their expenditure dollars on sanitation. Furthermore, among the BIDs with the lowest revenues, about one in four of them are allocating 40% or more of their annual expenditures on sanitation. To my mind, they seem to be more like a sanitation department than an economic development organization. What in the world are their leaders thinking? I use the New York data because they were readily available. The pattern of small BIDs overwhelmingly focusing on street cleaning operations also can be readily found elsewhere.

Why Are Street Cleaning Programs Still Big With BIDs?

Though relatively expensive, these programs:

Do not require rocket scientists to design and implement. There are existing programs to replicate and service providers to hire
Quickly provide visible evidence of the BID’s presence and ability to do things. Lots of staff in identifiable uniforms provide a presence and cleaning up the litter is proof of efficacy. These are important program impacts for new BIDs
Have been implemented by the largest and most prestigious BIDS. Unfortunately, too many of the other BIDs have fallen into adopting programs because their prestigious peers are operating them rather than asking whether such programs can really achieve their organization’s economic growth objectives.
Are seldom terminated because most BIDs seldom, if ever, engage in real program evaluations
Have developed an aura within the downtown revitalization community that they are always beneficial. After all, how can one be in favor of dirt and litter? But, that is not the real question.

For most downtowns, the real issues are will cleaner streets:

Bring more shoppers downtown?
Increase property values?
Increase investment?
Produce positive impacts commensurate with the cost of the street cleaning program?
Have a bigger economic impact than if its operational dollars were diverted to other programs?

I am not against all BID street cleaning programs. Just those that have no proven impact on customer traffic and economic growth.

FROM DECAY TO TREASURE: THE HIGH LINE PARK

2011-06-20T06:18:00.003-04:00

For many years an elevated rail line, that ran about a mile between buildings on Manhattan's west side, sat unused and decaying. It snaked through an area probably made most famous by the title of a Richard Rogers ballet, Slaughter on Tenth Avenue.

Then a small group of people came up with the stunning idea of turning it into a park. They managed to make a viable plan, raise money, rally the support of local landlords and obtain city approvals.The result is a unique and hugely popular public space.

The High Line did not spark the area's resurgence, but it has certainly reinforced it.

Across the nation, other projects like Millenium Park in Chicago, IL, and Mitchell Park in Greenport, NY, have taken decayed and even brown field locations and turned them into vibrant public spaces. More communities should look into following suit.

The photos in the slide show were taken over an 18 month period.

If you have trouble running the slide show you can go to my web photo album for the High Line at: https://picasaweb.google.com/dmilder/HighLinePark

N David Milder

TOUGH TIMES FOR THE MOVIE INDUSTRY -- HOW IS YOUR DOWNTOWN CINEMA DOING?

2011-06-07T21:13:00.002-04:00

Some Background
As a result of DANTH’s 2008-2013 downtown trend assessment work, we became very concerned about the future of movie theaters in a lot of medium-sized downtowns,so we keep our eyes out for news about the movie industry. In my February 24, 2008 posting, “DOWNTOWN MOVIE THEATERS WILL BE INCREASINGLY IN PERIL” I noted that according to a PEW survey:

“By a five-to-one ratio Americans view films more at home than they do in movie theaters. Move theaters account for only about 12% of the movie industry’s revenues”

And, according to that same PEW survey, this trend toward watching movies at home was growing. The implicit danger posed by this trend for downtown cinemas, that often are just scrapping by, is a relentless deterioration in attendance and revenues.

Some Recent Observations in the NY Times
A recent article in the May 29, 2011 edition of New York Times had a title that grabbed my attention: “3-D Starts to Fizzle, and Hollywood Frets,” The reporters, Brooks Barnes and Michael Cieply, state that: “The box-office performance in the first six months of 2011 was soft — revenue fell about 9 percent compared with last year, while attendance was down 10 percent.” That's off of a 5.25% attendance decine reported by boxoffice.com for 2010. To give those delines some perspective, remember that a mere six percent drop in attendance back in 2000-2001 pushed most of the theater chains into bankruptcy. The current drop in attendance and revenues might be explained by our stalled economy and/or rocketing gasoline prices, neither of which promise to soon disappear.

Many Hollywood big wigs, such as James Cameron and Jeffrey Katzenberg, have argued that 3-D movies would save the industry by bolstering audiences and revenues. But Barnes and Cieply also report that now “there is strong consumer resistance to high 3-D ticket prices” and “the novelty of putting on the funny glasses is wearing off.” While the best 3-D feature films still are doing well at the box office, 3-D films of more ho-hum quality are taking a box office beating in the USA.

Barnes and Cieply also reported that rentals in video stores during the first part of the year fell 36 percent. This fact would be consistent with the crumbling of the Blockbuster chain and a substantial growth in the streaming and downloading of films to home TV and computer screens through Internet services such as Netflix, Amazon and iTunes. The latter was a possibility DANTH’s trends assessment feared would be all too likely.

My Take-Aways
With retail gasping for breath in most downtown and Main Streets commercial areas, their entertainment niches have taken on an even greater importance than they have had in the past. Downtown movie theaters are often the cornerstones of these niches and the recent decline in attendance suggests they may be facing substantially increased financial stress.
Strengthening downtown entertainment niches in small and medium-sized communities will probably follow two strategic paths:

Buttressing the magnetism of the movie theaters through a package of improvements that includes: 3-D and IMAX screening capabilities; tie-ins with adjacent or in-house restaurants, bars, brew-pubs, ice cream parlors, etc.; clean theaters, with comfortable seating and audiences displaying civil behavior
Developing non-formal entertainments, most importantly in well-activated public spaces and restaurants.

What's Happening in Your Downtown?

Please let me know what is happening in your downtown or Main Street district. If there are sufficient responses, I will report on them in special posting to this blog.

N. David Milder

GETTING THEIR STORIES TOLD -- WHAT PETITE BUSINESSES NEED FROM E-MARKETING

2011-06-01T12:58:00.002-04:00

Morristown’s Treasured Businesses

France Delle Donne, the director of development at the Morristown Partnership (in NJ), recently sent me a link to a new posting to their website called Morristown's Treasured Businesses. I took a look and thought it was just terrific! One of the best things I have seen on any downtown organization's website in a long time. It's so different from the dull, static, list-based or e-business directory like structures that I typically see on the webpages of these organizations that deal with merchants. It got me thinking about what I liked so much about it and why. I concluded that, though it had many attractive aspects, it was its ability to provide a narrative for each of these business operators that was most important. Storytelling is a critical factor in successfully marketing a downtown and its businesses, though too often overlooked. Branding is a more widely accepted marketing concept, yet the strongest brands gain their power from denoting some kind of story, even a short one.

The High School’s Involvement Was Critical

Morristown High School’s Broadcasting and Journalism departments approached the Morristown Partnership about doing a project on Morristown. After an initial meeting and assessment of resources , the Partnership brought them a proposal for “Morristown’s Treasured Businesses.” With significant development taking place in Morristown’s business district over the past five years and an influx of new businesses moving in, the Partnership felt it timely to focus on independently-owned businesses that have been in operation for 25 to over 100 years and weathered a variety of economic cycles. According to the Partnership:

“We wanted to use this opportunity to connect established businesses with the younger constituency in our community. The hope was to raise a cross-generational awareness and appreciation about treasures in Morristown, including businesses and the human connections associated with them. It had all the components to tell a great story. The High School embraced this idea."

Fifteen of the 55 businesses that fit the selection criteria were then interviewed and filmed by the students. A total of 48 students were involved in all phases of completing these merchant “documentaries.” The finished films were then posted on the Partnership’s website for the public to view and vote for their favorites.

Downtown organizations seldom have the resources to do everything they want, so having other organizations, such as the local high school, get involved is a really good idea. In Morristown, the high school faculty and students not only got involved, they did so for a novel, needed and effective program.

Additionally, as the Partnership recognized, high school students are an important retail market segment in Morristown -- and in many other downtowns -- so relationship building with the high school and its students is a good idea for the Partnership as well as many other BIDs and SIDs.

Coping With the Longing for Trophy Retailers Syndrome

Another reason I liked Treasured Businesses so much is that it addresses a critical problem faced not only by the Partnership, but by many other downtown organizations as well: local residents focus on the trophy retail chains that are not in their downtown, but do not acknowledge or appreciate the good small merchants who are there.

Another is its use of the dynamic short movies to enable the local business operators themselves to talk about their shops and their histories in the community. As they tell their stories , these merchants become alive to the viewer, allowing the latter to develop some involvement in the stories and some attachment to the merchants.

The Decline of Storytelling About Local Businesses That Has Accompanied Downtown E-Marketing

For many years, from roughly the mid 1980s until fairly recently, many downtown organizations found that doing newspaper inserts and special magazines were strong marketing tools. They gave these organizations the capability to send strong editorial content, that they created and controlled, to both potential consumers and commercial tenant prospects. At the heart of these publications, their most effective components, were stories that convincingly conveyed to the reader that the businesses or the downtown characteristic covered by that story were interesting, unique and/or -- most importantly -- a discovery. But, the times are “a-changin.” Downtown organizations are quickly shifting their attention to e-marketing and their websites, e-newsletters and Facebook pages. My visits to many of these websites suggest that this shift from print to electronic marketing has been accompanied by a steep decline in the story-telling their marketing utilizes.

One reason for this trend may be that the easiest, cheapest and quickest ways to present information about local businesses on websites are in list/directory formats that primarily focus on category descriptors of business functions combined with basic contact information. In a few instances a short descriptive paragraph or two, perhaps even a photograph is provided. But, even fewer if any of these formats produce real stories about the local businesses. It’s more like name, rank and serial number, slam, bam, thank you mam. Also, using text to tell a story usually takes more words and time to read than most “webmeisters” advise for a webpage.

The short movies provide an e-commerce, non-text technique for effective short storytelling. It has a strong personal component to it and thus can evoke viewer feelings and involvement.

Storytelling May Be How E-Marketing Can Best Help Really Small Merchants

Since my work on the ‘deliberate consumer” I have been concerned about how the small business operators , say those "petite" firms with annual sales under $300,000/yr

Can be stimulated to make the management and operational changes they must implement if they are to survive
And how downtown and Main Street organizations can help them to make these changes.

As I have written in some recent postings to this blog, having an effective e-commerce presence is probably one of these necessary innovations, but:

A full-fledged e-store is probably too complex and resource demanding to be a viable option for these merchants
The directory type formats on either the business’ or a downtown organization’s website, even when blown up into full webpage formats, do not have sufficient impact to warrant the time and effort needed to create and maintain them.

I would argue that the best thing that their website or a page on their downtown organization’s website can do for one of these “petite” businesses, is to tell their story. That is what Morristown's Treasured Businesses does for these businesses. It provides a model for other downtown organizations to emulate, even if some tailoring to their situations probably will be needed.

Again, the teachers and students at Morristown High School are to be strongly commended for their participation in this program and for doing such a good job on it!

N. David Milder

PARKING TRENDS REDUX

2011-05-30T11:49:00.009-04:00

I just came across an article in the New York Times, "Higher-Priced Developments Providing Parking" by C. J. Hughes, (published on May 26, 2011) that cites two new upscale housing development projects in Manhattan that are providing on-site parking using hydraulic or "robotic" technologies:

An eight-story condo building on West 24th Street, near Seventh Avenue, with 24 units. the building also will have eight internal parking spaces that are available through a hydraulic lift.
Also on West 24th Street,, near Lexington Avenue, a 55-unit condo is being developed that is adjacent to a fully automated, “robotic”, 64-space garage. The garage is open to the public, but condo’s residents can lease spaces in it for a hefty monthly fee.

I think these projects are signs that the trend toward internally stacked and automated downtown parking that we at DANTH, Inc identified in our 2008-2013 downtown trends assessment is continuing even during our creeping economic recovery. The eight-space parking for the smallish condo building may be a particularly relevant model for projects in suburban downtowns that can attract households with comfortable annual incomes. Below is what I wrote about parking trends and mechanical and automated parking back in 2008. I think it is one of the most important trends identified in our assessment and worth a second presentation.

A. Slowly, We Are Winning The War For Downtown Friendly Garages

For decades following WWII, new downtown parking garages tended to be physically unattractive, intruding into the urban fabric in ways that disrupted how downtowns are supposed to work, and deprived them of an important competitive advantage. The objective was simply to store vehicles. Little thought was given to whether the garage created a pedestrian discontinuity that discouraged people from strolling and shopping, while too often stimulating fears. Even less thought was given to how the perhaps functional, but blaringly ugly parking structure diminished the downtown’s attractiveness and image.

It was not as if examples of better downtown parking projects did not exist. Walking around Manhattan today, for instance, one may easily find garages in what appear to be ordinary high-rise commercial structures that were built before the 1960s. Their parking use is basically masked, save for the signage and ugly windows.

More impressive is the Carew Tower in downtown Cincinnati that was completed around 1930. It is a mixed-use project with wonderful art deco decorative themes placed throughout its three towers, mainly in the metalwork and grillwork of the elevators and lights. Originally, the project had three towers specializing in three distinct uses: offices, a hotel, and a parking garage that relied on an elevator to move cars between levels.

The John Hancock Center, completed in 1969, on N. Michigan Ave. in Chicago, has 100 stories, a height of 1,127 feet and provides space for offices, retail shops, restaurants, and about 700 condominiums. The ground floor and the floor above it are for retail and commercial uses. Above them on floors 3 through 13, thoroughly masked, are 11 stories of parking. The office and condos are located above the parking. A helix one block down a side street provides entry and egress from the parking.

These examples gained little traction until about the mid-1990s and as more downtown friendly parking structures began to appear a kind of snowball effect emerged and more and more developers proposed such projects without local civic leaders having to bang them overhead. Most influential was the Horton Plaza project in downtown San Diego, which hid its parking behind a "skin" of residential units. They also have begun to appear in medium-sized downtowns such as Cranford and Englewood in NJ and Ithaca, NY.

DANTH has created a photo album of downtown friendly parking projects that is posted on the Downtown Curmudgeon’s website for photos. Feel free to visit and download the photos at no cost. The web address for the photo album is:
https://picasaweb.google.com/dmilder/DowntownFriendlyParking#

Photos like these can help demonstrate to developers, town councils, planning boards and the pubic what can and should be done when it comes to downtown parking structures.

B. The Challenges

1. User Convenience and Safety. The above discussion detailed how the external features and ground floor uses of garages have been improving so they integrated far better with the rest of the downtown. Unfortunately, how garages are configured and operate inside very often still create huge problems.

DANTH has no transportation engineers, transportation planners or parking specialists on staff. However, we do run into parking issues continually as we engage in our consulting assignments. As a consequence, DANTH has developed a deep sense that parking issues are habitually scoped-out incorrectly because conceptual blinders lead to parking solutions are formulated to address the wrong problems. As a result, parking facilities are too frequently designed to store vehicles, with insufficient attention to serving the people they transport. Here are some examples of the “people aspects” of downtown parking problems:

One nameless town along the Hudson River in NJ wanted to build a new parking deck although field investigation showed low utilization of municipal parking lots with ample parking spaces. Survey data indicated that many people simply did not know where the lots were or if the lots had available spaces. Was the problem here insufficient capacity? Was the viable solution a big parking deck? No on both counts. The capacity was adequate. Downtown shoppers needed better, up to date information so they could use it. This linkage between information and better utilization of parking capacity is too often overlooked.
For nearly 25 years we have found that on a busy fall Saturday at lunchtime in downtown Wellesley, MA, one can spend a good deal of time searching municipal lot by municipal lot for a vacant parking spot. This strong, attractive and busy downtown is a de facto lifestyle mall without central ownership. Lots of shoppers come not only from the college, but from many other affluent nearby communities. One might hypothesize that such frustrating searching for a parking space erodes shopper interest and visitation. Would a big parking deck be a solution here? How would it fit into the urban context? Would the local female shoppers really use it? If not a deck, what else can be done to ameliorate the need to search for parking spaces?
· Some downtowns build new surface lots or decks on the periphery of their districts and then the leaders are surprised when few shoppers or diners want to use them! DANTH does not do brain surgery, but….
Multi-level garages have been built to provide downtown shoppers with convenient parking only to have the operators discover that few shoppers will use the upper levels. No one apparently looked at how much time it would take on foot to get from a car on higher levels down to the sidewalk and then back again. No one also probably thought about the confinement of enclosed stairwells and the probable urine and urine smells they would attract. Or the hiding places built into many garages. Or the fear inducing potentials of elevators. Most shoppers are female and if you interview them about parking you will find they do not feel safe in most garages. Guess what makes them fearful! One does not need to be a rocket scientist to avoid this situation.
Increasingly, downtown trips are quick, pick up or drop off types of visits and the shoppers do not want to spend more time looking for a space, parking and getting to and from their destination than they will in the shop or eatery. Yet, we have found very, very few downtowns with a short-term parking program aimed at these key consumers.

Because of the nature of our business DANTH is primarily concerned about the people who live, work, play and shop in downtowns and how they engage in those activities. Consequently, DANTH sees the nature of their parking needs not just in terms of needing a place to store a vehicle, but also and primarily about how that parking space will impact on the ways those folks use the downtown and its shops, restaurant’s and entertainment venues. From such a consumer perspective, the key parking issues are first convenience and safety and only then capacity. Few downtowns have their parking problems analyzed in these terms. Far too few parking facilities are designed – even recent ones – to maximize user convenience and safety. Ah, you think we are wrong! Then let us ask: “When was the last time you parked in a garage that had electronic signage directing you to the levels with empty spaces?” Never, probably. Roaming around a deck, searching for an empty space takes time and generates frustration and then perhaps anger. It is an irritating inconvenience. Then it seems to take forever to walk out of the deck and likely requires walking down filthy, foul-smelling, little prisons with stairs. It certainly is a very poor way to welcome visitors into your shopping district. It is the worst kind of customer service.

2. The Cost Of Downtown Land. Downtown land costs are high and rising. Moreover, as a downtown revitalizes land costs will escalate at an increased pace. This means that creating more physical capacity for downtown parking is getting more and more expensive. Parking revenues typically cannot compete with those yielded if the same parcels of land are put to office, retail or residential uses. In fact, without subventions and/or greater project density, parking very often cannot pay its own way.

Finding solutions to this problem is a major challenge to future downtown revitalizations.

C. Technological Responses: Some Examples
To address the above problems requires management and technological innovation. Unfortunately, gene therapy has not matured to the stage where it can be used to cure downtown leaders and city officials who work so diligently to produce ghastly, unattractive and user insensitive parking facilities. Getting rid of them is certainly one alternative, but usually difficult to achieve. Another approach is to find good examples of the people friendly parking projects and then selling local leaders on them because the projects will genuinely improve the downtown, while making the leaders look far-sighted and effective (i.e., like real leaders).

Technology can play a big role in maximizing the amount of parking that can be placed on a piece of downtown land as well as help make a parking facility easier, quicker and safer to use.

Figure 1

1. Stacked Parking. One way to deal with rising land costs is to get more cars parked on the same amount of land. This can be done by going higher—but it also can be done by packing more parking spaces into the same volume of space. For example, in Manhattan, cars have been mechanically stacked on top of each other in small outdoor lots. These parking operations double or even quadruple their capacities without increasing the size of their lots. See Figure 1.

Looking out over the 2008-20013 time period, DANTH believes that relatively small infill residential projects will have growing impotence in downtown revitalization efforts across the nation. The viability of many of these projects will hang on their ability to provide on-site parking.

Figure 2.

The stacking approach pictured above has been adapted for use in basement garages – see Figure 2 – located in such modest infill projects. DAL Design Group and its development subsidiary, in Bayonne, NJ, are working on a number of projects using this technology.
At this juncture, DANTH cannot recommend the immediate adoption of this technology – but, we can state that it is one that certainly warrants serious investigation.

2. Robotic Garages. Another approach, using much more sophisticated and expensive technology, is to build what some call robotic garages and others refer to as automated parking systems. For example, a seven-level municipal parking structure, only 56 ft high and capable of storing 324 cars was built on a relatively modest 100 x 100 lot in downtown Hoboken, NJ. (Martin, 2003). The entering autos are placed on a steel palate, which is then moved mechanically to and from its storage location under computer guidance.

This garage encountered problems with the computer program controlling its operation, resulting in its closure for a time. Although now reportedly fully back in operation, its problems have put a wet blanket over the idea of robotic garages in the Northern NJ area.

But, robotic garages promise at least doubling the number of cars that can be stored on any given piece of downtown real estate, while greatly reducing the personnel costs for attendants and cashiers. These benefits attract a number of developers even though robotic garages cost significantly more to build. For example, at 123 Baxter Street, in Manhattan’s Chinatown, Automation Parking Systems installed and operates what their name says in a new building. It has 24 residential units, ranging in size from 1,200 sf to 4,800 sf. Every unit is guaranteed at least one parking space in the basement garage, which holds 68 cars. The estimated average cost for a robotic garage space is about $40,000, compared with $30,000 for a space in a typical underground garage, although those figures can be considerably higher if the builder has to dig deeper or encounters other problems along the way.

Manhattan's Chinatown is very densely populated with many narrow one-way streets. Parking is at an absolute premium. New infill residential buildings, such as this, with safe off street parking, are rare. The 44 parking spaces not allocated to residents will be made available to nonresidents, with the revenues raised hopefully more than offsetting the costs of the robotic system’s installation and operation.

Here is a link to a DANTH slideshow on the Automation Baxter Street facility and how it operates:
http://picasaweb.google.com/dmilder/RoboticGarage123BaxterStNewYorkNY

The technology it uses has been used successfully in numerous facilities in Europe, especially Germany. DANTH thanks Jordan Rinzler of Automation for inviting us to visit the facility and being our tour guide.

The Takeaway. Based on the information we have obtained, DANTH believes that robotic parking should be given serious – not knee jerk nor flippant – consideration for any downtown project that requires about 130+ parking units. DANTH also believes that the number of such projects that will find automated parking an appropriate solution will increase with time and the:

Accompanying rise in downtown land prices
Reduction in the costs of the automated systems
Growing acceptability of the approach as more systems are built and operate successfully.
DANTH also believes that the automated approach may be appropriate for smaller projects, such as 123 Baxter Street, when the facility can meet, in addition to the needs of building residents, high neighborhood demand for parking among people who can and will pay a high price for it.

