Cities Chasing Retail
The April 2007 issue of Governing magazine has an interesting cover story called, The Retail Chase with a subitlte: Cities will do almost anything to land the story of their dreams. From the article:
Much of the change in the retail market is happening not just within cities but in the middle of downtown. All over the country, young professionals and empty nesters — people with disposable income to spare — are moving into new lofts and high-rise condos. Those new residents have to shop somewhere. In downtown Minneapolis, now home to 30,000 people, three grocery stores are coming, and not one of them requested government subsidies. “For years, all the cities in the Midwest wanted to have a Michigan Avenue,†says Minneapolis Mayor R.T. Rybak, referring to Chicago’s famous high-end shopping street. “Michigan Avenue is spectacular, but we’re not all going to have a Michigan Avenue.†What’s evolving downtown now, in Rybak’s view, is a hybrid retail model where destination shoppers can still buy $200 shoes, but where the people living upstairs can find a dry cleaner. “Focus on the housing first,†Rybak says, “and the retail will follow.â€
The above is valid, we don’t buy expensive shoes everyday (I never do). What we do need are groceries, toiletries, prescriptions, basic clothing and dry cleaners. A number of these are available in downtown St. Louis currently. But really, every neighborhood needs to have these in close proximity (… a short walk).
The online version of the issue also has some additional interviews with retail experts. One of the three is Robert Gibbs. As it turns out, Gibbs was in town recently as the retail consultant to DPZ on the Dardenne Prairie town center charette. He was certainly interesting to talk to and he did a great job communicating retail strategy to the general public. One of the things he stressed was having high design standards, explaining that retailers have several store models and will simply do the least they can get away with in the community. Retailers, much like home owners, don’t want to overbuild for the area. Gibbs indicated high standards for store fronts and lighting were very important. From one of the online-only articles:
It’s generally agreed now that the underserved markets are urban markets. From inner cities with low-income populations to high-end wealthy cities, urban centers are vastly under-retailed for lots of reasons. If you’re a retailer and you’re growing your stores, you have to figure out how to get into urban locations. To do that retailers are doing things they never would have considered five years ago. They’re modifying their old standards for store sizes in order to fit on smaller, more compact sites. They’re lowering their parking standards. They’re even changing the merchandising mix to fit the urban consumer. So there’s a tremendous opportunity for cities to attract retail.
You mean, we don’t just have to accept the type of store the retailer builds in the exurbs? The city of St. Louis is underserved from a retail perspective. We can have our cake and eat it too: higher design standards and still attract retailers seeking a market in which to grow their business.
Cities don’t have to turn themselves into a mall, but they do have to do what shoppers want. Last year 70 percent of all sales occurred after 5:30 at night. If downtown is going to compete, it has to have stores open in the evenings or on Saturdays. It has to offer the goods that people want to buy at the prices people want to pay. Last year only 2 percent of all apparel sales occurred in downtowns. In that 1950s, that’d be more like 90 to 95 percent. Downtowns have lost almost all their market share. Most are either entertainment districts or they sell knick-knacks and antiques and other things we don’t need.
Yes, evening hours are harder on the mom & pop stores but if that is when the public has time to shop that is when you need to be open for business. This is not the 1950s anymore, mom works to help the family get by so she is not out at 2pm shopping. Despite being gay, I do not go antiquing.
Cities should have a master plan to show how they can accommodate modern retail. Cities should have a written policy saying they want to be competitive and gain market share. Cities need to have high design standards for signage, lighting and building design and be willing to enforce those standards. And they have to have a public parking strategy.
Are you folks down at City Hall and the downtown partnership getting this? A plan, a policy and “high design standards” that are actually enforced! And by “parking strategy” I don’t think Gibbs is advocating the razing of historic structures for additional parking garages, he is referring to good parking management. Gibbs continues:
Cities can get back up to 30, 40 or 50 percent of market share with a policy. There’s a demand for retailers. A lot of them want to locate in downtowns. A lot of cities don’t know that.