3. The Grove. Rick Caruso and his firm, Caruso Affiliated, have created one of the most successful and popular retail centers in the country, called The Grove. Located in Los Angeles – the city famed for reputedly having no there there -- its design resembles a small downtown, with its own trolley, bevy of trophy retailers, cinema, restaurants and location next to the locally cherished Farmers Market. It is also across the street from Parc La Brea, a huge housing complex built by MetLife after WWII.

In no small measure, The Grove’s success is due to an insightful understanding of how shoppers behave and a great attention to detail in responding to shopper needs, especially concerning making the visitors experience easy, safe and enjoyable.

This is shown in how they handle parking. The garage has eight levels and – contrary to what happens elsewhere -- shoppers have no problem with using the upper levels. In part this is due to The Grove being so popular, but also because the garage uses open escalators and electronic signage to make shoppers feel their visits will be safe and convenient. Here is a link to a brief DANTH slideshow that shows these two features:
http://picasaweb.google.com/dmilder/ParkingAtTheGroveInLosAngeles

The escalators completely avoid all of the garage stairwell problems and make pedestrian egress and entry feel safe, pleasant and quick.

The electronic signage greets the drivers as they enter the garage and indicates how many spaces are available on each level. This type of signage is used all over Europe. It is absolutely astonishing that more garages in the USA do not install them.

Moreover, in Paris, for example, similar sign technology is used to indicate on roads coming into the city the occupancy levels of various municipal garages, which reduces the amount of time, effort and gasoline drives spend on finding a space. Such a technology can certainly be implemented in the USA. Communities such as Wellesley, MA, and the Hudson River community described above would greatly benefit from them.

The Grove exemplifies a level of concern about visitor convenience and safety that many downtowns leaders and business operators can learn from. The Grove also uses modern technologies in ways that many downtowns can use as models.

Some Interesting Research About E-Commerce

2011-05-11T13:13:00.002-04:00

The Online Articles

A May 5, 2011 posting on ClickZ, "Is Facebook Marketing Behind Macy's Online Sales Jump," suggests that that Macy's efforts to pick up Facebook "likes", which in 2011 grew to 800,000 was responsible for the 50.3% rise in the Macys.com and Bloomingdales.com monthly sales. The article also mentions that Foursquare and Twitter were used in this campaign.

A May 10, 2011 posting to the Business Insider by Pascal-Emmanuel Gobry, "Turns Out Social Media Marketing Doesn't Work" reports on recent research done by Applied Predictive Technologies. The research tested "how much location-based services like Foursquare and Facebook Places can help local businesses." It found an impact that is just "close to 2%." (There is no clarity as to what the 2% refers to in the article, e.g., sales, visits, etc."

Gobry advises Foursquare investors not to panic because the used social media may not have had enough time in the test to work and "Right now, social media marketing and advertising is in the experimental phase. We don't really know what works and what doesn't, fumbling in the dark."

I consider customer service as a critical marketing tool, so another online article that recently caught my eye was by Joe Light and posted on April 25, 2011 to the Wall Street Journal's website. Titled "With Customer Service, Real Person Trumps Text," the article reports on a large national survey conducted by American Express to find out how consumers want corporations to provide customer service. The survey found:

90% of the respondents wanted customer service handled by live representatives over the telephone
About 50% like customer service delivered by online chat
Just a little more than 20% would use social networking sites
20% said they would use auto-response phone systems
70% said they would spend more with a company that provides good customer service , an increase from the 58% that felt that way last year.

My Take-Aways

I think Gobry hit the nail on its head, but that his remarks apply not just to social media marketing, but substantially to internet marketing in general. What is obvious is that large, savvy corporations with ample resources and large technical staffs such as Macy's and American Express are still trying to discover what really works and what doesn't and many of them are still "fumbling in the dark."

The small merchants that populate so many of our downtowns lack the resources and skilled staffs of the large corporations and the results for them of a failed online marketing campaign are probably more dangerous. Advocating their involvement in unproven and for them complicated and expensive internet ventures is irresponsible. Yet, an internet presence is fast becoming an existential imperative for all merchants, be they large or small! Downtown organizations that want to foster merchant presence on the internet in most cases need to focus on programs that have some real proof of effectiveness and that make merchant involvement less complicated and more affordable. I have always been fond of the Keep It Simple, Stupid (KISS) approach to program development and to my mind it applies here. For most small downtown merchants small, affordable, simple to do and easy to maintain steps may be the most viable.

Of course, there are always the exceptions, those marvelous exceptions among the small business operators. At the extreme they are the true innovators that may start in garages, small offices and small shops and create firms like Apple, Microsoft, and Limited Brands. While small business innovators of this high caliber are relatively rare, my experience suggests that there are 5% to 20% of a downtown's merchants who may be open to some innovation and willing to take some risk. Should downtown organizations focus their efforts on this group or do they need to develop two-tier programs, one level for the more innovative-prone merchants, the other for the average merchant?

N. David Milder

Trying to Assess the Impact of E-Retail on Downtown Merchants

2011-05-05T15:19:00.100-04:00

The Objective

Since I started working on downtown revitalizations there have always been ogre-like competitors that local merchants see as the primary threats to their financial well-being. First, it was the department store anchored regional malls, then the catalog mail-order operations, which were followed by the big box value retailers. Most recently, e-retailers such as Amazon, are seen as the primary competitive threat. Consequently, I decided to try to assess, as best I could from available data, how strong a threat e-retail has become. My objective was not to be definitive, but to come up with ballpark numbers that would show the dimensions of this impact.

Some Relevant Data

The U.S. Bureau of the Census has long published data on e-retail sales and the proportion of total retail sales that they account for. For the four quarters of 2010 the Bureau found that e-retail sales ranged from $38.7 billion to $44.1 billion per quarter and that these sales accounted for just 4.0 % to 4.3 % of the nation's retail sales.

These findings are consistent with the hypothesis that e-retail has had little impact. But they are contrary to the widely accepted beliefs that e-retailers have taken over the music and book industries, while squeezing the profits out of brick and mortar electronics stores and even making surprising inroads on the markets for apparel and shoes. One popular argument is that any retail market where the merchandise can be treated as a commodity is prone to deep e-retail penetration.

Unfortunately, the Census Bureau does not provide the e-retail data broken down by retail sectors. But, the Bureau does provide data going back to1992 on national GAFO sales and for sales in NACS 4541 Nonstore retailers -- electronic shopping and mail order houses. This category includes the pure play non-brick and mortar e-retailers, but it does not include the online sales of the brick and mortar retail stores. GAFO is a general category that combines the general merchandise, apparel, furniture and home furnishings and other miscellaneous retailing stores sales. GAFO type retailers are usually the ones that are seen by downtown merchants as the most endangered by e-retailers. NAICS 4541 stores are not GAFO retailers.

The top part of Table 1 shows the relative strength of the electronic shopping and mail order house sales compared to GAFO sales expressed in percentage terms. The data are for two time spans. The first, 1993 to 1998, is when catalog operations were stronger than the e-retailers; Amazon went online in 1995. The second is a more recent period, 2006 to 2010. In 1993 the nonstore retailers in NAICS 4541 had sales amounting to just 7.1% of the GAFO merchants’ sales, but by 2010 their sales were equal to 24.4% of the GAFO sales. These findings are consistent with the hypothesis that the strength of e-retailing has certainly grown since 1993. Indeed, the fact that NAICS 4541 sales are now the equivalent of about one quarter of GAFO sales is quite impressive.

But, did the NAICS 4541 nonstore sales take sales away from the GAFO merchants? Between 2006 and 2010 NAICS 4541 merchants grew steadily from the equivalent of 18.2% of GAFO sales to 24.4% of GAFO sales or from $202.6 billion to $276.2 billion, while the actual levels of annual GAFO sales in trillions were $1.113, $1.148, $1.144, $1.098 and $1.1320, with a 1.6% net increase over the period. In other words, while the NAICS 4541 had strong growth, there was fluctuation, but no real major erosion in GAFO sales.

The bottom part of Table 1 covers the same time periods, but it shows the proportion of non-auto-related retail sales that GAFO sales account for annually. Both e-retailing and mail order houses as well as GAFO stores are included in the total non-auto-related retail sales figures. So are groceries, supermarkets and pharmacies. Between the two time periods there is a definite drop in GAFO’s share of non-auto-related retail sales:

The peak, 40% was in 1998, the low point was in 2010 at 36%
The average for the 1993 to 1998 period was 2.7% higher than the average for the 2006 to 2010 period.

These fall offs certainly might be considered as indicators of the sales e-retailers took from the GAFO merchants. If these are valid indicators, then the numerical impacts may not seem large, but events have shown that a 3% to 4% drop in sales can take the wind out of any retail sector.

However, other factors were also present during this time period that could account for the reduction in GAFO sales. For example, as the Great Recession manifested itself, GAFO expenditures, especially for big ticket items, were where consumers cut quickly and deeply, while expenditures for food for the home and health and personal care items grew.

Furthermore, GAFO includes some of the nations largest and strongest retail chains such as Walmart, Target, Home Depot, Best Buy, Macy's, Saks Fifth Avenue, etc. They are not only strong brick and mortar competitors, but also have developed very strong and elaborate online stores. Many smaller GAFO chains and some independent operators have followed suit. Unfortunately, the GAFO data does not provide sufficiently detailed information to look into these issues.

My Take Aways

Reviewing these data I am inclined toward the following conclusions:

E-retailers have had much more impressive growth than the Census Bureau's e-commerce data would suggest. The proper benchmark is not all retailing that includes auto dealers, supermarkets and drugstores, but GAFO merchants. The latter sell the department store type merchandise that downtown leaders would like to have available in their districts, though many downtowns are just too small to have numerous GAFO shops.
Pure play e-retailers have knocked out many, if not most, book and recorded music stores, but broad swathes of GAFO brick and mortar merchants remain.
Though some erosion among other GAFO segments has likely also happened, it probably has involved marginal firms that were already poor competitors and/or could not develop significant online presences. Large firms fall into this group -- think Borders, Circuit City, Blockbuster -- but smaller firms with few financial and skill resources are more prone to having such vulnerability. Of course, many of the GAFO operations in our small and medium-sized downtowns fall into this category.
Many of these small marginal downtown GAFO firms would still be marginal if the e-retail threat did not exist. They have always been there in the 35+ years I have been working in downtowns. The thing that has changed over time is the nature of the threat.
My reading of various articles indicate that to date, the pure play e-retailers have not captured many sales in the auto, grocery, health and personal care sectors. These often have a strong presence in or near downtowns and are usually where a small or medium-sized downtown's strongest retail market potentials reside.
E-retailing's biggest impact is not the "constructive destruction" of most brick and mortar merchants, but in changing what it means to be a retailer: retailing now has an electronic as well as a brick and mortar component.
This means that many small downtown GAFO operations will have to "innovate" by either having their owners/managers learn new internet related skills or by hiring outsiders who have them. This is a strong challenge, as I outlined in my previous blog posting, that admonishments to get on the web alone cannot address.
If the current operations of these GAFO retailers are badly managed -- a likely condition if they are marginal -- it is unlikely that they will either acquire the necessary skills or be saved if they do.

What do you think?

N. David Milder

The Use of the Internet by Downtown Organizations and Businesses

2011-04-18T17:48:00.007-04:00

About a week and half ago I went to a workshop put on by Downtown New Jersey that focused on the use of web sites and social networking media such as Facebook. While I learned a lot and thought the presenters did a good job -- they certainly were enthusiastic -- I still came away with my major concerns being unanswered.

Being Able to Afford the Time, Money and Skill Acquisition Needed to Create and Maintain a Website. For many years I have heard several other downtown revitalization and business development experts strongly recommend that downtown organizations and individual downtown businesses have attractive and effective websites. I certainly concur with the potential positive impacts of effective websites. Moreover, I agree that organizations, with say $300,000+ in annual revenues, can have at least a useful website and that it gets easier for them to have a really effective website as their budget increases.

My problem is: Can most small businesses and small-budget downtown organizations really have effective websites? Many small and medium sized downtowns have numerous businesses that are in the $150,000 annual sales range or perhaps even less. With few, if any, full-time paid employees and modest revenues, these shopkeepers usually work long hours and may not have either:

The computer skills needed to create and maintain a website
Or the time to acquire them
Or the funds and networking skills needed to hire an outsider to build and maintain the website.

These problems can be particularly acute when it comes to a small merchant building an "e-store." The chores of keeping the online inventory current and packing and transporting the sold merchandise can be daunting.

Of course, what most downtown managers also know is that getting their small merchants to advertise is very often analogous to pulling teeth. So, if they are resistant to shelling out less than say $100 for a co-op newspaper ad, you can expect that getting them to even entertain a website they fear might cost in the thousands of dollars is likely to be far more difficult. Moreover, if they cannot have online stores, they may doubt the value of a website that is simply something akin to a fancy directory listing.

Much the same is true for small downtown organizations -- small budgets constrain what can be done -- but, my online observations strongly suggest they have both better skill sets for the electronic media and a greater willingness to spend a significant portion of their budgets on them than the small merchants. Many of their sites are good at promoting their downtown events and sharing news relevant to the downtown community that the local media might be overlooking. They usually have an online business directory, while some even try to provide a webpage for each business.

But, too many fail to take on business development functions by providing essential, easy to find and easy to use information that would be useful for a business looking for a new location. This can range from demographic data to information about prevailing rents and the town's permission and approvals process.

While small businesses probably will always lag in the creation and quality of their websites, there are reasons to believe that in the coming years there will be significant improvement among them:

The younger among them are more adept and comfortable with using computers and the internet -- and with time the proportion of the internet capable will rise and be dominant
There are website hosting services appearing that make the creation and -- most importantly -- the maintenance of a website much cheaper and easer to do. They use templates and modules to achieve the fast, easy and affordable website, but they also bound a site's creative potential. We are redoing our DANTH, Inc website, under the guidance of our website consultant 180 Interactive, and using one of these services. I'll report on the experience in a later posting.

When Is Electronic Social Networking the Answer? At the risk of sounding like an electronic Luddite, I am having a difficult time figuring out how something like Facebook or Twitter could provide real added value in the marketing of DANTH. Though I can see their value to some large downtown organizations and consumer products companies, I keep feeling that many small business people are in a similar position to mine:

I barely have the time to operate my business and still write a blog, maintain our website and write periodic email blasts. Where will I find the time and energy to also deal with a Facebook presence, which to me seems like another resource demanding website?
My company does not generate enough "news" to keep a constant information flow through any communication channel
Our clients do not usually come to us from the web, but through word of mouth. They then do go to our website to get more information about us and to "confirm" the positive messages they have received from other sources. What added value can Facebook offer that has a sufficient cost/benefit justification?
The times have been economically desperate and in such conditions people often look for "silver bullet" solutions. The faddish popularity of Facebook and Twitter suggest to me an unthinking groping for magical answers to tough problems.

I think that there is a real resource threshold for small businesses to properly utilize websites, blogs and the social networking platforms. To do all of them properly and advantageously demands proper staffing and the resources to pay them. To do just one properly takes skill and effort -- and time.

Our firm's approach to the design of our website and this blog is based on a set of marketing objectives we want to achieve. So far, we cannot see any objectives that a Facebook or Twitter presence could help us achieve. Perhaps, if we had DANTH events or if we sold my books directly from our website we would have a different assessment of the electronic social networking opportunities.

My fear is that too many downtown organizations are doing Facebook and Twitter without having any substantial strategic justification, but simply because more and more downtown organizations are doing it. I fear, too, that many small businesses are falling into the same trap.

Are We Taking Our Eyes Off of the Real Prize? A week or two ago our friend and strategic partner Mark Waterhouse of Garnet Consulting Services sent us this link to an article:

http://www.nhregister.com/articles/2011/04/10/business/doc4da114e0961da239903377.txt

It is from a New Haven newspaper and it details how the merchants in downtown Guilford, CT have prospered right through our nation's Great Recession. No where does it mention the merchants' slick use of the social networking media. But, there are vivid descriptions of merchants who work hard to have the right merchandise for their customers, who provide a deep level of customer service and who avidly recommend other nearby merchants to their customers. All of this is perhaps just a part of "Being A Successful Merchant 101," but apparently they are actually doing it in Guilford. The part of the story about the merchant referrals had a particularly strong resonance for me because:

I have become increasingly convinced that this is one of the most effective and inexpensive ways to do cross marketing in a downtown
I have also become convinced that most downtown organizations do a lousy job of encouraging cross marketing.

Furthermore, I have not heard of any similarly effective downtown cross marketing effort that is based on electronic social networking.

The Bottom Line. I am all for e-marketing and using websites, blogs, social networking platforms, web photo galleries, etc., as long as they can fulfill an organization's strategic objectives and fit within its resource constraints. Most importantly, I fear that downtown business operators and their downtown organization's leaders are shifting their attention and resources so much to the web that they will forget the importance of mastering the non-electronic ABC's of being a successful merchant. If you have dull merchandise, fail in customer service and have not learned how to work with your fellow downtown merchants to generate and SHARE customer traffic, no amount of adept electronic marketing will save you...or your downtown.

The Often Slow Pace of Implementation

2011-03-26T12:14:00.002-04:00

Last week we were in Garden City, NY. Back in 1996, DANTH had recommended that the site of a gas station on the very important corner of Franklin Avenue and Seventh Street would better serve the community's needs if it were redeveloped by a project having retail on the ground floor and residential units above. I was happy to see that our recommendation finally was being implemented (see photo on right).

The fact that close to fifteen years had passed between recommendation and implementation strongly reminded me that downtown revitalizations seldom occur quickly and usually require patience. Some downtowns have been in the revitalization business for 40 or 50 years. For example, the formal revitalization effort in the Jamaica Center commercial district in Queens, NY, started back in 1968. The improvements have been steady over these years, with the total amount of investment attracted to this district totalling well over $1 billion by 1987 and the investment flow continuing on to this day.

Other downtowns seem to be overnight successes, but years of unnoticed hard work usually precede their rocketing economic upswings. In the mid 1990s, for example, downtown Englewood, NJ, attracted a significant number of national retail chains and eradicated a 20% retail vacancy rate. Many outside observers noted how quickly this downtown had turned around. Mayors and council members in other NJ communities envied this quick success and wanted to replicate it in their downtowns. Few of these observers knew of the 10+ years of prior planning, improvement projects and coalition formation that enabled Englewood's "overnight success" to occur.

One of the most important things that Englewood's political leadership did was to form a common strategic outlook among the city manager, mayor and city council. This took time to forge and energy and attention to maintain. Unfortunately, many local political leaders in other communities do not understand the need for such a strategic coalition and/or do not have the political time or patience to create them.

Sadly, the need for a revitalization effort to have some patience can slip into lassitude, inaction and redevelopment doldrums. Then, impatient local political leaders can give the downtown revitalization organization a badly needed kick in the butt.

As a general rule, DANTH recommends that clients treat a downtown revitalization effort as never ending, not something that in a few years they can strike from their To Do lists. Success not only has to be won, but then also maintained.

The Arc of a Niche: The Bowery's Home Lighting Niche

2010-09-05T13:19:00.003-04:00

The key intersection for The Bowery's home lighting niche, which is about 50 years old.

The Bowery Mission, a remnant of a famed, if unsavory, past

Some home lighting shops on The Bowery 1

Some home lighting shops on The Bowery 2

Some home lighting shops on The Bowery 3

My initial thinking about retail niches was greatly influenced by my experiences shopping for antiques in Waynesville, OH and for lamps in shops along The Bowery in Lower Manhattan. It has been almost 50 years since I made my initial visits to these places. Their antiques and home lighting niches still exist, though they have changed over the years.

Waynesville is about 600 miles away, so I have not been there in many years. But, a few years ago, I did some telephone interviews. Though the antiques niche there reportedly remains strong, it has changed because the industry as a whole has changed. Two significant changes are: 1) a lot of merchandise is sold on consignment in large antique malls, where the dealers do not have to be personally on site and 2) internet sales.

The Bowery is much closer to home, about an hour away via public transportation. When I first visited the area, back in the 1950s, it was best known for its run down bars with cheap drinks, poor alcoholics down on their luck and a collection of flop houses. When I next returned to the area in the 1960s it was to look for lamps in a cluster of home lighting stores. By the late1980s, this home lighting niche had grown enormously, with most shops between Houston Street and Canal St seeming to sell home lighting merchandise. On a visit in the 1990s I estimated there were between 75 and 100 ships in this niche. My wife and I felt that too many them appeared to be indistinguishable from each other in size and merchandise and that consequently the whole niche seemed less attractive.

Since then the neighborhood has changed significantly. Property values have increased and so have the commercial rents. The Bowery is showing signs of gentrification. The cheap bars and SROs are long gone. Chinatown has expanded enormously.

The merchants have also changed. The number of home lighting shops is now back down to about 20 and they are clustered on a two block stretch going south from Delancey Street. A restaurant kitchen equipment niche has emerged.

The largest and best known home lighting shops are among those that remain. Though much reduced in numbers, the niche is still relatively strong. A 50 year run is not bad for a retail niche and it certainly is not yet over. The niche remains a regional draw for shoppers looking for home lighting.

I hypothesize that the contraction of this niche was due to a collection of factors:

Rents became unaffordable for most of the small, marginal shops. Given the huge increases in Manhattan's retail rents it is doubtful that the borough will ever again see a retail niche of the size this home lighting niche reached.
Some shops just aged out -- the owners retired and their businesses ended with their departures
Too many of the shops could not differentiate themselves except on price -- and many could not afford to compete in this manner
A new niche was competing for the available retail spaces.

It is also fair to say that this niche has helped revitalize a badly decayed, disreputable area.

An Expanded Notion of Commercial Nodes

2010-06-06T07:46:00.005-04:00

Over the years, I have often been analytically frustrated by geographically fragmented downtowns and neighborhood commercial districts, not knowing what to call and how to define the fragmented parts. In recent assignments in Morristown, NJ and and Long Island City, NY, I have used an expanded notion of a commercial node to address this problem and found it is a heuristically useful solution.

To my ken, the term commercial node is usually applied to a commercial agglomeration around an important intersection. While often useful for smaller districts, its application is usually more problematical in larger districts where the fragmented pieces of a district can occupy a cluster of several blocks or a substantial part of linear street corridor.

Also, since a commercial node functions as a socio-economic entity with supply and demand aspects, it often is not only useful to look at the business operations in a particular cluster, but also at their potential customers who are located within a reasonable walking distance.

The map above shows three of what we are calling extended commercial nodes in Long Island City. Each is composed of a commercial corridor, but also has a 0.25 mile band around the corridor. The corridor is where most commercial activities are located; the band is a 5 minute walk shed for residential shoppers, office workers, etc.

The three corridor segments are geographically quite detached, but the walk shed bands overlap. This shows both the overall district's dispersion and the connections between the nodes.

3-D Television

2010-04-27T15:48:00.005-04:00

This past Saturday my wife and I stopped by the Samsung showroom at the Time Warner Center in Manhattan. They were featuring a number of 3-D TVs and we were able, after donning the appropriate glasses, to see what their images really looked like.

I was frankly surprised by how good it was. This technology is worthy of respect.

For downtown theaters it is one more technological improvement that makes home movie viewing their most serious competitor.

That said, it also should be noted that using the glasses is a pain in the butt and one wonders just how many films and TV programs would benefit from 3-D imaging. However, technology for a 3D TV system that does not require special glasses is now in development.

The future is ever present.

Movies Update

2010-04-05T08:28:00.004-04:00

For several years now, I have been arguing that the average downtown movie theater is in trouble as more and more people watch more and more films at home or even on their mobile devices. To counter this trend I have encouraged downtown theaters to rekindle "going to the movies" as a special occasion by adopting modern digital, 3D and IMAX projection systems and/or by integrating their cinemas with a restaurant, brew pub or ice cream parlor.

An article in today's Wall Street Journal shows that 3D and IMAX are indeed having a positive impact on attendance:

"After a record-shattering year of revenues last year, when the box office soared beyond $10 billion for the first time in history, revenues are running about 10.3% ahead of the same point last year, with attendance up by more than 8%."
"3-D has helped boost those figures. Last weekend, some theater owners significantly raised ticket prices—mostly on 3-D and Imax showings. In some cases, the price increases ran as high as 26%."
"Consumers, so far, don't seem to mind the higher prices, as long as they come with premium experiences." And we are still climbing out of the Great Recession!

http://online.wsj.com/article/SB10001424052702303912104575164020114064944.html?mod=WSJ_hps_LEFTWhatsNews

AFFORDABLE DOWNTOWN RETAIL RENTS

2010-02-26T17:40:00.019-05:00

Introduction. As we slowly emerge from the Great Recession the time has come for downtown organizations to work hard on encouraging small independent retailers to seek affordable rents and for landlords to offer them. If they do not, downtown retail will contract and street level storefronts will be occupied even more by financial and personal service operations – or remain vacant for long periods of time.

True, in many downtowns retail rents have declined during the Great Recession, often substantially. In one I recently visited, for example, asking retail rents have dropped from $45/SF to $30/SF and in some instances even $25/SF. But, as we creep out of recessionary conditions, it is critical that in most downtowns retail rents do not regain their unaffordable levels.

In the new normal, small downtown retailers will be facing increased pressures to keep their operations lean and mean because capturing sales from today’s deliberate consumers is far more difficult than from the abnormally free-spending shoppers of the 1990s and 2000s. One budget line item they can focus on is the cost of the spaces they lease for their stores. This is a major long-term business expense and it is important that these retailers do not pay more than they can afford. It is also a business cost where “newbie” retailers dominate those going astray, though badly inept or unscrupulous merchants also tend to pay a lot more than what savvy merchants would deem affordable.

Looking at the other side of the coin, it is also in the interest of landlords to offer rents competent retailers can afford. In the new normal, far fewer stores will be opened by national chains and, among those, a smaller percentage than in the past will be placed in downtowns. Landlords, as a result, will need many local independent retailers to fill their storefronts. This will also be true to a significant degree for those who have built new mixed use buildings with expensively constructed ground floor storefronts. Additionally, as their rents reach ranges considered unaffordable by savvy merchants, the more likely they are to attract incompetent or sleazy businesses and also more likely to have storefronts stand vacant for long periods of time.

Defining Affordable Retail Rents. A useful formulation for determining an affordable retail rent is roughly 15% of the shop’s annual sales. DANTH’s merchant surveys and personal interviews with merchants over many, many years as well as the work of other firms, such as Urbanomics, found that downtown merchants generally felt that they could afford total rent costs that were 8% to 12% of their annual sales. However, more recently merchants say they are OK with 15%. While there is certainly some error factor present here, 15% is probably plus or minus just a few percentage points off the correct number. The major thrust of the analysis presented below is not affected by this error factor.

In a typical medium-sized downtown, independent retailers with annual sales of $500,000 to $1 million are relatively rare. Most independent downtown retailers would be quite happy with sales in the $300,000 range and joyous with sales around $450,000. Though in large downtowns the sales happiness range can be higher, the 15% rule applies everywhere, so I'll stick with the retailers in medium-sized downtowns to simplify my argument.

The table above depicts information about:

How much rent is affordable to retailers with $250,000, $300,000, $350,000, $400,000 and $450,000 in annual sales. You can do the calculations for higher annual sales
How many square feet of space this “rent money” can buy at various prices per square foot.

The table also shows how with increased rents more and more of a downtown’s most successful merchants cannot afford to occupy the amount of space they might even minimally need for their operations. Look at how quickly even “small” spaces in the 1,500 SF to 2,000 SF range become unaffordable. At $40/SF not even a retailer with sales of $450,000 can afford a 2,000 SF; at $50/SF even a 1,500 SF storefront becomes out of reach. Of course, for the $300,000 shopkeeper, that happened at lower rents: a 1,500 SF shop is unaffordable at rents of $31/SF and 2,000 SF at $22.50.

Affordable rents should be tied in with balloon leases, where rents increase at an agreed upon rate as the retailer’s sales grow. Some savvy downtown landlords are already using balloon leases.

To The Groaners. To the downtown managers and Main Street managers who groan that is impossible to deal with landlords:

Dealing with downtown landlords and doing it effectively is part of your job. If you are not doing it, start doing it. If you do not know how, learn how. If after all that you still can’t deal effectively with landlords, get another job.
Every occupation has jerks; but they also often have a lot of reasonable, effective and even innovative people. This applies to landlords, too.
Find the landlords you can work with to implement an affordable rents program, then use them as a model to recruit others
One thing is certain: if you do not try, nothing will happen.

To landlords and developers who groan that they need high incomes from their new and expensively constructed retail spaces to pay off their loans:

You are big boys, you like to brag that you are big boys, so act like big boys
You either goofed in your calculations or you really did not understand that in most downtown mixed use projects outside of places like Manhattan and downtown Chicago, etc., the residential and office rents, probably for some time, will have to subsidize the retail spaces. This is especially true of unproven, revitalizing downtown locations
Given the current economic conditions your options are really either affordable rents that will diminish your losses or long-term vacancies and continued lack of retail rental revenues

To landlords who believe they should get market rate rents as defined by the highest asking rents they’ve heard about in the district:

Your unaffordable rents are likely to produce vacancies, because so few accomplished retailers would be interested, or perpetual churn, because you are likely to attract inept or schlocky merchants who are prone to failing or disappearing
This will affect the resale value of your property and this is not a great time for any commercial property
Have you really calculated the difference between the income that an affordable rent will yield and the zero dollars you will likely reap from the months your stores stay vacant because you want higher rents?

N. David Milder

AVATAR AND DOWNTOWN MOVIE THEATERS

2009-12-28T15:28:00.014-05:00

I have been an avid film buff since my Mom took me to see Anchors Aweigh in 1945. Though I liked James Cameron’s Terminator 2, one Alien was more than enough for me and I could not bring myself to see Titanic. Cameron, in my book, did not belong in the same league as Lean, Ford, Hawks, Lubitsch, Capra, Wilder, Spielberg, Cukor, Hitchcock, Coppola, Scorsese et al.

But, on Christmas Eve I went to see Cameron’s latest, Avatar, a 3D film, in all of its glory on an IMAC screen. I went despite my opinion of Cameron as a film-maker/director because I have been reading that the latest 3D technology would be the savior of movie theaters against the growing trend for people to watch films on their home TV screens, laptop computers and even small mobile devices such as iPods. I was particularly interested in how the 3D technology might impact on downtown movie theaters, many of which are relatively small, with fewer screens and less able to support badly needed investments. The primary question I brought to my viewing of Avatar was: Could the 3D technology produce a movie experience that was so unique that it could draw people off their couches or away from their handheld devices and back to movie theaters – especially those in downtowns?

Avatar plain blew me away! It is a watershed in movie-making and one of the most impressive films I’ve seen since Lawrence of Arabia. Watching it you keep asking yourself what kind of mind conjured this reality up and what technologies are putting it on the screen so realistically and so competently? Your immersion into a totally strange, yet coherent, detailed and comprehensive new world is staggering – so much so, that the storyline, which is too often hokey and filled with 60’s political stances, seems acceptable. I intend to see Avatar on a regular 3D screen to determine how much of this impact was due to the huge IMAC screen and the immersive experience it supports, though published film reviews also report about the strong, unique viewing experience Avatar generates on normal 3D screens.

Avatar definitely created a type of experience that I would abandon my easy chair and ignore the four full length films on my iTouch to enjoy again in other movies shown at my local cinema.

However, this experience may be due as much or more to computer-generated, special effects that are not 3D related. For example, the Na’vi, a humanoid race at the core of the film, are completely realistic, with little evidence of contrivance. The biggest grossing movies for the last 10 years (Transformers 2, The Dark Knight, Spider-Man 3, Dead Man's Chest, Revenge of the Sith, Shrek 2, Return of the King, Spider-Man, Harry Potter / Sorcerer's Stone, The Grinch) all were either heavy on computer generated special effects or computer animated. These movies are costly and studios are making about 15% fewer films than last year, probably as a result.

The studios’ emphasis on big budget, high tech films that are sequels or remakes increased attendance at movie theaters in 2009 by close to 8%, according to data published by boxofficemojo.com. With recession restrained ticket prices remaining steady, box office receipts increased by about the same magnitude as attendance. That would place 2009 as the fifth highest in attendance over the past 10 years, still 8% less than the peak in 2002.

It appears that evidence is starting to accumulate indicating that downtown theaters that can show films using 3D and other digital special effects technologies will be able to compete with home theaters and personal film viewers such as the iTouch and iPhone.

But, I doubt that 3D or other digital special effects can be used to enhance the viewing experience for movies such as Casablanca, The Maltese Falcon, On The Waterfront, A Streetcar Named Desire, Annie Hall, The Godfather or the vast majority of lower budget films such as Juno, Education and It's Complicated, that have recently been turned out by independent production companies. The “indy” films have been a source of strength to some of the most successful movie theaters in large urban neighborhoods and medium-sized downtowns. The audiences at these often packed theaters are overwhelmingly composed of the almost 25 million Americans aged 55 or more who go to the movies every year.

But, the competition is also getting stronger. High tech innovations are also increasing the lure of home entertainment equipment. Tim Bajarin, of Creative Strategies, who I think is the best in the business on computer related markets, sees 3D television taking hold soon, while DVDs rapidly are being displaced by on-demand streaming of movies. (See: http://www.pcmag.com/article2/0,2817,2357490,00.asp).

Consequently, I think that downtown cinemas need to not only be capable of digital projection and showing 3D films, but they also need to:

Make watching a movie with others in an audience a very pleasurable and therefore desirable experience. This not only means clean and comfortable seats, clean floors, good sound equipment, etc., but the enforcement of rules that are absolutely intolerant of patrons acting without civility to those around them

Integrate the movie-going with unique eating and drinking opportunities such as a quality restaurant, a coffeehouse, a first-rate ice cream parlor or a brew pub

Court and pamper the 55 year old + audience. It has accelerating growth.

N. David Milder

Teenage Retail Market Update

2009-12-26T08:41:00.005-05:00

This is a follow up to my 3/10/09 and 4/24/09 posts on this subject.

Same store sales in November 2009 reported by retailers specializing in clothing and accessories for teenagers showed a 7.8% yr2yr decline, making it the worst performing retail sector.

Even Hot Topic, a former high flier, had a double digit drop, while Abercrombie & Fitch had its 19th straight month of reduced sales revenues.

The Bureau of Labor Statistics puts the current teenage unemployment rate at 26%. With fewer jobs and mommy and daddy being more careful with their dollars, teenagers have a lot less money to spend.

See the article by Stephanie Rosenbaum, "Recession? Teenagers Get It and Are Cutting Back" on NYTIMES.com, December 26, 2009.

Repositiong For The Future During The Great Recession: The Bayonne Town Center

2009-11-26T00:12:00.017-05:00

This posting was updated on 12/10/09.

Bayonne, NJ is the kind of place that folks form deep attachments to. Even when they move away or find another workplace, those warm feelings remain.

Last week I had lunch in Bayonne with an old friend and colleague, the city's planner. It had been almost a year since I was last in the Bayonne Town Center and I was eager to see how it had held up during the Great Recession. After walking around the district for about an hour and a half, taking photos and shopping in some of the new stores, I was impressed by what I saw. Here was a perfect example of a downtown that, while experiencing higher than usual vacancies, was repositioning for the future by working to attract and create strong new assets.

Back home, I quickly sent Mary Divock, the district manager, an email message saying:

"...during the Great Recession the Town Center managed to make some really strong retail additions that will be even more important as the economy improves. I have attached snaps of the stores I feel are good additions. Most other downtowns I've visited recently cannot say the same. You should be proud."

Here are some of the things I found:

A new and popular green grocer
ShopRite, located very close to the district, has doubled its size to 70,000 SF. I am hopeful that the district will be expanded to include the ShopRite and other nearby establishments. See: http://www.nj.com/bayonne/index.ssf/2009/12/bayonne_shoprite_re-opens_to_h.html
A new shop featuring silver products had opened
So had a hearing aid shop
Another firm featuring medical equipment had moved from a side street to Broadway
GameStop and Petland had opened. According to a report in the Leisure eNewsletter, between 2007 and 2008, nationally, annual household expenditures for pets, toys, hobbies, etc. increased by almost 26%
Plans for a nursing home, across from the Bayonne Medical Center, with Class-A retail space on the ground floor had obtained city approvals
Plans for adding 14 residential units and renovating the store facades on an existing building were proceeding and there are expectations that some other buildings may follow suit
There were more than normal vacancies, but really not that much more and certainly their perceived impact was more than offset by all the new shops. As the economy improves the vacancies will ebb, but the new shops will only get stronger.

After my visit I learned that with the bottoming out of the economy merchants were again applying to participate in the BTC's Jump Start Facade Improvement Program.

Here are some relevant photos:

Backdoor Retailing

2009-11-23T19:04:00.018-05:00

My October 29, 2009 posting on the new normal for downtown retailing prompted a number of requests for additional information about “backdoor retailing.” I am very happy to comply since, for some time now, that has been a topic I have wanted to write about, but just never got to.

Advantages and Disadvantages

Downtown merchants with backdoor operations have two customer streams and revenue sources. First are the walk-in shoppers they draw from the downtown’s pool of visitors. Every downtown business can draw from this visitor pool. Firms with backdoor operations also:

Sell to local businesses, organizations and even municipal agencies. These transactions and relationships fit in well with downtown sustainability strategies.
Sell to consumers, but out of their stores, and independent of walk-in traffic.

My observations suggest that firms with significant backdoor operations are usually stronger and stay in business longer than other firms in their downtowns. Moreover, these merchants are not inclined to passively sit on their duffs and just wait for shoppers to come to them, but they are more inclined than other merchants to be savvy about social marketing, both face - a -face and online (the subject of a future article).

This is not to say that they are untouched by economic downturns, as restaurants in NYC with large corporate catering businesses have recently demonstrated. In addition, the reduced dependency on downtown customer foot traffic potentially makes these firms less tied to their downtown locations as their backdoor operations grow. However, favorable downtown quality- of- life conditions can reduce the proability that they will actually relocate.

Traditional, Non-electronic, Backdoor Operations

Today, there are electronic and non-electronic variations on backdoor operations. But, the best way of conveying what these operations are like is to provide some examples of the traditional, non-electronic variety:

A retail tobacco shop in downtown Rutland, VT, that also was a distributor of tobacco products to merchants in Rutland and the surrounding region
A vitamin shop on Bergenline Avenue in West New York, NJ that both manufactured and distributed vitamins to merchants in the region
Paint stores in Englewood, NJ and West New York, NJ that have very large building contractor clienteles
A women’s clothing shop that took its wares to model and sell at local women’s clubs, PTAs, etc. (Unfortunately, while I remember reading about this on the web, I can’t find the citation in my files.)
Sporting goods shops here in Kew Gardens, NY and elsewhere that sell equipment to sports teams, leagues and schools
The plethora of restaurants in most downtowns doing off site catering
The Carvel in Bayonne, NJ – and I image elsewhere -- that sell desserts to local schools, social clubs, etc.
A bakery in Woodbury, NJ, that supplied many local eateries with donuts, danishes, etc.
A well-known fish market in Maplewood, NJ that supplies over 40 restaurants
Nevada Meat Market that supplied many restaurants in Manhattan
A fruit and vegetable shop in Kew Gardens, NY that supplied local restaurants

Many downtown service operations also have backdoor components:

A dry cleaner in Kew Gardens does uniforms and work clothes for businesses throughout NYC
An upholstery shop in Washington, NJ that does work for well-known furniture stores in Northern New Jersey
Some hair salons and barber shops that serve non-ambulatory clients in their homes, nursing homes and hospitals

This list of examples of back door operations, though limited in length, is sufficient to show the broad gauge of their potential-- and that such operations are certainly not confined to food products.

Online Backdoor Operations

The internet has brought a new dimension to backdoor operations. Merchants that have online storefronts with shopping carts and actual sales are engaging in electronic backdoor operations. The individual shoppers need not ever come to their stores. They are not walking in from the street. They may live in different states or even other nations and never have visited the merchant’s downtown.

On a more modest scale eBay allows downtown merchants to sell online a few items or groups of items without having to create and maintain a storefront of their own.

According to reports in the media and from downtown managers, a properly functioning web store can definitely strengthen some downtown merchants. I have seen a women’s apparel shop thrive because of their online store and I know of a collectables shop that survived through tough times because of its eBay sales.

But some perspective is needed here. Foremost, online sales make up only about 4% of retail sales. Also, most of our downtowns fall in the small and medium-size category and the overwhelming majority of their shops have modest annual sales revenues and very small staffs. Many of them may be able to create and maintain an inexpensive, uncomplicated website that provides simple information about the shop, its location and the types goods and services it sells. That might help drive some more customers into their shops. However, most cannot mount, operate and maintain a web store. Keeping the online inventory current and product shipment too often become killer tasks for small merchants. Some can do better by selling in a controlled manner on eBay. Most are probably best off not attempting electronic backdoor operations because they lack the computer skills, staff and money needed to succeed.

Cultivating More Backdoor Operations – Planting The Seed And Networking Local Businesses

While most merchants will not develop backdoor operations, my sense is that most downtowns have the potential for doubling or tripling their number. Over the years, my informal discussions with merchants suggest that more of the innovative types would try to develop backdoor operations if they simply had thought about them. This suggests that seeding the idea in the minds of the right merchants and then perhaps hooking them up with district merchants who already have successful backdoor operations might be a fairly simple and low cost way of starting to make it happen. Face to face meetings are probably a sure way to go. A low key workshop also would probably produce results – if the right merchants attend.

Also, a good starting point for many merchants is to explore what they could sell to the other businesses and organizations located in or near to their downtown. Downtown organizations can provide real help here by developing a “matchmaker” role. For example, the Long Island City Business Development Corporation’s staff has developed a role of matching the needs for goods and services of their district’s industrial firms with local suppliers.

The Takeaway

Increasing the number of strong stores is always an important objective of a sensible downtown organization. Growing the number of firms with backdoor operations can help make that happen. It should be an essential cog of your organization’s business retention program.

N. David Milder

Slot Car Racetrack Update

2009-11-19T15:30:00.004-05:00

In a June 2006 posting I described how the staff of the Bayonne Town Center worked with Vincent Margiotta of Pastime Hobbies to bring slot car racing to the district's car shows.

The slot cars now have graduated to their own venue, PHM Racing, next door to Pastime's shop. There is a larger and more sophistcated layout, where four cars can race, an electronic score board and even real racetrack sponsors.

At the heart of this operation is a slot car racing club. Members pay annual dues. Parents usually accompany their youngsters as the latter participate in club racing events.

The race track can also be rented for parties. Walk-in slot car racing enthusiasts are also accommodated.

Margiotta claims the slot cars are able to draw
youngsters away from their computers and phones and out of their houses.

Entertainment opportunities like this will be increasingly important in small- and medium-sized downtowns

The New Normal for Downtown Retailing: I. Introduction

2009-10-29T10:34:00.014-04:00

Across the board key Federal officials, renowned economists, and powerful business leaders agree that our Great Recession finally has bottomed out. The latest GDP data support this view. For downtown leaders this is a very appropriate time to ask: “What’s next?" Are we returning to the same challenges and opportunities downtowns faced prior to the recession? Or to conditions similar to those of the earlier parts of the decade? Or are we facing a “new normal”, with its own array of fresh challenges and opportunities that we must learn about and deal with?

The evidence points toward a new normal. Responding effectively to this situation will require some insightful, hard-nosed analysis and then a lot of innovative and practical problem-solving. This is absolutely not the time for puffed-up marketing, fluffy analysis or laissez les bon temps roulez attitudes, but there are still viable paths for growth and redevelopment.