The eight or ten cities we consult in have this huge unmet demand. Even a blue-collar town with modest income has a big demand for shoes and apparel. Urban consumers drive farther than normal to get goods and services, and the goods and services they do get downtown they overpay for. That’s the norm. Old Navy knows that now. Target knows that.
Gibbs give a good reason why we can demand higher standards:
Time matters for retailers. Stores have to open to keep their stock prices rising. A development director for a chain is told to open five stores in a region by a certain date, and if they don’t open he gets fired. So those people will go to a city only if the city can give them some assurance that the store can open by a certain date. That’s hard to do.
With good zoning & urban design codes we, as a city & region, can demand better retail design. It will not be offered to us on a silver platter, we must ask for it — no — we must demand better. The chain’s development director, faced with termination for not opening enough stores, will work with us and reluctantly pull off the shelf one of the more urban formats used in other cities. Walgreen’s will not abandon the City of St. Louis. They are on a mission to be in every part of every city and state. They are also trying to beat CVS in the race to tap new markets. QuikTrip is in a similar situation.
Wall Street doesn’t give a damn about St. Louis or if a new store is urban or has a big parking lot in front. Their concern is new growth as evidenced by new stores and eventually, steady or growing same store sales. Period. All these national retailers want to make sure they please their shareholders and Wall Street. They build the very least they can get away with and still please investment analysts that track their stock. If a reasonable urban design code requires good sidewalk access, bike parking, and caps the auto parking then the retailer will go along — that is much easier than answering to shareholders when the stock takes a dive.
Part of the problem is that retailers generally don’t build their own buildings. They work with developers, often local developers, to construct & own the facility and lease it back to them. In the St. Louis region we have a limited number of such retail developers like THF, Koman Properties, and DESCO. These developers, through campaign contributions throughout the region (Missouri & Illinois) keep things favorable to themselves. High design standards? Not for them! They will cite retailers demands but we know that really isn’t true. If they want to stay in business they will need to comply with the community’s design standards. Do you think THF included all the trees in the Chesterfield Flood Commons project out of some altruistic reason? No way! Chesterfield has high landscaping standards. With enforced design standards in place a developer can go back to a retailer and say, “our hands are tied, [insert municiapity] requires that you [insert requirement].
In addition to some basic demands, non-financial incentives can be used. For example, parking can be reduced if the developer includes bike parking (up to a point, and distributing the bike parking throughout the development). Many cities use creative incentives to improve design by giving developers choices that will make the project look & function better and not really add to the overall costs.
It is time for St. Louis to stop acting like a city losing thousands of people every decade. We are on the upswing per the latest figures from the census.
Don’t forget that more retail also means more hourly wage jobs. As a college student, I have an unreliable schedule and can’t work full-time, so I work nights and weekends at retail jobs. I don’t want to see St. Louis full of Wal-mart centered strip malls and other big-box retail, but we have to let some chains in, under strict development standards of course, if we want a thriving local economy. It will create much needed part-time retail jobs that pay good wages for students, parents, retired people, and those who need/want a supplemental income.
Additionally, a few chains might help establish and prove there is a market, paving the way for indie retailers to move in.
Without INTEGRATION of neighborhoods, your density cheer will be only that. Growing and prosperous neighborhoods throughout the StL region are walled-off by large and obtrusive highways and this makes residents too auto-dependent. As such, pedestrian traffic is reduced and no high-end retailer wants this situation. Thus WE get parking lots! Who in their right mind created these problems? MoDOT that’s who! We had a grand opportunity to address these issues in the central corridor with the New I64. Instead of correcting old mistakes, MoDOT is destroying the opportunities for creating a liveable city by making travel more auto-dependent. In addition because of fragmented government, our communities are competing with each other with TIFs and the value of smart urban design is destroyed.
What would Janet Jacobs say about this Steve?
As you said last year: “It is no secret that I am attempting to follow in her footsteps; writing about my observations, stopping freeways (or drive-thrus) and advocating better planning. She has left some mighty big shoes to fill.”