Though much remains to play out (e.g., gasoline costs and consumption), in coming email blasts and postings to my Downtown Curmudgeon blog and DANTH, Inc’s website, I will start to detail some of the characteristics of this new normal. Among the topics I will discuss are:

The biggest single new factor that downtown merchants have to face is the rise of the “deliberate consumer.” Americans are poorer and feel less affluent. Consumer credit is harder to get and to keep. Also, the housing piggy bank is kaput. Shoppers are more value conscious, more calculating and less impulsive. They are still buying -- but differently.
Capturing consumer expenditures now requires an even higher level merchant skill set than before the Great Recession
Increasingly important to this skill set is a “social marketing” component that has face-a-face and online dimensions
Downtown merchants will struggle to define what “value” means to the consumer – it does not always have to be low price
Many retail chains that liked downtown locations have either folded, been severely weakened or stopped putting new stores in downtowns. As a result, more than ever, the strength of a downtown’s retailing will depend on high quality independent merchants.
Baby Boomers are now retiring in increasing numbers, but are poorer, more frugal and finding it harder to sell their homes. Those that do “gray” our downtown residential projects will likely provide less lift for nearby retailers than previous “empty nesters”
Even after we climb out of the recession, doing downtown redevelopment projects as we did over the past 10 to 15 years will be far more thorny because of legal constraints, political challenges and difficulty in finding tenants and financing
A significant number of downtowns will have their growth constrained not only by malls or big box retailers, but also by nearby downtowns that already have been successfully revitalized
Young single knowledge workers have ignored and will continue to ignore living in most small and medium-sized downtowns. Some of these downtowns, however, are attracting artists and crafts people because of their comparative low costs, good quality of life and decent access to major arts markets
A surprising new factor: the luxury retail market will be weakened for some time to come, with diminished middle class “trading up” and “treasure hunting” shopping, and guilt constrained luxury buying. Also, significantly fewer at the top of the income ladder have a positive assessment of their personal finances – it is at the lowest level in 20 years. Many of the suburban “lifestyle downtowns” are vulnerable to the impact of this trend
Affordable luxuries will come back first. Larger mass luxury purchases requiring new credit lines will lag
Home and hearth niches will recover slowly following the housing market, with big ticket items lagging the most. Nevertheless, HDTVs, other “cocooning” related merchandise and children’s furniture will do relatively well.
It is far more difficult for downtown merchants to finance new locations, inventory, facade improvements, etc. Retailing will be stronger in districts where downtown organizations can help merchants cope with these problems
Low-price powerful warehouse retailers continued, even during the Great Recession, to increase sales and their market share. Downtown merchants have typically been poor at playing the low-price game. Big box and supermarket chains are more serious about rolling out smaller stores with a scale more appropriate for downtowns. Although contrary to their commitment to small independent local operators, should downtown leaders consider recruiting some small format, national, low price retailers?
Through the recession sales continued to increase for food away from home establishments. Downtown eateries that provide comfort food, good value, friendly service and a venue for friends and family to meet will continue to do well. Their strength also shows the continued importance of convenience and quality family time for dual income households and those with children
Non-comparison, convenience retail has been a steady rock for the vast majority of downtowns – e.g., food markets, drug stores, etc. – and will continue to be in the foreseeable future
There has been a significant decline in Americans’ participation in the arts, especially attendance at legitimate theaters, concert halls, museums, art galleries, etc. The recession deepened, but did not induce the decline. The audiences for these arts venues have become significantly older. Middle and lower income and younger folks are increasingly “cocooning” and consuming arts performances at home electronically.
Shops and restaurants that featured locally grown or produced products tended to fair much better than others during the recession and they will have increasing strength as the economy improves and the sustainability movement gains traction
Though online retail sales tanked more on a percentage basis during the recession than regular retail sales, “backdoor retailing,” both electronic and brick, will increasingly define successful downtown merchants
Ethnic downtowns did comparatively well during the recession. They will continue to fare relatively well because of population growth, upward mobility, unique sourcing of merchandise, language and cultural affinity. Also, they provide access to dense populations for many retail chains that see ethnic markets as untapped growth opportunities
More and more communities want downtown commuter rail stations. These stations will be cornerstones for strong downtowns – and their retailers
Another and perhaps most important cornerstone will be establishing the downtown as the community’s central social district with well activated and attractive public spaces and popular eateries having pivotal roles

Your comments are welcome.

N. David Milder

Apparently, The Recession Is Not Saving Movie Theater Attendance

2009-08-03T12:01:00.002-04:00

In past blog postings I have argued that movie theater attendance is being significantly eroded by the growing ease of watching movies at home, where -- as a Pew survey showed – Americans now watch most of their movies.

But in the first three months of 2009 attendance jumped 13% over the previous year and observers in the news media were claiming that depressions and recessions induce higher movie theater attendance as folks are looking for affordable entertainment. In an April 18, 2009 posting, I cautioned against jumping on this analytical bandwagon, noting that movie attendance in 2008, definitely a recession year, was the lowest since 1997.

More recent attendance data, as reported in an article in the Wall Street Journal, (see:Lauren Schuker, “Summer Box-Office Sales Cool Down - WSJ.com,” http://online.wsj.com/article/SB124924166209699671.html#mod=testMod.) indicates a reversal of this trend: “Attendance for the summer season, beginning on May 1, is down by 4.36% compared to the same time last summer, with revenue edging down by 0.77%.” This means that movie attendance has dropped to a really low level, since the 2008 stats were the lowest in over a decade.

N. David Milder

An Audacious Small Town BID

2009-07-22T17:48:00.003-04:00

For over a year now, as a response to our current recession, I have been urging downtown organizations to focus on repositioning their districts for future growth and encouraging them to take on new financial activities.

The Washington BID in Warren County, NJ, is a good example of a district organization that is doing this. Also, it is in a town, Washington Borough, with a small population of 7,000 people.

The BID is borrowing money from a nearby community bank, Skylands, to build a badly needed downtown parking lot. Few BIDs, large or small, borrow from banks for capital improvement or program purposes.

The BID obtained a USDA loan guarantee that made the private bank loan possible. This was a smart move and tapped a government source many other BIDs might not have thought about.

Impressively, the BID will bring in a completed project for about half of Washington Borough's estimated project cost.

I can think of many BIDs around the country that would benefit from emulating the Washington BID’s audacity to assume financial risk and willingness to play a lead role in a downtown redevelopment project. Too many BID managers and board members are straight jacketed by a comfort with reliably safe programs such as street sanitation, security and promotional events. But, by their very nature --and usually by their state’s enabling legislation-- BIDs are tasked with economic development roles. Unfortunately, too few perform them.

N. David Milder

Downtown Vacancies: Let’s Get Real

2009-05-15T08:00:00.008-04:00

______________________________________________________

A slightly different version of this article appeared as a Perspectives Column in the May 15, 2009 issue of the Downtown Idea Exchange

______________________________________________________

Far too often, concern about the number of empty storefronts in a downtown reaches distorted and needlessly injurious proportions. This was true before our current recession and now it threatens to become an even more serious problem. It’s critical for downtown leaders to view the vacancy rate issue from a realistic perspective.

For example, a few years ago, when I was managing a district, the mayor and I often would go around the block about our vacancies. My protestations that our vacancy rate of 2.6% was very low, and one that most other districts would love to have, were dismissed – the mayor wanted a zero vacancy rate. I tried to explain that a zero rate actually would be unhealthy for the district because it would keep out new business blood and thus make the district stale, perhaps even ossified. This argument, too, gained no traction. And this mayor is a very bright and likeable guy.

Today, many downtown leaders and local politicians are seeing growing vacancies as omens of doom. In past recessions, DANTH Inc. had projects in downtowns where the vacancy rates were in the 18% to 20% range. Looking just at the vacancy numbers is deceiving. High numbers are not a death warrant:

Within a year, the downtown with the 20% rate recruited several trophy retailers and substantially reduced the number of vacancies. A few years later it was being cited as a veritable model of downtown revitalization.
Similarly, the other downtown reduced its rate to 12% in less than a year and to 6% after 18 months. Today it reports having few vacancies.

A recent canvass of 14 downtowns showed four with vacancy rates of 10% or higher. But:

Two of those downtowns had actually reduced their vacancy rates substantially during 2008 from 2007: one dropped to 11.2% from 14.1% and the other to 11% from 15%.
Another of the canvassed downtowns reported a 13.3% vacancy rate. On the other hand, it still had at least six new stores open, some of which promise to be strong. Moreover, a supermarket is doubling its size, a new nursing home with new ground floor retail space is about to be built, 14 residential units are being added to the floor above an existing 15,000-s.f. retail space, and McDonald’s will be renovating a 100-plus-foot façade on the main drag.
Most of the canvassed downtowns reported new shops were opening, even when the district managers felt the vacancy rates were much higher than they would like.

In the vast majority of downtowns a very significant proportion of the storefronts normally are occupied by marginal operations. Very often, marginal businesses are badly managed and do little to foster a positive image of the district. In a recession marginal firms have a high probability of failing. Some marginal firms are not small – many national retail chains are now out of business because mismanagement put them on the financial brink and the recession pushed them over.

The vacancies that result from this economic pruning can – and I would argue should – be viewed as opportunities. In tough times like these, there still is “creative destruction” and many district managers are reporting that some attractive new businesses are opening. If these firms survive the recession, they probably will really thrive when the economy rebounds.

Many would argue that a district is damaged more by a poor business operator who cannot garner customer support than by a vacant storefront. Let us not take our admiration of small business people to the point where we canonize all of them. By definition, half of the small business operators in this country are below average. The challenge in this recession is to fill the downtown vacancies with as many above average operators as we can. The quality of the existing tenants is more important than the quantity of empty stores!

Now is the time for downtowns to survive and reposition. Consequently, there are lots of better barometers than vacancies for judging how a downtown is doing during our current economic troubles:
• Have shops and eateries adapted to the new market realities so their owners can still make a satisfactory living?
• Are quality businesses opening?
• Are store facades being maintained and improved?
• Is land being quietly assembled for development when the economy rebounds? Better still, are projects actually going into construction?
• Are improvements being done to make the downtown a more convenient place to visit?
• Are investments being made to create terrific public spaces?

N. David Milder

Eateries That Help Downtown Movie Theaters

2009-04-25T18:13:00.006-04:00

The Cinemart Movieplex in Forest Hills, NY, benefits from being next to a legendary "sweet shop" with homemade ice cream and an old soda fountain on one side and a cafe that is popular with outdoor dinners on the other.

This kind of "context" enables downtown movie theaters to survive. It makes going to the movies a special event, quite different from watching a flick at home. There is a brief slide show below that shows the movie house, Eddie's Sweet Shop and the Theater Cafe. Eddie's and the Cinemart have been around for 50+ years.

More On Retailing To Teenagers

2009-04-24T08:07:00.005-04:00

There was an interesting article by Eric Wilson in yesterday’s New York Times about retailers who target teenage shoppers. The full citation can be found at the end of this post.

Wilson notes that a recent study by the investment bank Piper Jaffray reported a 14% decline in spending by teenagers that was a “direct reflection of the economy.” Cost has become a much more important factor in teenager purchasing decisions.

Most importantly, Wilson notes that “as teenagers’ priorities rapidly shift away from brands they now perceive as too expensive, the pecking order of mall stores has changed.” Abercrombie & Fitch, for example, has held its prices during the current recession and consequently has had a significant decline in sales.

But, price is not everything., Hot Topic has increased its sales steadily during the recession largely because it sells licensed products tied to the “Twilight” vampire series. According to Betsy McLaughlin, the chain’s CEO: “There’s just so much retail out there. I think the people who will win are the ones who provide something different. It’s not just a price war.”

See: Eric Wilson, “Losing Its Cool at the Mall,” The New York Times, April 23, 2009, sec. Fashion & Style, http://www.nytimes.com/2009/04/23/fashion/23TEENS.html?scp=1&sq=Buckle%20April%2023,%202009&st=cse.

Is Our Great Recession Saving Downtown Movie Theaters?

2009-04-18T12:18:00.005-04:00

About a year ago, I wrote that downtown movie theaters were increasingly in jeopardy because people were more and more watching movies at home. Lately, I have been asked if I still believed downtown cinemas were in trouble, since recent media reports indicated that:

Nationwide, movie attendance was up 21% in the first seven weeks of 2009
The National Association of Theatre Owners claims box office numbers climbed in five of the seven economic downturns that occurred over the past 40 years.
It is well-known that movie attendance rose sharply at the height of the Great Depression
The stocks of the movie theater chains lately have risen substantially.

First, it should be noted that a seven week attendance pattern ought to be treated with caution, especially when it is contrary to a longer term trend.

Total U.S. & Canada Admissions
Year Admissions
2008 1.363
2007 1.400
2006 1.395
2005 1.376
2004 1.484
2003 1.521
2002 1.599
2001 1.438
2000 1.383
1999 1.440
1998 1.438
1997 1.354

Source: National Association of Theatre Owners

Total admissions in the USA and Canada for the full year of 2008 – when we where already in recession – was the lowest since 1997.

But, the primary reason that I still think downtown cinemas are in trouble is the behavior of highly regarded Hollywood moguls such as James Cameron and Jeffrey Katzenberg and the movie theatre chains. Cameron and Katzenberg both believe that the future of the movie theater business rests on 3-D movies because “going to the movies” has to once again become a special occasion, quite different from watching a flick at home. The movie chains have been investing a lot of money in more IMAC screens and now they are trying to raise between $700 million to $1 billion to convert enough screens—at $100,000 a shot –- to 3-D.

Some smaller, but savvy movie theater operators are doing such things as running “dinner cinemas,” where you get both a good film and a quality meal. Others are opening restaurants or brewpubs next door.

The downtown movie theaters that are really endangered – regardless of how they are drawing now – are those that cannot turn watching a movie into a special occasion. That is the key for the future. Dirty sticky floors, uncomfortable seating, inadequate restrooms, uncivil patrons, run of the mill films, etc., are not characteristics of a special occasion that will draw film viewers from their homes, but far too many downtown cinemas have them. Improving these theaters will not be cheap. Nor will it be cheap to provide them with 3-D equipment.

I do not know whether 3-D is the silver bullet. Here in Kew Gardens, we have a six screen cinemaplex that has absolutely no off-street parking, but it has been packed every weekend for many years. It is located in a densely populated neighborhood and features current “indy” films to an audience that rarely has a teenager in it – I’d say most patrons are over 40. Larry Houstoun reports similarly successful small cinemas near him in downtown Philadelphia. Indy flicks for seniors or IMAC or 3-D or whatever that makes going to the movies a special occasion is what counts!

If downtown organizations want their independent cinemas to survive they will have to help the operators again provide a venue where going to the movies is a special occasion.

Recession Evils: Rumors and Facile Solutions

2009-03-10T18:30:00.004-04:00

In a recent newsletter of Red Bank’s RiverCenter, Nancy Adams properly admonished the rumor-mongers who, faster than the recession, can bring down a good business operation. I congratulate Nancy for her spunk. And in contrast to Lou Grant, a lot of us like spunk! I am so glad she told those idiots to shut up!

Let me take up a cudgel against an equal danger – the town leader, manager or guru who thinks they are on to an easy answer for coping with our Great Recession. For instance, since November I have been hearing on and off about how good the student market is for retailers. This flies directly against what I have leaned about student shoppers since I started to study them for a project in Elizabeth, NJ back in the late 1990s. Before the dot,com bubble burst, the teen/tween market was an important growth engine for many downtowns – especially in urban wear. But with the dot.com bust, these youths lost their biggest income – what mom and dad gave them. And a lot of shops that targeted this market were badly hurt. Also, this market is notoriously fickle – a shop or chain that is red hot today can be in the crapper tomorrow. Finally, the potential size of this market is limited – the amount that teens and tweens can spend simply pales in comparison to how much retail spending their mothers control!

Then, if you look closely at what is happening today, you have to wonder some more. You can bet your bottom dollar that as this recession deepens, these kids are going to get less and less from their parents. And do you really think these kids are now getting part-time jobs to cover their retail buying habits? Moreover, if you look at some recent data, the story is a mixed one; some retail chains that target the teen/tween market are doing really well, but others, many that were hugely popular with these young shoppers, are not.

Below are some same store sales comparisons for retail chains that like teen/tween customers. The data are from Barbara Farfan at About.com:

Same Store Sales –Dec 2008

+13.5% The Buckle, Inc.
+ 12% Aeropostale
+ 10% GameStop
+ 4.3% Hot Topic Inc.

- 1% Urban Outfitters
- 10% Pacific Sunwear
- 12.3% Zumiez
- 12.5% Wet Seal
- 17% American Eagle Outfitters
- 24% Abercrombie & Fitch

Same Store Sales –Jan 2009

+ 14.7% The Buckle Inc.
+ 11.0% Aeropostale
+ 6.0% Hot Topic
+ 2.0% American Apparel

- 11.0% Pacific Sunwear of California
- 14.8% Zumiez
- 20.0% Abercrombie & Fitch
- 22.0% American Eagle Outfitters

Same Store Sales –Feb 2009

+ 21.0% Buckle, Inc.
+ 11.0% Aeropostale
+ 10.8% Hot Topic
+ 4.8% Torrid (Hot Topic)
+ 3.0% Urban Outfitters

- 6.6% Wet Seal
- 9.0% American Apparel
- 13.0% Zumiez
- 23.9% Arden B (Wet Seal)
- 30.0% Abercrombie & Fitch

The Buckle, Hot Topic and Aeropostale are indeed doing well and it would be great to discern a winning formula they share. Hot Topic is hot because it sells the clothing that the vampires or zombies wear in some book series that tween and teen girls now adore. Gamestop is hot because it resells computer games to the avid gamesters. But, Ambercrombie’s, Amercian Eagle, Zumiez, Wet Seal and Pacific Sunwear are not flourishing. And Amercian Apparel and Urban Outfitters – some retail analysts thought they were immune to this recession – are up and down. This market segment still does not sound to me like a rock downtowns now can build their retail upon.

“You never want a serious crisis to go to waste”

2009-01-31T16:33:00.002-05:00

Rahm Emanuel's statement about not wasting a serious crisis was music to my ears and anyone committed to real change in their downtowns should keep it always in mind during this very trying recession.

Two of the socio-economic theorists I most admire, the American economist Mancur Olson and the French sociologist MIchel Crozier, forcefully argued that real change in most social, economic and political systems can only occur during a crisis. During the non-crisis periods they've become ossified, paralyzed, stalemated and bureaucratized by powerful interest groups. For change to occur the existing system must be severely shaken -- and that is exactly what a crisis does. A crisis greases a paralyzed system and enables real, meaningful -- not just incremental -- change.

Now is the time for downtown leaders to think BIG, to come up with innovative programs, perhaps in areas their organizations have not ventured before. These programs certainly will be of value during the recession, but have even more utility when the economy turns around. For example, I think that the vast majority of downtown organizations now need to get much more involved in helping small businesses find financing. I also think that BID/SID advertising and promotional programs based on the "old media" need to be overhauled. BID expansion is another possibility. I am certain you can come up with your own list of possibilities. Now is the time to undertake such ventures!

Long ago, I was told that in the Chinese language the character that means crisis also means opportunity.

The Apparel Niche and the Home & Hearth Niche: The Growing Importance of Independent Operators

2008-09-03T12:29:00.005-04:00

Introduction

The apparel niche and the home & hearth niche may seem unrelated, but they share several commonalities:

They are both particularly important to downtowns
They are both facing challenges, and
They will both be relying on the success of independent operators for their future well-being and growth.

Apparel

First, let’s consider apparel. This niche is important to downtowns because women are our most prominent and powerful shoppers (making 80% of the purchases for the home and family). And clothing, shoes and accessories purchases for themselves and their children are an important part of women’s purchases. As we’ve reported in previous blasts, time-pressured mothers are willing to accept higher prices from downtown vendors if they can shop quickly and easily close to home. In addition, a successful apparel niche adds diversity to the downtown mix and stimulates interest in strolling and window shopping.

But apparel has been an at-risk niche for the past two decades. While the industry has grown, it has grown at a pace much slower than other retail sectors. Additionally, major retailers like Ann Taylor, the Gap and Chico’s – the kind of trophy apparel shop that many downtowns have targeted as their dream tenants – are not opening new stores as they suffer reduced sales in a difficult economic climate.

What to do? We all know of downtowns where there is more than sufficient unmet demand for apparel within a ten-minute drive shed to support a new store with $300,000 to $400,000 in annual sales. Such revenue may be too low for a national chain, but very adequate for an independent operator.

These new merchants will need a great deal of support from the downtown organization in finding affordable space, negotiating leases and perhaps even “sourcing” their merchandise. To succeed it will help that these merchants:

Be a local resident – for instance, a local mother – with a network of friends and colleagues in the community
Represent and market to a specific and strongly populated ethnic group in the community
Be opening a very high-end shop that provides an exceptional level of pampering and customer service
Be able to solve the problem of sourcing attractive merchandise

In many instances, an independent operation apparel niche is not going to be recognized or realized without the proactive intervention of a downtown organization. Your organization can help foster such a niche by:

Having market research performed to identify opportunities
Indentifying and cultivating possible entrepreneurs
Helping the entrepreneurs form a viable business plan, find appropriate affordable space, find loans or investors, etc.

Home & Hearth

For decades, revitalization advocates have searched for a type of retailing that can thrive in downtown locations despite the presence of nearby malls and big box discount retailers. DANTH has found that home and hearth niches are very often the answer.

Home and hearth niches are groups of shops that feature goods and services that enable shoppers to make their homes more comfortable, more entertaining and more beautiful. They include retail establishments selling furniture, carpets, antiques, table top goods, window treatments, hardware, electronics, art works, picture frames, tiles, appliances, kitchen and bathroom equipment, plumbing supplies, telephones, and gardening equipment. This niche can also include architects, plumbers, carpenters, contractors and service firms that deal with lawns and septic tanks.

Usually, the firms in this niche are overwhelmingly independent operators or small regional chains. They usually don’t need vanilla box spaces.

The home and hearth niche is very dependent on the housing market and the niche’s current economic woes have traced the decline in home values. But DANTH believes that demand for this niche’s products and services soon will begin to grow as consumers start to put more money and attention into fixing up their current homes instead of buying new ones. Home Depot and Lowe’s have already pivoted their marketing in this direction. Economic conditions have also sent Americans into more “cocooning” in their homes which is leading to strong sales of flat screen TVs and other home theater accoutrements.

Plus, the long-term trend for this niche is very good, showing that businesses in the home and hearth sector have grown at a pace greater than GAFO in eight of the last ten years for which data are available. DANTH expects that as the current housing crisis is resolved and household formation again rises, sales in home and hearth stores will follow suit. Now, as the market is bottoming out, is a good time for downtown organizations to strengthen or build their home and hearth niches.

Another positive for this sector is that downtown organizations will need to do less work in attracting and building this niche than with an apparel niche – since less home and hearth business owners are “newbie’s” to the industry. The downtown organization can take on a more traditional business recruitment effort without having to provide the large amount of business development assistance that independent apparel operators will require.

This posting was condensed from my longer report by Mary Mann. To read the full report on Apparel and Home & Hearth Niches, visit www.danth.com.

RETHINKING DOWNTOWN ENTERTAINMENT NICHES: Non-Formal Entertainment and Work-as-Entertainment

2008-06-26T15:32:00.006-04:00

Thesis: In a contracting economy populated by time-pressured consumers, downtowns need to rethink their entertainment niches to include and foster informal entertainments that are low-cost and convenient.

Most economic development experts have come to agree that entertainment niches are good fits with the assets of many downtowns and such niches have indeed flourished across the nation.

While “formal” entertainment facilities such as concert halls, legitimate theaters, rehabilitated movie theaters, sports stadiums and arenas can generate subsidiary economic benefits and make towns more attractive to residents, visitors and workers, they are often expensive to build and many small and medium downtowns do not have the means or the capacity to develop such large-scale formal entertainments.

In addition, data from the Bureau of Labor Statistics indicate that most American households began reducing their expenditures for formal entertainments even before the current economic downturn. With the vise closing on the discretionary income of most American households, it is reasonable to assume that entertainment expenditures may be among the first to be reduced. When you factor in the time pressures experienced by the modern household (and detailed in previous reports), formal entertainments seem likely to get further squeezed. In addition, as DANTH noted in our assessment of the future of downtown movie theaters, watching films at home and other home entertainments are eroding the downtown movie theater audience.

The good news? Downtowns of all sizes can develop vibrant niches based on informal entertainments to capture the potential lost audience for these formal entertainments. In a contracting economy populated by time-pressured consumers (research indicates that time –pressed families are increasingly looking for entertainment opportunities that last about 45 minutes rather than the two to four hours usually demanded by formal entertainments), downtowns can compete for time and dollars by providing low- or no-cost entertainments that are close by and do not require long car trips and expensive amounts of gasoline. This entails “rebranding” entertainment as something other than – or in addition to – theaters, arenas and the like. In this scenario, entertainment is “anything that amuses observers.” Reinforcing such informal entertainments can help to bolster the economic health of downtown – its housing, retail, office, and, yes, its formal entertainments.

Public Spaces

Great public spaces provide opportunities for people to engage in activities that they enjoy and that also interest and amuse nearby people-watchers. Think of the ice skaters drawing the ever-present crowds above the rink in Rockefeller Center. Similarly, in Manhattan’s Bryant Park, lounging patrons watch chess players – as well as each other. In Greenport, NY, a much smaller community, a carousel and waterfront location create a wonderful public space where people can watch and be watched by other people. Other downtowns have fostered entertainment with facilities such as:

model boat ponds
children’s pony rides
tables where people can play chess, checkers, or dominoes
Wi-Fi hotspot to access and cruise the Internet on laptops
places to catch the sun — a favorite pastime for office workers and young tourists in the spring and summer
places to buy food and eat lunch alfresco
outdoor cafes for sipping coffee and eating snacks
slot car racing for kids
interactive art installations that capture and play with people’s images, make music or move

Visitors will “perform” if the opportunities are there. Informal entertainments are usually public and usually priced right – either free or, when there are fees (e.g., to ride a carousel), affordable. They are also “sticky” activities. Retailers can feed off of the traffic the informal entertainments bring in, as demonstrated by the busy pedestrian traffic on the street next to Mitchell Park in Greenport, NY. Informal entertainments are also liable to be open when the public would want to use them as opposed to theaters, concert halls, etc. Most often they are child-friendly – and therefore mommy-friendly, too.

Work-as-Entertainment

Often overlooked is the delight and amusement people can derive from simply watching other people do their jobs. In particular, people have shown a great interest in watching craftsman and artists at work. Historical villages such as Williamsburg (VA), Sturbridge (MA) and Old Town (San Diego, CA) have long had many “demonstrations” by blacksmiths, glass blowers, bakers, weavers, etc. The Miami Ballet rehearses in a ground floor studio with a storefront window, which always attracts crowds of passersby and helps build the company’s audience. At the Torpedo Factory in Alexandria, VA – one of the most successful and innovative downtown retail projects in the nation – each artist and craft studio has windows and often open doors, so the public can watch the artists and craftsman as they create. At the Simon Pearce retail store at The Mill in Quechee, VT, visitors to this converted mill/retail location can watch glass being blown, ceramics being thrown and decorated and fabrics being woven, and then enjoy a meal with views of a waterfall.

This posting was condensed from my longer report by Mary Mann. To read the full report and find the complete sources for “Rethinking Downtown Entertainment Niches,” visit www.danth.com.

In addition, DANTH has created photo albums relevant to informal entertainments and work-as-entertainment that can be downloaded now, free of charge, from the Internet:

For the album on informal entertainments, visit:
http://picasaweb.google.com/dmilder/InformalEntertainmentActivities

For work as entertainment, visit:
http://picasaweb.google.com/dmilder/WorkAsDowntownEntertainment

For photos of the Torpedo Factory, visit:
http://picasaweb.google.com/dmilder/TorpedoFactory121607351PM

The Mommy Niche

2008-05-27T08:46:00.004-04:00

Cultivating the Mommy Niche
In the last few postings, we have detailed the trends negatively impacting downtowns as the economy constricts, but we have also discussed strategies for overcoming those negative trends.

One such strategy for downtowns is building and/or strengthening the “Mommy Niche.”

The reason is simple: Women are our nation’s shoppers. Though they comprise little more than half the population, women make over 80% of the consumer purchasing decisions. Mothers with children make up about a third of all households and they are spending a lot of money.

Why will mothers be attracted to downtowns instead of regional malls or big box retailers? Mothers employed outside the home are the most time-pressured group and the one most likely to give convenience a heavy weight within their purchasing decisions. These mothers are looking for shorter shopping trips and are more inclined to “satisfice” (compromise between price and convenience) with merchandise available in their downtown shops. They are also looking to spend “quality time” with their children as conveniently as possible, and downtown restaurants and activities can provide the perfect venue.

Activity-Driven Retail
While women’s apparel and children’s apparel shops are very helpful, activities seems to be driving a lot of mommy niches. Family friendly restaurants are key. Restaurants that encourage children with play areas, baby and child-friendly restrooms – even toys – and affordable prices and kid-friendly food will attract mothers with young children. Another key factor is children’s learning centers – dance studios, art studios, kids yoga, karate, even the town library. Mothers can spend time with their children at these activities or drop their children off and be free to shop and catch up on salon needs, grocery shopping or buying presents.

This mix of services and activities provides a customer traffic flow of moms that downtown retailers and restaurants can capture.

Mommy Networks
Through their own social activities as well as their involvement in those of their children – car-pooling, preschool, soccer, etc. – mothers need to be networked with other parents. This need is especially strong for those who work outside of the home and rely on the networks to provide some level of care or supervision for their children. Consequently, in most communities there are strong “mommy” social networks that provide word-of-mouth communications channels.

Local “Mommy Merchants”
Over the past year, DANTH has noticed increased reports about local mothers opening commercial establishments in New Jersey downtowns. These “mommy merchants” have many assets that give them a higher probability of success. For example, they usually bring along networks of local friends who constitute a close-in customer base and cadres of likely store apostles. They are also more likely to be attuned to local mommy needs, tastes and shopping habits. Even more, they are sometimes friends of other district “mommy merchants” and these connections provide a spine for referrals and informal cross promotions. Many mommy merchants can probably use technical assistance. DANTH estimates that between 7% and 25% of downtown merchants are interested in obtaining and actually using such assistance. However, because of their high education attainment and prior professional experiences, it is likely that mommy merchants will have a higher participation rate in such programs.

Despite all this, few downtown revitalization strategies have a “mommy” focus.

How To Make A Mommy Niche Happen?
Downtown organizations need to think about how to make their districts more convenient for visitors, especially busy working mothers and /or stay-at-home moms. Thinking about physical improvements in terms of a “convenience analysis” is the first strategy. Downtowns need to have streets that are easy to cross, public toilets available and kid-friendly, parking that is easy and safe for mothers with children and strollers, short-term parking that generates lots of quick customer trips, and a reasonable distance between parking facilities to shopping and activity. Downtowns also have to cultivate relationships with their local mommy networks. This means identifying the networks and the women in them who are the opinion leaders and message transmitters. Hold focus groups with local mothers or arrange discussion groups between downtown business operators and local moms. Finally, help potential local “mommy entrepreneurs” prepare viable business plans, find downtown locations and link them to other sources of assistance such as business schools, the SBA and state economic development agencies.

This posting was condensed from my longer report by Mary Mann. For the full report on “Cultivating the Mommy Niche” and for a full citation of sources, visit www. DANTH.com after June 17, 2008.

Downtown Retail Part II. Food: Capture What You Should Own

2008-05-03T18:10:00.004-04:00

People spend a lot of money on food. In 2006, the average total expenditures for food by households in the bottom, middle and top income quintiles were $3,195, $5,614 and $10,212 respectively. And the need to eat is fairly inelastic. Proximity and convenience are major factors driving food purchases, with higher fuel costs just increasing their strength. Food emporiums and eateries bring more customer traffic into small and medium-sized downtowns than any other kind of retail. Additionally, working parents have been able to juggle increased time spent at work and with their children by reducing their time invested in food preparation and food shopping. Therefore, even with the rising cost of food, small and medium downtowns can and should own the food expenditures of local residents.

Restaurants – First, we’ll start with the obvious. Downtown restaurants play critical economic and social roles for their downtowns and entire communities. They are not only places where people eat, but also where people spend time with significant others, friends and family – allowing time-pressed consumers to both dine and meet their needs for “quality time.” Good restaurants help reinforce the downtown as the Central Social District and the social heart of the community. Notably, restaurants often also serve as entertainment venues for their downtowns. Restaurant niches have been pivotal in the revitalization of downtowns – with local restaurateurs opening in many locations that national and regional retail chains initially bypass. While the National Restaurant Association projects slower growth for restaurant expenditures in 2008 as compared to 2007, it still projects growth. Finally, an analysis of BLS data shows that food-away-from-home spending has been increasing faster than inflation, with the largest increases in households in the top income quintile. In 2006, households with children accounted for 40% of all food-away-from-home expenditures. Downtowns with higher income residential neighborhoods and large pools of working mothers should tap into these markets.

Supermarkets and Gourmet Markets – Nationally, households average 2.1 supermarket shopping trips a week, making supermarkets potentially huge generators of downtown customer traffic. For many small and medium-sized downtowns, “food at home” is their most important retail niche: 62% of supermarket shoppers also shop in other nearby shops. However, traditional supermarkets can adversely impact a downtown when they are located in self-contained, pedestrian-hostile shopping centers surrounded by a sea of parking. The good news: Downtown-friendly supermarket chains, such as Whole Foods, that squeeze into tighter urban locations and in mixed-use projects are growing. Additionally, there is a new trend toward smaller downtown food and gourmet markets with stores in the 6,000 SF to 15,000 SF range, including Balducci’s, Trader Joe’s, Aldi, Garden of Eden, Zeytinia and The Natural. This trend towards smaller, often gourmet markets, means it is much easier to locate a quality food market, capable of drawing many customers, in more downtowns without threatening the pedestrian landscape (as traditional supermarkets with their large size and parking requirements do). These stores often take advantage of nearby commuter rail stations and their homeward-bound commuter shoppers. They work well for time pressed shoppers who, often on their way home from work, are shopping without a list for a meal or two and not a week’s worth of groceries. Gourmet food stores also often offer consumers “pick-up” or “prepared” meals that they can simply take home or to the office and reheat – another important retail trend for the time-pressured consumer.

Take Out – As restaurant expenditures are projected to grow at a slower rate in 2008 than in 2007, the National Restaurant Association projects that full-service restaurants will rely more on “take-out, delivery and curbside service to meet Americans’ desire for convenience.” Middle- and upper-income families feeling the squeeze between declining discretionary dollars and time limits (particularly those with two working parents) increasingly will choose take-out as the compromise option. This brings up an interesting issue for downtowns. A large number of auto trips are being generated to stop, order and pick up food. These trips require very short-term use of parking spaces – 15-20 minutes at most. DANTH has found that downtown gourmet markets and local restaurants often do not have enough nearby, short-term parking and as a result their pick-up and take-out sales have suffered (despite pedestrian and commuter traffic). Over the next five years, downtown organizations and their governments may need to look at short-term parking solutions as this niche becomes a strong driver of the downtown economy during tough times.

For the full report on “Food: Capture What You Should Own” visit www.danth.com after June 1, 2008 and double click on the red trends button..

This posting was was condensed from my longer report by Mary Mann.

Downtown Retail Part II. Survive, Manage Effectively and Reposition

2008-05-03T17:52:00.007-04:00

It is essential for downtown retailers to keep the proper perspective. While the media frequently ask and answer the recession question, no one to our ken has suggested that we are entering a depression resembling what this nation experienced during the 1930s. Consumers have not stopped shopping, though they may be spending less, purchasing a different basket of merchandise and making consumer purchases based on new weights for the variables in their decision-making calculations. The consumer expenditure pie has shrunk, not disappeared, and merchants will be facing tougher competition to capture their individual slices. Some retailers will close, while others are likely to open, though overall vacancies may increase.

Although it is true that a few firms can grow during a recession -- e.g., MTV, Silhouette Blinds, Trader Joe's, and the iPod were all launched during economic downturns – most retail experts recommend a more prudent response to tough economic times that emphasizes three key objectives: survival, effective management and repositioning. For some downtown retailers, effective management and repositioning will be essential to their survival.

A. Effective Management
To get through the stressful economic conditions anticipated for the coming five years downtown retailers will definitely need to carefully manage their resources. This may require more inventiveness than just making across the board cuts. For example, the need for some form of effective and affordable advertising will be greater than in fat economic times, but finding the money for it and deciding how to advertise can be a real challenge for small merchants when newspaper readership is in a steady decline, print advertising is losing both its effectiveness and popularity, and ad clicks on Google have flattened. 1

B. Repositioning
Tough economic times create good opportunities for downtown retailers to take stock and rethink their businesses. For example, instead of making a 20% across the board cut, a merchant could reposition by cutting out an entire underperforming line and using the money saved to introduce a new one that is better suited to the current economic conditions.

Or the merchant might develop a stronger, yet affordable customer service program to counter his customers’ increased desire for low prices. Along these lines a merchant might devise a program to encourage “customer advocacy.” Advocates – some experts call them Store Apostles -- will “like your store, recommend you to others, buy from you and stay with you.” 2 Whether a shop has customer advocates or customer antagonists can have a big impact on its bottom line, especially in tough economic times: a small core group of customer advocates may account for as much as 50% of a store’s sales and profits. 3 A recent study of customer advocates among apparel shoppers found that the two characteristics that were most important to them were that the shopping experience be pleasant and enjoyable and that it is easy to do. 4 The biggest attitudinal difference between an apparel store’s advocates and its antagonists was on their perceptions of whether or not the store had an “always fresh and new product selection.” 5

Customer antagonists can pose a real problem: about 31% of shoppers tell many people about their bad experiences and 48% of customers will avoid a shop because someone told them about having a bad experience there. 6

C. Strengths Of The Unscathed
A recent magazine article identified some retailers that appear to be weathering the current recession unscathed. It is probative to review the explanations given for their enviable situations: 7

• Tiffany & Co.: “… wealthy folks still have Valentine's Day and wedding gifts to buy. Luxury retailers without an international presence are the ones struggling. ‘Tiffany's end results were pretty good because they don't only sell to clients looking for affordable luxury but to very rich customers who are not necessarily impacted by the U.S. dollar’ says Dave Sievers, retail practice leader at Archstone Consulting.”
• Wal-mart: “…on the other hand, does better with sales of food and nondiscretionary items, which continue to perform solidly.”
• Urban Outfitters. “No other store looks like them. The catchy windows draw people inside. The funky clothes sell themselves.”
• Costco: "They offer constant newness and incredible value."
• Walgreens: “…leads the drugstore sector in sales and profits with 1,600 24-hour stores (out of their 6,237 outlets), convenient locations and easy online access.”
• J.Crew: “… made the designer business affordable through brilliant product development. Now customers get cashmere sweaters and tailored suits for less than high-end labels.”
• Kroger: “The largest traditional food retailer in the U.S. is doing well because its stores are convenient and people still need to eat.”

The following factors can be distilled from the above comments:
• A focus on non-discretionary consumer items
• A very upscale customer base
• Convenience
• Value through price alone or a high design quality per dollar ratio
• Merchandise and shopping environments that are unique and frequently refreshed

The discussion above is not exhaustive, but it is hopefully a good place for many downtown merchants to start when thinking about how to adapt their operations to the economic conditions that are likely to dominate their downtowns over the coming five years.

------------
Endnotes
1. Julia Angwin and Joseph Hallinan, “Newspaper Circulation Continues Decline, Forcing Tough Decisions - WSJ.com,” http://online.wsj.com/public/article/SB111499919608621875-72vA7sUkzSQ76dPiTXytqgOMS5A_20050601.html.
Louis Hau, “Newspaper Ad Decline Accelerates - Forbes.com,” http://www.forbes.com/2007/08/31/newspapers-advertising-media-biz-media-cx_lh_0831newspapers.html. Robert Hof, “Google: What Goes Up…,” http://www.businessweek.com/magazine/content/08_15/b4079021321853.htm?chan=top+news_top+news+index_top+story.
2.Melody Badgett, Maureen Stancik Boyce and Jeffrey Hittner, Why advocacy matters to apparel retailers :Customer focus requires apparel retailers to dress for success, IBM Institute for Business Value, 2007, pp.14, p.2
3. Michael J. Silverstein and Neil Fiske, Trading Up: The New American Luxury, Penguin, New York, 2003, pp.305, p. 18
4. IBM Institute for Business Value, “Customer Focused Apparel Retailer Study.” 2007
5. Melody Badgett, Maureen Stancik Boyce and Jeffrey Hittner, Why advocacy matters to apparel retailers :Customer focus requires apparel retailers to dress for success, IBM Institute for Business Value, 2007, pp.14, p.8
6. Ibid. p.2
7. Kristina Dell, “Retail Stars of the Recession - TIME,” March 18, 2008, http://www.time.com/time/business/article/0,8599,1723257,00.html.

Downtown Retail Part II: The Nexus of Time Pressure, Proximity, Convenience and Customer Service

2008-04-21T14:01:00.008-04:00

In recent postings I have detailed how retailers, over the coming five years, will be facing an environment in which shoppers, especially those in the middle-income bracket, will be having fewer discretionary dollars to spend and consequently inclined to give more weight to low price in their purchasing decisions. In this posting I argue that downtown retailers will best handle these trying circumstances if they understand and exploit the nexus of time pressure, proximity, convenience and customer service. Even in an economic environment where price is a leading factor, downtowns and downtown retailers can compete when they offer the time-pressed local shopper the proper convenience and customer service. Time pressure is what is making proximity again a powerful downtown asset.

Time pressure: Americans are more time pressed than ever and this is changing our society in many ways, sometimes subtle, other times not. Major golf outings are down 33%, major cultural centers like the Metropolitan Opera are shortening performances and intermissions to satisfy the modern customer who demands “express entertainment” and health clubs are offering 30-minute “drive-by” workouts for the busy-but buff-body. The most time-pressed group is working mothers with young children. One way these mothers are creating time for themselves is by spending far less time shopping, especially traveling to and from malls. Another is outsourcing food preparation through take out, sit-down and prepared meals. Time pressure is making consumers look for shopping opportunities close to home. It also inclines them to "satisfice," i.e., to buy merchandise that is “good enough” in terms of quality and/or price, which sometimes makes it easier for downtown merchants with limited assortments to compete.

Proximity: Downtowns have always been closer to the typical residential shopper than that super-regional mall, but, as we all know, the allure of the mall with its vast retail selection, sea of parking and low price points has siphoned off downtown customers for decades. Now, time pressure and convenience (and gas prices to fill that gigantic SUV) are making downtown appealing again. Back in the 1970s, people might pile into the car for a 10 a.m. to 3 p.m. day at the mall – it was considered a leisure trip. This is not the case anymore.

Convenience: This means making visits quick, easy and, if possible, enjoyable. Time in and out is fast and/or well spent; products are easy to find. But can convenience compete against low prices in an economic crunch? Yes, if the other three factors of Time Pressure, Proximity and Customer Service come into play. Studies show that convenience can often beat price when it comes to household necessities like food and drugstore items. Even Wal-Mart, Home Depot and Sears are experimenting with smaller store formats to speed up the shopper experience – including self-checkouts. Downtown retailers with their intimate size are already there – but don’t hide the milk at the back of the store! Consumers get aggravated when they realize they are being manipulated and are losing precious time. Convenience also means that the entire downtown shopping district is quick and easy to navigate – busy streets are easy to cross, parking is well-marked and available, public toilets are provided and are user-friendly for moms with young children, etc.

Customer Service: This means providing customers-- through personal services -- a quick, easy and enjoyable shopping experience. There are numerous ways to achieve this including letting customers shop after hours, knowing their names and their favorite products, sending them birthday cards, providing cappuccinos, offering gift wrapping and delivering their purchases to their homes so they don’t have to carry them around town. Big boxes cannot compete on the same level (or they haven’t tried – yet!).

Downtown merchants can seldom compete on price, but they, alone and organized, can hit home runs on convenience.

For the full report on “The Nexus of Time Pressure, Downtown Proximity, Convenience and Customer Service” visit www.danth.com after May 1, 2008.

This posting was written with the inestimable assistance of Mary Mann.

Downtown Retail  Part II: Downtowns Will Be Effected To Different Degrees

2008-04-15T17:06:00.011-04:00

The first installment of this retail trends assessment argued that it was very likely that over the next five years retailers would be facing a situation in which consumers would be having significantly fewer discretionary dollars to spend. The first installment also argued that the resulting increased importance of price in consumer decisions would enhance the attractiveness and strength of price-driven value retailers while decreasing the appeal and strength of retailers who offered shoppers opportunities for “trading up.”

However, there will be some variation in the ways that downtowns encounter stressful economic conditions.

A. Regional Economies. There will be significant variation by state – and by region within states – based on their housing markets (not all are tanking), foreign exports (now hot), agriculture (now hot), auto industry (now cold), etc.

B. Shoppers’ Household Incomes. DANTH’s analysis suggests that downtowns in market areas dominated by middle-income households may be stressed more significantly than those that rely on shoppers from either low-income or high income-households.