A part of the “parking strategy” that St. Louis doesn’t seem to get is the need to balance short-term parking (meters) with better, nearby, safe, inexpensive longer-term parking options. Provide metered parking with rates high enough and enforcement strict enough in front of stores so people can run in and grab one or two things easily. (See the gelato place on Washington.) Get control of valet folks commandeering blocks of on-street parking. One big reason suburban retail “works” is the cost of parking is hidden from the consumer. If you want to go to Macy’s, do you want to pay several dollars to park downtown when you can park for “free” at the Galleria?!
Your plan to “remove all highways” was too dramatic for the area. Instead we shold be concentrating public efforts to make these roads more pedestrian friendly, safer, etc. in line with the designs of “Complete Streets”. Issues like quality of life are too easily ignored here and kept off the debate table. One side wants no highways and the other wants more highways. The middle ground wants smart design and liveable communities. Guess which side is winning in the StL region and what it means about developing “high-end retailing? Similarly to the purchase of the major StL banks years ago, the one high-end and locally managed retailer in StL was purchased by outside interests. The destiny of StL is no longer in the hands of elected leadership and local businesses as much as in the hands of nonresidents. What do they care about our quality of life issues as long as the revenue/capital expenditures remains acceptable? Even home-grown organizations such as MoDOT doesn’t care… why should others?
The biggest thing I notice in the Minneapolis example is the downtown residential population of 30,000. St. Louis has what 10,000, optimistically? St. Louis is going to need to get in the 30-40,000 ballpark before if people want to see a “big city” retail environment downtown; and this type of increase is going to necessitate some of the proposed residential projects actually breaking ground (mayfair, BPV, skyhouse, Park Pacific etc. etc.), historic tax credits can only take us so far on this front.
As far as the design standards, Steve’s right that if you force higher standards on developers, they won’t turn and run but grudgingly accept them because their clients (the retailers) want to get into a growing market. I do see this as being more of an issue outside downtown though, where it is often more confusing as to developers who should take precedence – autos or people.
Regarding destination vs. local retail, you may get the occasional curious suburbanite now, but DT retail needs to serve the needs of the DT population first and foremost. Trying to come up with grand parking schemes and luring “destination” retailers ahead of the development of the smaller-scale local market would be a losing strategy, call it the St. Louis Centre strategy. Once you have a thriving local retail environment, you may be able to lure a bigger name “destination” type retailer down there to draw from a bigger area, then would be the time to start talking about an overall parking strategy for downtown, of which there would be several options. But to recap, the local residential population will be the main driver, more important than cute signage or parking.
Yes Steve, local leadership is right on Target if you consider that’s an upswing.
You rightfully stated, “Every neighborhood needs to have these ‘in a short walk'”. OK, does Soulards, Lafayette Square, etc. offer sufficient density and wealth/income to have a high-end retailer located in each? The areas between the highways are insufficient, disconnected and remain under the threat of bigger parking lots, not density. Management of some of your favorite stores believe that Brentwood is now the retail center of St. Louis and their only plans to expand are further west, not east. They too know that StL consumers will readily drive many miles as this is the StL personality and parking enforcement/design is nonexistent. These factors are particularly important in understanding the whole picture and are necessary in the analysis of cities and retail.
Now this is truly scary: “The ICSC conference isn’t just an affair for the industry anymore. It’s a big event for local government as well. Mayors, city council members, city managers and economic development officials have become regulars at this annual carnival of deal-making.”
Consider these two questions: Are public assets such as infrastructure, parks, streets, parking policies, etc. being managed to benefit the whole or are particularly interest groups designing the final decisions for the region, and what does this mean for retail development?
Are the designs and level of expenditures for these infrastructure products (particularly the New 64) more like Walmart or Famous Barr?
We should aim higher (than Target) but local leadership is rapidly destroying that opportunity.
Downtown St. Louis may have only ±10,000 residents, but the total city has ±350,000 and, for example, no Wal·Mart it can call its own. I know, I know, they come with a lot of political and social baggage, but they do generate a big sales tax number and they do create jobs. Much like Lowe’s at LC, it’s not about the architecture, it’s about the revenues. St. Louis residents ARE spending their money at Wal·Mart, only they’re doing it in Maplewood and other suburbs, and NOT in the city. The city loses tax money. and our residents spend more time and money going greater distances to get to the “great deals”.