Downtowns With Lots of Low Income Shoppers.1 In a very interesting piece of research, Cox and Alm have shown that households in the lowest income quintile have a surprising amount of spending power that is far greater than their taxable incomes: though their average household income in 2006 was $9,974, the average total for household expenditures for consumer goods was nearly twice that, $18,153.

Household income correlates with household size. Factoring for this and looking at consumption per person, the difference between the richest and poorest households is just 2.1 to 1, while the income differential between the richest and poorest households is close to 15 to 1. 2

Quite astonishingly, Cox and Alm found that: “The average person in the middle fifth consumes just 29 percent more than someone living in a bottom-fifth household.” 3 This may help explain why, in addition to their population density, “poor” neighborhoods often have bustling shopping districts where merchants can have surprisingly high sales per square foot – e.g., $1,300 PSF.

Cox and Alm explain the surprising purchasing power of America’s poorest households by their financial inflows. They claim that, on average, these lower-income families have access “to various sources of spending money that doesn’t fall under taxable income” amounting to $10,716 per year.4 Cox and Alm claim that the sources of these financial inflows “include portions of sales of property like homes and cars and securities that are not subject to capital gains taxes, insurance policies redeemed, or the drawing down of bank accounts.” DANTH believes that for the many mired in poverty other “financial inflows” may be involved and that substantial portions of these monies may not be very dependent on the business cycle.

DANTH’s review of the Cox and Alm data suggests that only about 16% of the consumer expenditures made by low income families are for discretionary items. This means that 84% of their expenditures are for items that are everyday necessities and for which their “demand” is rather inelastic.

Many downtowns and large urban commercial districts located in low and moderate income neighborhoods are also buttressed against stressful economic times because they have a number of economic functions that must be performed whether the economy is running hot or cold. Among these functions are hospitals, schools, government offices, courts and transportation facilities. Their employees and the visitors they attract are important customer bases for local retailers.

Dart Westphal is the president of the Mosholu Preservation Corporation in the Norwood section of The Bronx (NY), which is dominated by low- and moderate-income households. The local economy is heavily influenced by Montefiore Hospital and has a vibrant commercial district along Jerome Avenue and Gun Hill Road. Westphal feels that his commercial district is not effected adversely by recessions as much as other districts because:

“Hospitals are counter cyclical or at least more resistant to economic slowdowns than other sectors. In the first place people don't get sicker or less sick depending on the business cycle and our “customers” are not usually making a purchasing decision they can put off. Put another way demand for hospital services is not elastic. Secondly, as other parts of the economy slow down and prices flatten or decline, the ability of institutions to spend money buying and building things may actually increase, helping the area in general maintain economic stability. Local retailers benefit by continuing to have customers (hospital employees) who have jobs. Also at the 'inexpensive' end of the residential market there is less purely discretionary spending so that the money that is in the economy is weighted more heavily to basic necessities...not many people trading up to Gucci.”5

Downtowns With Many Wealthy Shoppers. As one observer has noted, there are:
“…Consumers who will buy …regardless of recessionary woes, the kind of folks, who, to paraphrase a WWD headline a few days ago, are more concerned with getting their high heels wet waiting in a drizzle outside of Chanel's couture show, than they are about this ‘thing’ called a recession.” 6

While this quote may be somewhat hyperbolic, most retail analysts agree that the consumer behavior of the nation’s wealthy shoppers will not be strongly curtailed by the current stressful economic conditions. Some cite households with incomes above $150,000/yr as the income threshold for such recession resistant shopping behavior.

A review of the following statistics from Cox and Alm indicates why the consumer behavior of the wealthy is so resistant to economic downturns. The top quintile of households earned an average of $149,963 in 2006 and spent a total of $69,863 on food, clothing, shelter, utilities, transportation, health care and “other categories of consumption.” The remainder of their income was spent on taxes, $23,376, and most significantly, savings and investments, $47,171. Indeed, among the top quintile of households, all consumer expenditures – discretionary and non-discretionary – represents roughly 47% of household incomes. The same figures for the middle and lowest quintiles are 77% and 182%.

Downtown retail districts such as Rodeo Drive (CA), Madison Avenue (NYC), Greenwich (CT), Wellesley (MA) and Palm Beach (FL) may expect relatively undiminished levels of affluent shopper traffic.

Many “luxury” retailers also developed significant merchandise lines and sales channels that targeted middle income shoppers wanting to “trade up.” They are now being squeezed to the degree that their trading up sales contributed to their bottom lines. They probably will continue to be stressed as long as middle-income shoppers feel they have declining discretionary dollars. These “mass luxury” retailers are often located in strong, revitalized downtown commercial centers such as Westfield (NJ), Englewood (NJ), Old Pasadena (CA), Bethesda (MD), etc. that have lots of upper middle income shoppers.

Downtowns With Mostly Middle Income Shoppers. The first installment of this retail trends assessment detailed the increasing constraints on the discretionary expenditures of middle-income households and noted the importance and susceptibility of dual income households with children. At this point of the analysis it is useful to clarify the implications of this finding for downtown retailers and their downtown organizations.

Working on this assessment DANTH has concluded that:
• For the vast majority of downtowns, dual-income middle class households with children are a very important potential consumer market. They represent a lot of the spending power in a downtown’s trade area. The working women in these households are their most important potential shoppers.
• This has been the case for about 20 years
• Although a few individual merchants in a downtown may succeed with this strategically critical market segment, most downtowns have failed to make local shoppers from dual income households steady retail customers.
• The relatively few downtowns that have successfully developed a dual income female shopper customer base – e.g., Westfield (NJ) and Englewood (NJ) – have been shining examples of downtown retail revitalization
• It is noteworthy that, currently within the downtown revitalization community, there seems to be agreement that the best strategy for revitalizing a downtown’s retail base is to have multi-use redevelopment projects that bring in young professionals (a.k.a. yuppies or the “walking wallets’) and the empty-nesters. When this strategy works the yuppies and empty nesters help create an array of retail offerings and a shopping environment that then can attract shoppers from dual income families
• The yuppie-empty nester-mixed use retail revitalization strategy takes a lot of time to implement, requires large financial investments and usually entails enduring grueling local government permissions and approvals processes
• Strategically, what most downtowns need – especially those that are small and medium sized-- is a strategy for attracting the working mommy shopper that is cheaper, quicker and less expensive than the yuppie-empty nester redevelopment strategy.
• Such a strategy will help many downtown retailers and their downtown organizations to cope with the current tough economic conditions.

The pursuit of such a strategy will serve as a filter in the remainder of this assessment.

In our consulting assignments and in our visits to downtowns across the nation, DANTH has observed that in most small and medium-sized downtowns that have successfully attracted working mommies there are other operations that provide merchandise and services for children – e.g., schools; apparel, toy and hobby shops; dance and martial arts studios, etc. These downtowns also tend to have non-retail functions such as entertainment and “pamper” niches that generate traffic retailers can feed on. These observations will provide another filter in the discussion that follows in later postings.
-------------------------------
ENDNOTES:
1. A caveat: This analysis does not claim or imply that our nation’s poor face anything other than dire and unacceptable economic conditions. However, in our assignments in Jamaica Center (NY), Fordham Road(NY), Downtown Brooklyn (NY), Norwood (NY), West New York (NJ), Elizabeth (NJ), etc., we have found vibrant low to moderate –income, ethnic shopping centers with surprising total retail sales. We believe this analysis helps explain why those districts are strong.
2. W. Michael Cox and Richard Alm, “You Are What You Spend,” New York Times, February 10, 2008
3. Ibid.
4. Ibid.
5. Dart Westphal, President, Mosholu Preservation Corporation in an email communication.
6. “Fashion Notebook: The Luxury Market, The Recession and What Marketers Can Do About It.” WWD is an acronym for Women’s Wear Daily, a fashion industry paper. http://brandmediaweek.typepad.com/fashionnotebook/2008/01/the-luxury-mark.html.

Downtown Retail  Part I: Buckle Your Seat Belts, We’re in for a Bumpy Ride

2008-03-18T10:46:00.010-04:00

The DANTH, Inc. 2008 Trends Assessment
Every five years – a period known as a lustrum – DANTH Inc. prepares a trends assessment. One of the areas we analyze is downtown retail. Following is a synopsis of the first part of our two-part retail trends study. (For the full report, email danth@danth.com or visit the trends page on www.danth.com.)

What we’ve found is that downtown retailing is entering into a period of stresses – some old, some new – which are detailed below. However, we have also discovered that downtowns are experiencing a number of trends that can be leveraged to cope with these stresses. These more positive indicators will be detailed in our next report and blog posting.

So first, the Bad News. . .

1. There will be growing constraints on consumer spending:
• Income Growth Will Continue To Be Modest for the Next Few Years. And even as income grows slowly, the costs of a standard middle class life will likely outpace that growth.
• Home Values Are Declining. At this point, everyone must be aware of the subprime mortgage crisis and other factors bearing down on home values, which are not expected to recover for many years. As a result, Americans will have less home equity and less ability to leverage that equity for discretionary spending, as they avidly have done over the past decade.
• Energy, Medical, Child Care and Education Costs Will Continue to Rise. It is no longer inconceivable that gasoline could hit $4 or $5 a gallon. BLS data shows that medical costs have risen 168% faster than the consumer price index over the past ten years – a trend that is likely to continue. Child care costs – essential for working mothers – are also increasing faster than the CPI, and college education has experienced a growth rate in tuition and fees over the past decade that is the highest in 30 years. These are all creating pressure on discretionary spending.

2. Recovery From An Anemic Job Market Probably Will Be Slow. For some time the nation experienced scant job growth. We teeter on recession. It is taking longer for the nation to recover jobs after each recession. Trends indicate that the job market would probably take 46 months to recover the jobs lost from a recession.

3. Boomers Are At It Again. As the boomers soon begin to sell their large suburban homes, this will create further downward pressure on home prices. While many downtowns are basing their revival on attracting “empty nesters” it will be increasingly difficult for those nesters to get their money out of their homes.

4. Value Retailers Are Still Growing. Value retailers continue to gain market share on both price and fashion/design as retailers like Target and Kohl’s and, increasingly, Wal-Mart appeal to consumers with “cheap chic” products. More affluent consumers as well as lower-income shoppers are drawn to these stores as the tightness of discretionary dollars penetrates and seeps up the income ladder.

5. Trading Up May Be Stalling. The “New Luxury” or “Trading Up” retail trend –running counter to value retailing --has succeeded by pinpointing middle- and upper-middle-income consumers who are willing to spend more on certain goods that provide superior quality, performance and emotional appeal (think Coach, Calloway Golf, Williams-Sonoma, Tiffany, Trader Joe’s and Sam Adams Beer). This retail trend has supported the renaissance of many downtowns, but the factors presented above indicate that this behavior may be significantly diminished in coming years as discretionary incomes are constrained.

And now that we’ve got you drowning your sorrows in that Sam Adams (or perhaps you’ve traded down to a Miller Light), don’t despair! “Downtown Trends II: Revenge of the Mommies, the Foodies and the Indies” is coming soon and the news gets a little better.

This posting was written with the deft assistance of Mary Mann.

DOWNTOWN MOVIE THEATERS WILL BE INCREASINGLY IN PERIL

2008-02-24T13:14:00.004-05:00

Our Lustrum Trends Assessments.

For the past 20 years, about every five years (a lustrum) DANTH, Inc. has engaged in a review of the social, economic and political trends that are --- or soon will be-- affecting the health and well-being of downtown, urban neighborhood and Main Street commercial districts. We do this because it is an essential asset when we work on any kind of revitalization strategy for our clients.

Being a curmudgeon, I must also strongly opine that being aware of these trends and their potential effects is an essential component of any district manager’s job. Unfortunately it is a job function that too many managers ignore.

The results of DANTH’s last trends assessment in 2003 are available free of charge at: http://www.danth.com/pdf/trends_3_25_05.pdf

Below is a “tease” excerpt from the first installment of the 2008 assessment.

Downtown Movie Theaters Are Very Vulnerable.

Downtown movie theater closures are bad news because:
• They are usually important downtown assets
• Closed cinemas are usually large, highly visible spaces, occupying considerable frontage and consequently a huge negative for a downtown’s image. It is also usually very hard to re-tenant an empty cinema -- too many stay vacant for numerous years, often for decades. Some of the conversions, e.g., bingo halls and flea markets, are often less than desirable for spaces having prime locations and large size.

Movie theaters are in an increasingly weakened position because:
• Their hold on adult audiences is small and diminishing. By a five-to-one ratio Americans view films more at home than they do in movie theaters. Move theaters account for only about 12% of the movie industry’s revenues.
• Even the most frequent movie goers prefer home viewing
• Many theaters have low operating margins based primarily on revenues from concession stands and screen ads. Just a small drop in the paid attendance can be devastating financially: a mere six percent drop in attendance in 2000-2001 put most of the theater chains into bankruptcy.
• A relatively modest reduction in paid attendance by a small group of frequent moviegoers could easily erase these meager margins. The frequent movie goers do not have to completely stop visiting movies theaters for the impact to be devastating. This is an important point.
• The frequent movie-goers have demographic characteristics that highly correlate with the use of computers and other electronic home entertainment equipment
• Many theaters lack amenities such as many screens, large screens, first run films, stadium seating, clean restrooms and theaters floors. This is especially true of cinemas in small and medium-sized downtowns
• Theaters provide a very small revenue stream for the major movie studios. Consequently, the studios are incentivized to make decisions that will help other film distribution channels although they may hurt the theaters

Rival Home Film Distribution Channels Are Poised To Grab Market Share.

Competing film distribution channels have been improving, many finding formulas that are aimed straight at the three key variables that most impact film viewer behavior --- convenience, film selection and cost:
• On-demand cable TV has great convenience, wide household penetration, competitive prices and indications that some large operators will be offering significantly greater film selections. The introduction of HD broadcasts will also improve product quality and enhance competitive strength
• Apple TV and Vudu have a strong films service formula that could really grab market share if they can offer sufficient film variety. They, too, already offer on-demand convenience and competitive prices. Apple, because of iTunes, has a large amount of household penetration and brand loyalty.
• The competitive strengths of the brick and mortar DVD shops and the mail delivered DVD services versus movie theaters has been improved recently by the growing presence of large HD TVs in American households and the final victory of the Blu-ray HD DVD format.

Tipping Point Scenarios.

Below are some scenarios under which a tipping point might occur:
• The cable TV and Internet film services improve their film libraries sufficiently to become real competitors with movie theaters.
• Real household incomes erode to the point that the cost of movie consumption grows in importance in consumer decision-making. The cost advantage of home viewing, popcorn, sodas, baby-sitting, etc, is substantial. Given the recent low growth in median household incomes and the soaring costs of medical services, energy, college educations, etc. and the reduced values of private homes, this scenario is likely to have substantial impact.
• The convenience and comfort of home movie theaters increase to the point that consumers prefer the home viewing experience even more than reported in the 2006 Pew survey. This is occurring now; the question is how big its impact will be.
• The major studios finally go for “simultaneous releases.” In 2006 and 2007 there was a lot of discussion within the major movie studios about releasing films to theaters, cable TV and Internet film services at the same time, with DVDs being released three months later. A major survey of movie audiences in the USA, Japan and Germany, which account for over half of the world’s film market, found that simultaneous releases would enable the studios to increase their revenues by 16%, but cause the revenues of movie theaters to shrink by 40%. More recently there has been some discussion of simultaneous releases for a limited number of films.
• An accumulation of impacts from all of the above.

The Complete Report

DANTH’s complete assessment of the dangers that downtown movie theaters will be increasingly facing will be posted on our website www.danth.com and publicly available by March 24th, 2008. As our current work on trends progresses, I plan to periodically post the complete reports of our findings on our website and excerpts on this blog. Here are some of the other topics we’ve been looking at in our assessment:
• Time-pressured people continue to be downtowns’ best friends
• Retailing is in for much tougher times
• Post-Kelo redevelopment
• Boomers are now seniors and a great market segment for downtowns
• Green redevelopment
• Owners or renters: downtown residential redevelopment
• Downtown crime redux
• Downtown solution trends:
-- Mixed-use projects
-- Transit-oriented development, getting more important every day
-- Place-making
-- Niche development
• Downtown organizations: a time to alter missions, roles and responsibilities
• The internet and downtown revitalization

Unfortunately, some of the trends DANTH identified suggest that downtowns will soon be confronting major new challenges. DANTH believes that being forewarned enables downtown organizations to be forearmed. Although proven solutions to these emerging threats do not exist, I will try in my postings to outline some approaches to finding them, while welcoming other members of the downtown revitalization community to share their solution suggestions.

Despite The New National Wave Of Crime, Downtown Security Strategies Still Stand

2008-02-16T18:09:00.010-05:00

In a June 24, 2007 posting, “The Downtown Crime Problem Redux?”, I asked if crime was again becoming a crippling problem for our nation’s downtowns because:
“(T)he FBI just announced an increase in violent crimes for the second straight year, an occurrence that signals the first continued spike in homicides, robberies and other serious offenses since the early 1990s. This spike is especially noticeable in medium-sized cities and cities located in the Midwest. In large cities such as New York, the crime rate continues to decline.

What is unknown at this time is how this recent uptick in crime has impacted on downtown districts.”

I was concerned because such an uptick would be a strong indication that the new policing strategies combined with the creation of 24-hour downtowns were no longer effective ways to solve downtown crime problems. That was important since I had claimed in DANTH’s 2003 downtown trends report that “crime is no longer the barrier to downtown revitalization that it once was” (see our website to download the report http://www.danth.com/pdf/trends_3_25_05.pdf).

I recently conducted an online search for information about downtown crime rates around the nation. I found data for 12 large and medium-sized cities. While this is admittedly a small sample, the results seem reassuring:

Atlanta, GA, Aug.2007. Population: 486,411
1. For several years downtown had 9% of city's crime, but a daily population of half the size of the entire city. It now has just 6% of the city’s crimes.
2. Downtown there has been a 61% drop in major crimes over the last 6 months

Boise, ID July 2007. Population: 198,638
Continuing trend of declining crime downtown, with a 14% decline in the last year.

Chapel Hill, NC Nov. 2004. Population: 49,919
1.Reports of "major crimes" had gone down in each of the last three years for which the numbers were available.
2, But the number of arrests for crimes committed in the downtown had gone up. Leaders feared people could still feel unsafe even though statistics showed some positive trends.

Cincinnati, OH May 2004. Population: 332,252
1.Last year, serious crime in downtown dipped by 1 percent. The bulk of all downtown crimes are thefts, many from cars
2. Of the city's 75 killings in 2003, one was in the Central Business District.
3. Major problem: area is still perceived to be unsafe

Dallas, TX, January 2008. Population: 1,232,940
1. Car break-ins were a problem a few years ago, but crime has gone down in the past
year
2. "I tell people safety and crime is old news downtown," says the downtown manager

Dayton, OH, January 2008. Population: 156.771
1. In January, 2008, City of Dayton officials released statistics that show the city’s crime rate continues to decline significantly.
2. Targeted crimes downtown declined by 39 percent over the past five years. From 2006 to 2007 alone, key downtown crime categories dropped more than 25 percent.
3. A further perspective on downtown safety: in 2007, statistics for targeted crime categories downtown represented just 5 percent of the city’s overall targeted crime numbers.

Lawrence, KS, Nov. 2007. Population: 88,605
1. Since 2001, violent crime has risen in downtown Lawrence
2. According to the Kansas Incident Based Reporting System, 41 assaults were reported in downtown Lawrence in 2001, a number which has steadily increased in the last five years. In 2006, there were 245 reports of assault and battery in downtown Lawrence,
an increase of nearly 100 from the year before.

Kansas City, MO June 2005. Population: 447,306
Between 2002 and 2004, the period before and after the improvement
district was introduced downtown crime had dropped in all categories: robbery, 34 percent; juvenile crime, 28 percent; public intoxication, 21 percent; suspicious behavior, 10 percent; and miscellaneous crimes against property, 10 percent.

Los Angeles, CA June 2007. Population: 3,849,378
1.The Downtown crime rate has dropped to its lowest level in more than 60 years.
2. Even as Los Angeles' decrease contrasts with the national trend of rising crime rates, statistics show that the city still contends with high levels of gang-related violence. There was a 14% increase in such activity in 2006

Miami, FL, 2006. Population: 404,048
1. Over the past five years, Downtown Miami has become a safer place. Investment has soared, new businesses have opened, and the population continues to grow.
2. While the same decreases in crime incidents are registered city-wide over the 2000-2005, the overall decreases are more dramatic within the DDA boundaries.
3 Almost every category of crime incidents decreased within the DDA boundaries between 2000 and 2005.
4. Most notably there was nearly a 68% decrease in robberies and 38% decrease in larceny/thefts.
5. Criminal homicides within the DDA account for less than 4% of those occurring city-wide.

Philadelphia, PA 2004. Population: 1,448,394
1. The 9th consecutive year that there was a reduction in crime downtown
2. Statistics that document a continued drop in downtown crime: Comparing 2003 and 2004, part one crime (aggravated assault, homicide, rape, burglary, robbery, stolen auto and theft, minus retail theft) in the 6th and 9th police districts fell 9.46%; the Center City District experienced a 7.99% drop. Between 1999 and 2003, part one crimes, not counting retail theft, fell 35.77% in the 6th and 9th police districts and 31.94% in the Center City District.
3.Theft from auto declined 19.7% between 2003 and 2004 in the 6th and 9th police districts and 16.77% in the Center City District. Between 1999 and 2003, theft from auto fell 36.58% in the 6th and 9th districts and 30.72% in the Center City District.

Portland, OR, Jan. 2007. Population: 537,081
1. Crime drops for third straight year
2. 16% decrease in 2007

Some Observations:
• Except for Lawrence, KS, a medium-sized college town in the heart of the Midwest, all of the other downtowns report declining crime rates
• In several downtowns (e.g., Cincinnati, Atlanta, Dallas Miami and Kansas City) the wording of the report suggests that the downtown organization is still dealing with the problem of the fear of crime being out of sync with the actual level of crime. This is a long existing problem. Looking at the housing data in Eugenie Birch’s report “Who Lives Downtown” suggested a possible explanation: downtowns that lost considerable populations sent lots of people to live in other parts of the city who would tell others negative things about the downtown and who would be hard to persuade that things had improved. These “lost residents” created a powerful negative word-of-mouth network that spreads fears about being a crime victim if you go downtown. For example, between 1970 and 1980 Downtown Miami lost 41% of its population; Downtown Atlanta lost 21.9%; Downtown Cincinnati lost 27.2%; Downtown Dallas lost 27.7%. In contrast, Center City in Philadelphia only lost 8.8% of its population between 1970 and 1980 and had population increases thereafter. Downtown Portland also had a small population loss during the 1970s, 2.2%, and population growth thereafter. Surprisingly, Downtown Los Angeles has had a growing residential population since 1970.
• The situation in Downtown L.A. also demonstrates that high gang activity need not mean a higher crime rate nor impede a reduction in the fear of crime. This is consistent with the situation in Trenton, NJ that I reported on in a previous posting: Trenton has about 2,000 Bloods in a city of 85,000 people. The crime rate has fallen, though gang activity has risen and violence is confined to areas where the gangs are dominant.

An Ethnic Downtown With Many Retail and Fast Food Chains

2008-01-26T11:29:00.005-05:00

For many years downtown revitalization experts lamented that large, ethnic downtowns -- those with lots of African American and Hispanic shoppers -- were being avoided by major retail chains.

That is certainly no longer the case. Here, in New York City, one of the hottest retail locations is along 125th Street in Harlem. Many retail and fast food chains are also occupying important storefronts in the outer borough downtowns such as Jamaica Center in Queens, Downtown Brooklyn and Fordham Road in the Bronx. They are also opening in strong neighborhood shopping districts such as Jerome Avenue in the Bronx and and Corona Plaza in Queens.

Below is a list of the national and regional retail and fast food chains that I found on a visit yesterday to Jamaica Center.

I first went to this commercial district with my mother to buy shoes back in 1949, which was toward the end of its "Golden Age." I continued to shop there occasionally for sports equipment and sneakers until I went away to college in 1958. It was not until the early 1980s that I returned to carry out consulting assignments for Regional Plan Association and the Greater Jamaica Development Corporation (GJDC). Though my involvement in the revitalization of this district ended in the early 1990s, I have continued to visit every few years to take photos and gauge its progress. It's just two miles from my home office.

The revitalization of Jamaica Center has been a long process, starting back around 1968 with the creation of the GJDC. Over a billion dollars have since gone into the revitalization of this commercial center, paying for such things as the re-routing of a subway line (E train), tearing down an elevated line, building York College, the construction of a one million SF Social Security Building, new court buildings, building a terminus for a monorail link to JFK, etc.

By the early 19980s the quality of the retailers was ebbing and this trend culminated with the closing of two major department stores, Macy's and Gertz. White shoppers from the northern and western parts of Jamaica Center's trade area stopped visiting, choosing instead to drive east to the shopping malls in Nassau County.

Many of the other neighborhoods in the trade area had African American households with relatively high annual incomes for Queens. Cambria Heights, for example, recently had a median household income of $69,030, while the median income for Queens was $49,780. Many of the residents in these neighborhoods were civil service workers and teachers, often in dual income households. Though large numbers of these residents passed through Jamaica Center each weekday to use the subway on their trips to and from work, they, too, avoided shopping there because the retailing had come to focus on low income and teenage markets and the area had developed a reputation for street crime and drug use and sale. Nevertheless, the pedestrian traffic along Jamaica Avenue continued to be a "beehive of activity" and some of the merchants were doing $s/SF that rivaled those of retailers in some of Manhattan's best locations.

I was greatly encouraged by my recent visit and feel that the end game, the "take off" phase of Jamaica Center's revitalization is in sight. The primary reason for my optimism is the recent announcement of a major project that will bring over 300 market rate housing units into the downtown, with a number of similar projects on the drawing boards. Another reason is that the retailing's strength now seems to be more than shops featuring "urban wear," with chains having a strong middle class appeal opening, e.g., Home Depot, Marshall's, Zale's, Nine West, Old Navy. The teens will still shop in Jamaica, but now their parents might as well.

The changing nature of the district's retailing is also, in my opinion, reflected in the new store facades that have been built in recent years. They are much more attractive, with smaller signage, a better sense of proportion and though the colors used might offend some with Main Street design sensibilities, they are often still very pleasing.

Another indicator of this district's strength is that commercial rents along Jamaica Avenue recently have reached as high as $150/SF for choice locations.

In the list below I have noted some of the chains that were open in Jamaica Center and have since closed. It should be noted that all of these closures involved chains that were having overall problems.

At the end of the list I have provided a link to a web-based photo album that contains photos of Jamaica Center's retail chains.

National and Regional Chains in Jamaica Center January 25, 2008

Payless (2 stores)
Gothic Furniture
Quiznos Sub
UPS Store
Java’s Brewin
Game Stop
Burger King
Taco Bell
Pizza Hut
Dunkin Donuts
Subway
McDonald’s (2)
Duane Reade
Walgreens
Sleepy’s
Footlocker Kids (converted to Kids)
Zale’s
Nine West
Radio Shack
Marshall’s
Conway (2)
Home Depot
Fabco Shoes (2)
Footco USA
Jimmy Jazz
Toys ‘R Us (closed, chain in trouble)
Kids ‘R Us (closed, chain in trouble)
Wertheimers (closed, chain in trouble)
Jennifer Convertibles
Rainbow
Ashley Stewart
Tick Tock
Dr Jay’s
Vim
Modells
Cookie's Department Store
Porta Bella
Strawberry
Parade of Shoes (closed, chain in trouble)
Youngworld
Athlete’s Foot
Shoppers World
Old Navy
The Children's Place
Gap (closed, chain in trouble)

2007-07-09T08:06:00.002-04:00

Downtown Crime Problem Redux add-on

Here is an interesting paragraph from today's NY Times relating to my last posting on the possible reemergence of downtown crime problems:

"In Trenton, a city of 85,000 where the police estimate that the Bloods have as many as 2,000 members, overall crime is down and officials say violence is largely confined to areas where gangs are most prevalent. But gang killings remain a persistent problem. There were 20 homicides in the city last year; the police have made arrests in nine of the 16 killings they consider gang related, and in three of the others. In the first half of this year, murders increased by 50 percent."

-- from David Kocieniewski , “Scared Silent: A Little Girl Shot, and a Crowd That Didn’t See” New York Times, July 9, 2007

THE DOWNTOWN CRIME PROBLEM REDUX?

2007-06-24T18:25:00.001-04:00

Is crime again becoming a crippling problem for our nation’s downtowns?

For decades after WW II, crime and the fear of crime first fostered downtown decline and then impeded their revitalization. Happily, since the early 1990s, the crime problem seemed to be abating as violent crime statistics nationally dropped steadily and significantly. This drop in crime was accompanied by reduced fear, increased pedestrian traffic and nighttime activities in downtowns revitalized by:

Residential and commercial growth
A population trend that reduced the size of the crime-prone age cohort
And police departments adopting new and far more effective strategies.

However, the FBI just announced an increase in violent crimes for the second straight year, an occurrence that signals the first continued spike in homicides, robberies and other serious offenses since the early 1990s. This spike is especially noticeable in medium-sized cities and cities located in the Midwest. In large cities such as New York, the crime rate continues to decline.

What is unknown at this time is how this recent uptick in crime has impacted on downtown districts.

The Down Side.

As the introduction of crack cocaine led to a major surge in violent crimes between 1985 and 1992, so the growing use of Methamphetamine --- a..k.a. Crystal Meth – appears to be associated with higher crime rates. The Crack Meth problem also appears to have taken particularly strong roots in the Midwest and in small and medium-sized municipalities -- localities that trended toward not having major crack cocaine problems.

Many of these same municipalities are reporting the growth of street gangs, especially those having national organizations, such as the Crips, Bloods, MS-13, etc. There is a strong correlation between the growth of Crack Meth use in a locality and the growth of street gangs, since the gangs often are heavily involved in the sale of this drug. There have been some reports of these gangs being active in poor or marginal commercial districts, where they intimidate shoppers and scare and extort local merchants.

There also has been a rise in retail crimes by well-organized rings of professional thieves. While most of the crimes in the larceny/theft statistical category have declined since 2000, shoplifting has increased 11.7 percent.[1]

The Bush Administration’s reduced funding for police departments has had a big negative impact on the police departments in small and medium-sized cities, where, according to the legislative counsel for the International Association of Chiefs of Police, the loss of “one or two or five police officers can make a real difference."[2]

Nationally, there has been an increase in the teenager/young adult population, the age group most prone to committing crimes and acts of violence, especially in low-income disadvantaged areas.

Also nationally, there are growing numbers of released prison inmates and their recidivism is likely to result in many crimes.

Newspaper articles on the recent crime surge have focused on criminal events in poor and often “ethnic” neighborhoods, which often are located near downtown areas and sometimes in them. As a recent major study found, “Downtowns are home to some of the most and least affluent households of their cities and regions.”[3]

While some of the newspaper articles mention the meth drug connection, others focus on a new and extremely disturbing aspect of this heightened violence – it’s seemingly arbitrary causation. For example:

“And while such crime in the 1990's was characterized by battles over gangs and drug turf, the police say the current rise in homicides has been set off by something more bewildering: petty disputes that hardly seem the stuff of fistfights, much less gunfire or stabbings.

Suspects tell police they killed someone who ‘disrespected’ them or a family member, or someone who was "mean mugging" them, which police loosely translate as giving a dirty look. And more weapons are on the streets, giving people a way to act on their anger.

Police Chief Nannette H. Hegerty of Milwaukee calls it ‘the rage thing.’”[4]

Arbitrary violence is almost impossible to predict and consequently almost impossible to avoid. It is very fear inducing.

On The Upside.

In the 1980s I directed a major study for Regional Plan Association on how the fear of crime is generated and how it strangled the outer borough downtowns in New York City. A major finding was that the fear of crime did not so much thwart visitation rates – people still had to use the subway connections, courts and hospitals -- as it induced a huge amount of pedestrian avoidance behavior and that significantly reduced the number and strength of the multi-purpose trips that are the sine qua non of healthy downtowns.[5]

More recently, as my wife and I have traveled across the nation over the last 10 years, visiting such places as Boston, Chicago, Charlotte, Miami, Midtown Manhattan, Pasadena, Philadelphia, Portland (OR), San Diego, Santa Monica and Seattle, we have been struck by significant evening downtown pedestrian flows, where people seemed to be walking free of fear and not feeling the need to take precautionary measures. Unfortunately, I could not find any statistical evidence to support our “field observations.”

I could offer numerous anecdotal reports of our experiences, but here are just two:

Since returning to NYC in 1980, I have often walked, after dark, from Times Square down 7^th Avenue to Penn Station to catch a LIRR train home. During the 1980’s and much of the 1990’s, Times Square was a physically frayed, fear inducing area, but walking down 7^th Avenue, desolate but for the drunks, drug users and homeless was even worse. Street savvy pedestrians were ever vigilant, watching darkened spaces and scanning who was behind them. Today, Times Square is awash in new development and again the entertainment capital of the world, jammed with pedestrians day and night, and a favorite of tourists. Now, after dark, there is a steady pedestrian flow on 7^th Avenue, overwhelmingly comprised of Average Joes and Average Janes, with the quality of life issues greatly abated. Pedestrians are no longer constantly looking over their shoulders. Some even window shop.

We love to visit Center City Philadelphia at least once a year because of its superb restaurants, cultural amenities and “walkability.” On our first visit, in 1985, we drove one Saturday evening down Walnut Street to Rittenhouse Square. The street was devoid of pedestrians as was the rest of the downtown we drove through. On recent visits we’ve walked to several restaurants on Walnut from our hotels on Logan Square or East Market Street. On these visits, with its numerous restaurants and bars and nearby hotels and cultural facilities, Walnut always had a significant amount of nighttime pedestrian activity, overwhelmingly by “respectable people”

Back in 1987 I argued that downtowns could reduce the fear of crime if they were designed and developed to make visitors feel that they are interesting and attractive places where “’respectable people’ like themselves tend to frequent.” The key to the emergence of such downtowns was the development of a dense, compact multi-functional core area that would combine residential, office, retail and entertainment functions. Such core areas would be conducive to significant flows of law abiding pedestrians during both day and evening hours.

Today, most of the successful downtowns I visit have such multi-functional cores, These downtowns are often referred to -- with some hyperbole -- as “24 hour” activity centers, because commercial and cultural activities as well as pedestrian traffic are present during daylight and evening hours.

Entertainment Niches. Vibrant entertainment niches containing restaurants, watering holes, movie theaters, concert halls and/or legitimate theaters have enabled many downtowns to attract substantial numbers of evening visitors, who are not afraid of strolling and window shopping after dark. This is true for large downtowns such as Midtown Manhattan , Center City Philadelphia, downtown Chicago and the Gaslamp District in San Diego as well for smaller downtowns such as New Brunswick, NJ, Englewood, NJ, Old Pasadena, CA, Manayunk, PA

Residential Growth. Also contributing to this “after dark” resurgence has been the growth of downtown residential populations. In her recent study, Eugenie Birch also found that:

““During the 1990s, downtown population grew by 10 percent, a marked resurgence following 20 years of overall decline. Forty percent of the sample cities began to see growth before the 1990s. While only New York’s two downtown areas and Seattle, Los Angeles, and San Diego saw steady increases from 1970 to 2000, another 13 downtowns have experienced sustained growth since the 1980s.”

This influx of downtown residents is important for several reasons:

Downtown residents, in Jane Jacobs' terms, take "possession" of the area they live in; they help make sure it is properly maintained and kept safe
More residents help create a built-in demand for many retailers and entertainment functions. They can be especially important for the attraction and development of good restaurants
More downtown residents help create a more interesting and safer environment after dark. Directly and indirectly they increase the flow of law-abiding citizens, which in turn serves to reduce the fear of crime

While Birch’s study focused on the nation’s major downtowns, the NY-NJ-CT metropolitan area offers numerous examples of significant growth in residential units in smaller downtowns such as White Plains, Hoboken, Morristown, Cranford, Englewood, South Orange, New Brunswick, Rahway, Livingston, Garden City, etc.

Police Strategies. Downtown security also has been greatly improved by police departments deploying one of more of the following strategies:

1. Community Policing. This usually involves more foot patrol officers who build relationships with the people on their beats, garner better information about criminal activities and problem-solve specific community crime issues

2. Broken Windows. Based on the famous 1982 “Broken Windows” article by James Q. Wilson and George Kelling in the Atlantic Monthly that argued:

'If disorder goes unchecked, a vicious cycle begins. First, it kindles a fear of crime among residents, who respond by staying behind locked doors. Their involvement in the neighborhood declines; people begin to ignore rowdy and threatening behavior in public. They cease to exercise social regulation over little things like litter on the street, loitering strangers, or truant schoolchildren. When law-abiding eyes stop watching the streets, the social order breaks down and criminals move in.”

A broken windows strategy tries to remove the “signs of disorder” such as broken windows, dirty sidewalks, loitering, public use of drugs and alcohol, prostitution, etc.

3. Comstat. Uses computerized mapping of crime reports to identify “hot spots” of criminal activity. These hot spots are then analyzed and the local police units are tasked to deal with them and evaluated on their ability to succeed.

The 24 Hour Downtown and New Policing Vs The New Crime Wave

How are the 24 hour downtowns coping with the new crime wave? Are the new residents and greater evening pedestrian flows helping to deter criminal activities and/or keeping the fear levels low? How effective are the new police strategies against the new crime wave? Are downtowns experiencing a recent surge in crime and fear doing so because they have not used the above mentioned revitalization and policing strategies or because these strategies have failed? These questions need to be addressed and answered – and quickly – so the downtown revitalization community can take appropriate remedial actions. Perhaps the International Downtown Association can work with the National Institute of Justice and academic experts such as George Kelling to create, fund and execute the necessary research project.

[1] Joel Groover, “ORGANIZED CRIME Retailers combat growing number of professional shoplifters,” Shopping Centers Today ,October 2006

[2] Dan Eggen, “Violent Crime Up For Second Year: Some Point to Cuts in Federal Funding,” Washington Post, Saturday, June 2, 2007; A01

[3] Eugenie L. Birch, “Who Lives Downtown,” The Brookings Institution, November 2006

[4] Kate Zernike, “Violent Crime Rising Sharply in Some Cities,” New York Times, Feb.11, 2006

[5] N. David Milder, “Crime and Downtown Revitalization” Urban Land , September 1987, pp. 16-19

BEING A DOWNTOWN CHANGE AGENT: Facilitating Change for Downtown Business Operators

2007-06-03T19:43:00.000-04:00

Small Business Operators Are Slow To Adopt Changes

At conferences and other events where downtown managers congregate, the conversation at some time usually turns into a group therapy session focusing on the seemingly intractable, but certainly dysfunctional attitudes and behaviors of downtown business operators and landlords. Some of the dysfunctional behaviors raised might include deteriorating facades and signs, poor market research, lousy merchandising, "wrong" business hours, inadequate customer service, high rents, poor building conditions, harmful tenant selection, etc. Many readers, I am sure, know the rest of the litany.

Many downtown managers also consider it almost impossible to "re-educate" most downtown business operators and landlords or to otherwise induce them to improve their business behaviors. Years ago, based on my own management experiences and field observations as well as reports from friends managing downtown districts across the country, I came to a kind of Bayesian subjective probability estimate that only about five to seven percent of downtown business operators and landlords can be retrained or otherwise induced to innovate.

However, more recently, based on my program development experiences in the Bayonne Town Center (NJ), I have come to believe that significantly more downtown business operators can be induced to change, if, and this is a critical if, downtown leaders, acting as change agents, can help make it easy for them to change.

How To Get Existing Merchants To Renovate Their Facades?

About four years ago I took on the management of the Bayonne Town Center Special Improvement District. The previous executive director had done a great job of getting a highly respected architect, Walter Chatham, to write design guidelines, which were then adopted by the city as an ordinance. The city was offering then, as it still offers today, strong financial incentives to stimulate façade and storefront renovations in the district: a shop with a frontage of 25 feet can get a grant for as much as $10,000; a corner shop can get up to $15,000. However, while new businesses in the district were improving their facades, none of the existing street-level business operations were doing so, though many storefronts badly needed renovation. Officials in city hall as well as the Town Center board of directors could not understand why the city’s generous financial incentive package was not stimulating more façade improvements in the district.

While I quickly ascribed this situation to the typical change -adverse way I believed small downtown business operators behaved, my intellectual curiosity and feeling of management responsibility led me over the next year to talk informally to many merchants about why they were not improving their facades. Here are the surprising conclusions I reached as a result of those discussions:

A lot more merchants than I expected were interested in improving their facades. My rough estimate would be somewhere between 20% to 25%, not my expected 5% to 7%.

Merchants who owned their buildings were more apt to be interested in renovation than those who leased their spaces. This was understandable since they had more to gain and one less decision-making gatekeeper to deal with

Almost no one had any idea of what kind of new façade they might want!

No one felt they had a good idea of how much a façade renovation might cost!

Few knew an architect or contractor who might help them! Most small business people will not have architects or contractors in their social networks. They often work long hours and lack the opportunities to establish such contacts on their own

There was wide spread concern about getting city approvals for their projects!

Almost everyone knew about the city’s façade improvement financial incentives.

A minority of those interested in doing a facade improvement felt that even with the city’s financial incentives, they still could not afford to renovate

Most of those interested in improving their facades felt that, with the city’s financial assistance, they probably could afford to renovate. They were not moving forward because they did not know how to proceed and lacked the time and energy to remedy this situation!

Facilitating Change

As I mulled about these findings some research I had done in 1989 came to mind. Back then I was trying to find out why manufacturing firms were moving out-of-state from the Bronx, a borough of New York City. My research indicated that:

These firms were successful, expanding and needed more space

They were too small to have a real estate specialist on staff

Management was too busy with their growing business to look for a new location

They often need specialized training for their blue collar workforce

They had concerns about high crime

Recruiters from out-of-state economic development organizations had come in and offered turn-key solutions that included low-cost new space, manpower training, low crime, etc. The recruiters made it very easy for the Bronx firms to move to their states. In other words, the recruiters had facilitated change.

A program that could facilitate change seemed precisely what was needed to unleash façade improvements in the Bayonne Town Center.

The Jump Start Façade Improvement Program

Consequently, I designed the Town Center’s Jump Start Façade Improvement Program sm.

This program provides each participating business operator with the following products and services:

A well-known architect in the field, Margaret Westfield of Westfield Architects visits with them to listen to any ideas they might have about their new façades

She comes back several weeks later with a rendering of their new façade, cost estimates for the improvement project and samples of the materials that should be used

The façade design, because it is done by one of the Town Center’s architect’s in conformance with its design guidelines, has assured acceptance by the city

The Town Center’s staff, if necessary, helps participants with the paper work for the city’s incentive program and provides them with contact information about contractors who have done successful façade projects in the district.

Of the five storefronts in the initial round of the program, two renovations have been completed and three are in process, with completions expected by August 2007. A second round of Jump Start has been completed recently. One entire building façade has been renovated; action on six other storefronts is awaited.

The slide show below shows three of the improved building facades, before and after their renovations.

The Kick Start Building Renovation Program

Based on the success of the Jump Start program, the management of the Bayonne Town Center leaped at the opportunity to obtain a technical assistance grant from the Community Preservation Corporation (CPC) to create the Kick Start Building Renovation Program sm. Kick Start is aimed at stimulating district landlords to renovate the upper stories of their buildings and create market-rate residential units.

The CPC is a very large and successful nonprofit that uses CRA funds from over 80 banks and insurance companies to fund housing projects in NY, NJ and CT.

The Kick Start “treatment strategy” is again to facilitate change, this time by having the CPC’s architect-engineer provide each participating Town Center landlord with a feasibility study that describes how many residential units might be built on their property, the types of units that should be created and cost estimates for the project. The CPC also will be ready to finance feasible projects. Furthermore, because of the CPC’s reputation, it is anticipated that the feasibility studies will help ease their associated renovation projects through the city’s permissions and approvals process.

At the time of this blog posting, Kick Start is underway, but none of the three initial feasibility studies have been completed.

Facilitating One Change Can Help Facilitate Other Changes

As consultants have long known, developing a client’s trust and confidence in you and your firm is essential for having your recommendations implemented. Downtown managers, when acting as change agents, face a similar challenge with the business operators and landlords in their district. The Jump Start Program has helped to significantly increase the trust and confidence that district business operators and landlords have in the Town Center’s management team. This is true even among those who have not participated in Jump Start, but knew what happened in it. This has stimulated not only interest in participating in Jump Start and Kick Start, but it has also made some landlords more willing to work with us on business recruitment and redevelopment projects.

Some Additional Observations

My experiences with Jump Start strongly suggest that money, while not a negligible factor, is certainly often not the prime factor that impedes change and innovation among small downtown business operators. Knowing what can be done and easy access to needed professional assistance are also very strong factors.

The city’s permissions and approvals process also can have an enormous impact on downtown change and innovation. The Town Center has city legitimated design guidelines and its architect determines whether or not submitted designs are in accordance with them. The Town Center is thus able to provide designs for renovated facades that are guaranteed to be accepted by the city. This factor alone reduced anxieties about delays and escalating costs among the participating business operators.

BEING A DOWNTOWN CHANGE AGENT: Consensus, Conflict and Crisis

2007-03-28T19:11:00.000-04:00

This is the first in a series of postings on being a downtown change agent. It is not a nuts and bolts piece, but rather philosophical in tone. It is, however, a view that has been honed by over 30 years of "working in the trenches."

A Process of Perpetual Positive Change

One need not be Noah Webster to understand that the term downtown revitalization implicitly means bringing a commercial district from an existing damaged state to one that is significantly improved. In other words, downtown revitalization implicitly means a significant amount of positive change.

It also can be argued that the need of downtowns for positive change is perpetual. The reason is simple: the socially, economically, politically, geographically and technologically defined environments in which they exist are themselves constantly changing, generating new competitive threats and altering consumer desires, expectations and behaviors. Think of how such things as the flight to the suburbs, urban crime, the creation of regional shopping malls, the appearance of big box value retailers, catalog sales and e-retailing have impacted downtowns over the past sixty years. Downtowns languished because they failed to adapt to these changing competitive threats and conditions; they began to succeed when they finally learned how to adapt.

Effective Downtown Leaders Must Be Change Agents

If their environments are in perpetual flux, then downtown leaders must assume the role of "change agent" if they want to be effective. Moreover, the changes that they usually must try to spark are on the order of large systemic changes -- e.g., changing the business mix, reducing crime, creating more high quality commercial space, etc.--- rather than smaller, incremental changes, such as improving a store facade or putting up Christmas lights. Whether lots of small incremental changes can add up to a significant systemic impact may be debatable, but, personally, I doubt it.

Big Changes Mean Conflicts

Large significant changes require lots of financial, political and organizational resources. They are usually beyond the power of one individual to bring about. Big downtown changes will require the involvement of lots of people, many of whom will be powerful, often egotistical and sometimes downright petty. As organizational theorists, sociologist and political scientists have long recognized, big changes in any social system are likely to arouse strong fears and intense opposition. Just think of the frequent opposition to proposed downtown redevelopment projects and the "not in my backyard" response syndrome. Downtown change agents must expect that they will generate conflicts and be prepared to deal with them.

In my experience, many downtown leaders, unfortunately, are conflict avoiders. I am not suggesting that good leaders should look for fights, just that they should not run from them if an important issue or outcome is at stake.

Downtown Revitalization Means Politics

The local political process is just one available structure for conflict resolution, but it is the most important. Unfortunately, I can't count the number of times I've heard, over the past 30+ years, about significant proposals for downtown improvements being sidetracked because of fears that they might cause a "political problem." Far too many downtown managers do not understand that their important programs and projects will generate conflicts that become political issues and that they will not only have to become involved in the local political process, but be very adroit at doing it.

Generating Broad Consensus Versus 50% +1
Many of the downtown leaders who are conflict adverse have strong needs to be liked and admired. When conflicts emerge they often seek solutions that can garner a broad consensus of support. They are often inclined to support planning efforts that have large public participation components.

While I certainly see how public input into the downtown revitalization policy/planning process can be valuable, I strongly dispute that the objective should be the creation of a consensus -- the correct objective should be to garner enough support so an effective policy decision can be made and meaningful change can happen. In other words, you do not need to get 70% or 90% (or whatever the percentage that for you defines the existence of a consensus) of those involved to agree, just 50% +1. Everyone does not have to love you or your policy or your program -- just your 50% + 1 supporters.

A broad consensus is much harder to create and to maintain than a smaller 50% +1 coalition. One of the other negative consequences, in my opinion, is that policy and planning processes that seek a broad consensus usually produce dumbed down policies, plans, strategies, etc., because so many competing interests and views have to be accommodated. Ironically, while the public input can really help inform the policy process about community needs and conditions and increase policy options, the consensus driven policy process then gives veto power to every small group and makes decision-making possible only on a few dumbed down points.

As may be obvious by now, my views about democracy are closer to those of Madison and Hamilton than Jefferson and Jackson.

Crisis Can Be Downtown Revitalization's Friend
We use the term bureaucratic in a very derogatory way to describe a situation full of paralysis, inaction, system drift, numerous insufferable rules, and a stalemated decision-making process. Bureaucratic organizations and systems are the antithesis of change; instead they freeze and defend the status quo.

How many of us are in or have been in downtowns that are in a bureaucratic situation? How many of us have said to ourselves about our downtown, "Gee, we need a bomb to go off to make anything happen in this place?"

Downtowns in such a situation often can only be loosened from their inertia and power stalemate by encountering a crisis that shatters the existing decision-making structure and brings in new leadership having the desire for -- and power to-- bring about change.

For many downtowns, crisis can present enormous opportunities as well as enormous challenges.

Good downtown leaders shine during a crisis.

Some downtown leaders may even try to cause something of a crisis in order to bring about change. For example, I know one downtown district manager who was hired by a board that had no landlords or business operators from the district on it. (You read right.) The latter, because of their exclusion and the imposed district assessment resented and ignored the district organization. The district manager, after attempts at wooing failed, adopted a strategy of intentional antagonism and confrontation, hoping to thus stimulate the district's business operators to become actively engaged and organized against him, when he hopefully would co-opt them into the downtown organization. This was exactly what happened.

Strong Downtown Entertainment Niches

2007-02-10T11:49:00.000-05:00

Increasingly, downtown and Main Street commercial districts are finding strength through the establishment or expansion of an entertainment niche. This is happening in communities of all sizes. The theater district around Times Square in Manhattan has long been world famous. At the other end of the scale are communities as small as Weston, VT, with a population of 630, that is home to The Weston Playhouse Theatre Company, the oldest professional theater company in the state. Every summer it presents Broadway plays and musicals in a beautiful white-columned building on the village green. In between are literally hundreds of communities with theaters and performing arts centers for staging plays and concerts such as Carlisle, PA; Rahway, NJ; Englewood, NJ and Rutland, VT.

In most small and medium-sized downtowns, reliance on such formal entertainment venues will result in an entertainment niche that is, perhaps, moderately strong. The problem is that such formal venues, at best, are "lit" a few nights a week and dark during most days. Really strong downtown entertainment niches utilize other resources to attract and amuse visitors throughout most of the day and almost every day of the year.

Informal Entertainments

Entertainment essentially involves people being amused by something. In formal venues, they can be amused by plays, movies, concerts and dances -- all requiring some kind of formal organization (a theater company, dance troop, orchestra) that is scheduled and "performs" the entertainment. However, strong downtown entertainment niches rely on the fact that people also are entertained when they are amused or pleased by observing other people -- who, at the same time, may be amused by watching them. Great public spaces provide opportunities for “informal entertainments” that occur when people engage in activities that they enjoy and that also interest and amuse nearby people-watchers. Think of the ice skaters drawing the ever-present crowds above the rink in Rockefeller Center. Similarly, in Manhattan’s Bryant Park, you’ll find young men and women seated and watching each other and chess players, who always attract an audience. Greenport, NY, has used a carousel and waterfront location to create a wonderful public space where people can watch and be watched by other people. Other downtowns have fostered entertainment with facilities such as: a model boat pond; a children’s pony ride; a Wi-Fi hotspot to access and cruise the Internet on laptops; a place to catch the sun — a favorite pastime for office workers and young tourists in the spring and summer; places to buy food and eat lunch alfresco; outdoor cafes for sipping coffee and eating snacks; slot car racing for kids, playing bocce for seniors, etc.

Visitors will “perform” if the opportunities are there. To sail a model boat, a suitable pond or pool is required; to sit in the sun and people watch requires an attractive place with benches and chairs to sit on, etc.

The following link takes you to a photo album that illustrates a range of “informal entertainments”

DANTH, Inc.: Informal entertainment activities

Work As Entertainment

People are often engrossed and entertained by watching other people at work.

Decades ago, the people who brought back “historic” villages, -- such as Colonial Williamsburg (VA) and Old Sturbridge Village (MA), -- cleverly decided to have people at work, using 18th Century technologies, to educate and entertain visitors. For example, in Colonial Williamsburg visitors can watch 100 masters working in 30 trades. Included are an apothecary, blacksmith, cooper, brickyard, foundry, gunsmith, basket maker, etc.

In Old Town, located in San Diego, CA, visitors can watch glass blowing, wood-working and candle-making, though current technologies may be used.

The Simon Pearce retail store at The Mill in Quechee, Vermont, is perhaps the most brilliantly designed and executed retail project in the United States in a small Main Street setting. It combines a superb site in a renovated old mill located over a waterfall with a diverse assortment of retail goods ranging from blown glass to ceramics and superb furniture. In addition, at this diverse destination you can watch glass being blown, ceramics being thrown and decorated, fabrics being woven and enjoy a meal in a three star restaurant that has attractive water views. The Simon Pearce store at Quechee is a strong destination and lots of people leave there with bags full of merchandise.

At the Torpedo Factory in Alexandria, VA, an historic building has been renovated to provide studios for artists and craftsmen where visitors can watch jewelry being made, pots being thrown, lithographs being made, etc. and have opportunities to purchase the products.

At the Chelsea Market in Manhattan, visitors can be entertained by watching bread making at Amy’s Bread, a working kitchen for Sarabeth’s, a skilled knife sharpener, and people learning to dance the Tango.

People like to watch TV shows outdoors, as attested to by the crowds drawn the Today Show and Good Morning America.

Edward Villella has the Miami City Ballet rehearse in a storefront window, where pedestrians flock to watch the dancers.

Many diners want to sit at chef's tables or counters where they can watch the cooking process and interact with the kitchen staff. Chef’s tables are often the hardest to book and offer the most expensive menus at topnotch restaurants. The noted French chef Joel Robuchon specifically designed his recent restaurants so most or all of his patrons sit at counters where they can watch their food being prepared.

Double click on the link below and you an access a photo album that illustrates “work as entertainment.”

DANTH, Inc.: Work as Downtown Entertainment

Downtown Friendly Store Formats, Facades and Signs

2006-12-29T11:17:00.000-05:00

Over the years I have seen downtown developers, landlords and store owners propose retail store formats, facades and signs that are appropriate only in a highway or shopping center setting. They invariably claim that the retail chain demands exactly what they are proposing. Sometimes they go on to claim that their way is the only way the chain does things. Consequently, I have tried to accumulate photos that can be used to disprove these assertions. I have tried to find examples that are "downtown friendly," i..e., that have appropriate scale and acknowledge and encourage pedestrian activity. I have also included some that I just plain like -- as well as examples of some things to avoid.

This posting is an elaboration of two earlier postings on this subject. More photos will be added periodically over time. A slide show on this posting is provided below.

Learning From Las Vegas

2006-12-24T12:09:00.000-05:00

I don't gamble, but I love to go to Las Vegas. For a downtown revitalization specialist, it is a working laboratory that is intellectually provocative.

How to move people efficiently and effectively is an apparent concern of casino owners and local government officials. The responses have ranged from hotel elevators with nil wait times to a monorail and a pedestrian mall.

Double click on the photo to access the photo album.

DANTH, Inc: Moving People in Las Vegas

Downtown Friendly Garages

2006-12-24T11:47:00.000-05:00

This collection of photos aims to show that a downtown garage does not have to be a hideous, massive structure that visually violates the surrounding area while creating a dead space that severely dampens pedestrian activity. These garages are all mixed use. Most have ground floor commercial activity. Some have residential units. Some are completely hidden from the street, except for their entrances and exits.

DANTH, Inc. Downtown Friendly Parking Garages

Paying “Premiums” For Downtown Redevelopment Projects

2006-07-05T14:15:00.001-04:00

A wave of public indignation and anger against the use of eminent domain for economic development purposes now threatens the renewal of our nation’s downtowns, Main Streets and neighborhood shopping areas. However, evidence suggests that the use of eminent domain for economic development purposes can be salvaged if universally acknowledged abuses are avoided AND the property owners and tenants dislocated through the use or invocation of eminent domain are paid a meaningful “premium.” The characteristics of the premium may differ case by case, with resulting variation in cost. However, it can be anticipated that the cost often will be significant, with considerable consequences on the financial feasibility of downtown redevelopment projects. Savvy downtown organizations will be finding ways to finance these new redevelopment project premiums.

Kelo’s impact. The reaction to the June 2005 decision of the U.S. Supreme Court in the Kelo v. New London case has put the use of eminent domain in jeopardy in a growing number of states across the nation. Though the court, in a close 5 to 4 decision, affirmed the use of eminent domain, legislation has been introduced or passed to reduce its use in Alabama, Delaware, Texas, Ohio, Minnesota, Colorado, Michigan, Pennsylvania, Florida and New Jersey. California also will hold a referendum on eminent domain in November 2006.

Though these legislative initiatives fall into a number of descriptive categories, their underlying objective -- except possibly for clearly blighted situations-- is usually to make it difficult or impossible for eminent domain to be used to increase tax revenues or for economic development purposes such as to enable real estate projects that putatively will significantly improve an area’s economic well-being.

Downtowns obviously cannot wait until blighted conditions appear before undertaking serious redevelopment projects. Doing so just makes redevelopment riskier, more costly and burdensomely complex. A way to make the use of eminent domain again palatable must be found. The future of America’s cities and towns is at stake.

Fair market value and the case for premiums. While the Kelo decision focused on the issue of public purpose, in my view the real challenge with eminent domain projects is political rather than legal and centers around the issue of fair market value. As things now stand, an eminent domain project will usually have potential victims from the getgo -- the people who must give up the properties they own and who have not asked for the project to be initiated. While the project may indeed have results that will enhance the general good, the best that the property owners can do is get “fair market value.” Such victims can politically nullify a project’s public benefits and become the rallying point for political opposition.

HUD standards are often cited as exemplary when it comes to the use of eminent domain. They are based on an appraiser determining a property’s fair market value, which according to one of HUD’s publications can be understood in the following manner:

“Fair market value is sometimes defined as that amount of money which would probably be paid for a property in a sale between a willing seller, who does not have to sell, and a willing buyer, who does not have to buy. In some areas a different term or definition may be used….The fair market value of a property is generally considered to be ‘just compensation.’ Fair market value does not take into account intangible elements such as sentimental value, good will, business profits, or any special value that your property may have for you or for the Agency.”

Associate Justice Samuel Alito of the US Supreme Court went through his confirmation process around the time that the Kelo case was before the court. In a TV interview Alito was asked about the case and he uncharacteristically expressed a fairly clear view on the issue at hand -- the use of eminent domain would be OK, if owners were paid a premium over fair market value for their properties, with the clear implication that such a premium is to compensate for the sort of “intangible elements” that are denied in HUD’s definition of fair market value and/or a share in the economic wealth generated by the project.

Such a legal position appears consistent with the claims of many redevelopment advocates who, in the vortex of debate that built up around the Kelo case, argued that the vast majority of property owners receive more than fair market value when their properties are sold under the threat of eminent domain. Redevelopment advocates also argued that commercial and residential tenants who are forced to relocate by eminent domain related redevelopment projects usually receive very favorable financial considerations. Unfortunately, there is no rigorous research to substantiate these claims, only a thin array of verbal anecdotes.

My own family’s experience indicates that property owners do not always feel that they have received a munificent amount of money from the governmental entity taking their property -- or threatening to do so.. Furthermore, the whole experience can be quite complex and its true impacts may take years to emerge.

Back in the early 1950’s, the New York City Housing Authority used the threat of eminent domain to purchase a brownstone and tenement owned by my maternal grandmother in order to build a high rise “housing project.” My grandmother, four of her children and their spouses and children occupied apartments in these two buildings. We all lived in a warm and closely knit family environment. While the neighborhood was changing and family members had considered moving, there was a lot of inertia caused by the fear of the family being dispersed. When the city invoked eminent domain the family could not really judge whether the financial offer was fair or not. Most importantly, the family felt that it did not have the power to fight the city. Family members felt they had no choice but to make the moves to other neighborhoods that they had long contemplated. The money might have made things a little easier, but it was not viewed as a bonanza. The fact that we were forced to move left a somewhat bitter taste. I wonder how we would have reacted if the city had showed that it was paying us 25% above fair market value and explained “We are forcing you to move and the extra money is our way of trying to make up for it.”

Ironically, the diverse manifestations of redevelopment premiums are amply demonstrated by the types of final settlements made by the families involved in the Kelo litigation.

A state official involved in the negotiations claims that giving the property owners more money was a key to the settlements. Also, according to an article in the New York Times, one of the settling owners said "When you look at my property, put these on," as he fiddled with a pair of sunglasses with dollar-sign holograms on the lenses. Susette Kelo, a lead plaintiff, agreed to have her house moved to a new lot. Another homeowner said the difference was a number of small concessions the city made:

While his house will be torn down, his family has an option to buy property in the new development at an agreed price.

The city also agreed to move the rhododendrons, yews and other plants his father planted 30 years ago and to install a plaque in the development to honor his mother, who fought the condemnation of her home until she died in 2003.

Successful redevelopment premiums will stimulate property owners and tenants to settle with the developer or development agency and avoid legal actions. Redevelopment premiums are more likely to succeed if they:

Provide the property owner or tenant with some of the increased wealth that the new redevelopment project will generate. This will require the involvement of a shrewd financial deal-maker

Compensate, financially or otherwise, for “intangible elements” lost by the relocation (e.g., the rhododendrons, yews and plaque mentioned above). This will benefit from a negotiator with superior inter-personal skills.

Where is the money going to come from? The relatively high costs of downtown land already require that financial incentives such as tax increment financing, payments in lieu of taxes, land write-downs, etc., be made available if many redevelopment projects are to be financially viable. The costs of redevelopment premiums -- especially in small and medium-sized projects having limited density and hence limited income potential -- may require the use of new financial tools.

One of these may be giving current property owners equity stakes in the redevelopment projects that will be built on their properties. The ability to reach a timely agreement on the current values of their properties will likely be critical to the success of such ventures.

Many downtown districts have the capacity to issue bonds through their municipality which are paid off from the districts’ assessments. For example, a district paying about $45,000/yr for 20 years might bond for about $500,000 at a 6.5% interest rate. While $500,000 is not a princely sum, it often can be leveraged and might help make three or four redevelopment projects viable.

Also, there are what some call “exactions.” A community might find that hefty redevelopment projects capable of generating large revenues and big increases in municipal tax revenues are occurring along the municipality’s periphery or in very solid sections of the downtown. The local government might negotiate for such a project to donate $50,000/yr for 20 years -- which adds up to $1,000,000. For a shopping center with annual revenues over $100,000,000 a $50,000 exaction should be more than affordable.

The Downtown Curmudgeon

Update on the Reassessment of Our Use of Social Media

DANTH Is Reassessing Its Use of Social Media

Office Development -- We now have all the office space we need

Downtown Multichannel Retailing

On the Passing of Steve Jobs

A CURMUDGEONLY VIEW OF BID STREET CLEANING PROGRAMS

FROM DECAY TO TREASURE: THE HIGH LINE PARK

TOUGH TIMES FOR THE MOVIE INDUSTRY -- HOW IS YOUR DOWNTOWN CINEMA DOING?

GETTING THEIR STORIES TOLD -- WHAT PETITE BUSINESSES NEED FROM E-MARKETING

PARKING TRENDS REDUX

Some Interesting Research About E-Commerce

Trying to Assess the Impact of E-Retail on Downtown Merchants

The Use of the Internet by Downtown Organizations and Businesses

The Often Slow Pace of Implementation

The Arc of a Niche: The Bowery's Home Lighting Niche

An Expanded Notion of Commercial Nodes

3-D Television

Movies Update

AFFORDABLE DOWNTOWN RETAIL RENTS

AVATAR AND DOWNTOWN MOVIE THEATERS

Teenage Retail Market Update

Repositiong For The Future During The Great Recession: The Bayonne Town Center

Backdoor Retailing

Slot Car Racetrack Update

The New Normal for Downtown Retailing: I. Introduction

Apparently, The Recession Is Not Saving Movie Theater Attendance

An Audacious Small Town BID

Downtown Vacancies: Let’s Get Real

Eateries That Help Downtown Movie Theaters

More On Retailing To Teenagers

Is Our Great Recession Saving Downtown Movie Theaters?

Recession Evils: Rumors and Facile Solutions

“You never want a serious crisis to go to waste”

The Apparel Niche and the Home & Hearth Niche: The Growing Importance of Independent Operators

RETHINKING DOWNTOWN ENTERTAINMENT NICHES: Non-Formal Entertainment and Work-as-Entertainment

The Mommy Niche

Downtown Retail Part II. Food: Capture What You Should Own

Downtown Retail Part II. Survive, Manage Effectively and Reposition

Downtown Retail Part II: The Nexus of Time Pressure, Proximity, Convenience and Customer Service

Downtown Retail Part II: Downtowns Will Be Effected To Different Degrees

Downtown Retail Part I: Buckle Your Seat Belts, We’re in for a Bumpy Ride

DOWNTOWN MOVIE THEATERS WILL BE INCREASINGLY IN PERIL

Despite The New National Wave Of Crime, Downtown Security Strategies Still Stand

An Ethnic Downtown With Many Retail and Fast Food Chains

THE DOWNTOWN CRIME PROBLEM REDUX?

BEING A DOWNTOWN CHANGE AGENT: Facilitating Change for Downtown Business Operators

BEING A DOWNTOWN CHANGE AGENT: Consensus, Conflict and Crisis

Strong Downtown Entertainment Niches

Downtown Friendly Store Formats, Facades and Signs

Learning From Las Vegas

Downtown Friendly Garages

Paying “Premiums” For Downtown Redevelopment Projects

Downtown Retail  Part II: Downtowns Will Be Effected To Different Degrees

Downtown Retail  Part I: Buckle Your Seat Belts, We’re in for a Bumpy Ride