Some retailers are starting to “get it”. Walgreen’s may not be a darling of the urbanist, but they’re investing in the city. Save-a-Lot is investing in what many might consider “marginal” sites. Wal·Mart has to fight to get into unionized areas, and they’re still trying. Home Depot and Lowe’s have figured out that older neighborhoods are prime markets for their businesses. Check out this article in a trade journal – http://retailtrafficmag.com/development/retail_welcome_metropolis/ – it points out how cities (like St. Louis) have the potential to be real players on the regional retail scene.
I agree we get what we deserve when it comes to design. We can start to set the bar incrementally higher. But to so, we need to a) have the patience to wait for the right project / developer willing to abide by the new rules, and b) grant no (or very, very few) exceptions to any new rules. Given our current political climate, that seems highly unlikely, but we can always hope . . .
Steve,
By pointing out that we lost more people than New Orleans during Katrina, we are able to justify our failures and lack of progress. It is not our fault give us more time! The LRA is forgiven for being a failure because of the environment in which it operates. It transitioned only 22 properties to the private sector during FY06, but that is acceptable given their constraints. Steve, our many problems limit the rate of progress! This is the justification. St. Louis had such a rapid depopulation, that we cannot expect big changes overnight! Get your head out of the clouds! Be realistic and settle for smaller standards.
Room 200 Advocate,
Better avoid making posts like yours or risk being attacked by Jason Toon. It really doesn’t matter if you have a good reason for doing so.
We do not need smaller (or lower) standards. What kind of statement is that? Retail will respond to higher design standards because they see a clear approach, an understanding that the community knows where it is going. If the standards are well done retail partners know they will benefit.
The real problem is that apparently most city officials have so little understanding of design that they don’t comprehend the article in Governing magazine. The result is they fall over each other if Desco or some other developer makes a mediocre proposal, thinking they should be thankful to get even that interest.
With higher standards, new retail will in fact be attracted to the city. The political types don’t get it. A beautiful city will do more to sell St. Louis than all of their marketing campaigns put together.
In the end, it is more and more important to elect officials who exhibit urban savvy. While it would be difficult to totally ruin the city, it is not impossible. Certainly many decisions have already damaged the city fabric. A partial list resides on this blog.
Yes, but what do you do when you set higher standards and your neighboring city doesnt? Or your neighboring state? Unless all the authorities were to at once stand up and say THESE ARE OUR STANDARDS, it will never happen because businesses will go to where it is easier, faster, and yes, cheaper.
No, retail goes where there are markets, the discussion about density is part of solution, although it goes hand in hand with other aspects of urban planning.
New York just rejected a Wal Mart from moving in. New York is a very expensive place to do business and Wal Mart could have put up their cheap ass stores anywhere, but they wanted to be in New York City, they wanted to be in that market.
There are cities around the world in which retail has set up shop in the more expensive districts with high standards. They are markets retail wants to be in, London, Paris, Toronto, you name it.
Cheap, if they want cheap then they can’t serve clients in these and other cities. It is naive and just plain wrong to say that retail only heads for easier, faster and cheaper areas.
In fact it seems easier, faster and cheaper isn’t even working in the city of St. Louis. There is no Wal Mart, in addition the city is loaded with abandoned box stores where once sat smaller storefronts that could be more easily reused.
The easier, faster and cheaper method has been tried and failed in the City of St. Louis. It doesn’t work to sell the urban soul for a few short term bucks. It is not what a city is or is supposed to be.
It is time for a change, some of those changes are occurring, but many more need to happen to establish higher standards that attract new population and retail to the city.
Do you think that the New Urbanist New Town in St. Charles is the quickest growing project in the region and in the multi state area because they set low standards? No, it wildly successful precisely because they established high standards, low standards are for those who wish to attain mediocre results.
High or low, standards need to be applied consistently. A big frustration for any retailer is not knowing what the rules are and/or how they will be applied. Retailing is tough enough without complicating it further through local political manipulation or favoritism.
For understanding the StL market, examine The Boulevard. Hailed as one of the best examples nationwide as “New Urbanism”, the developers marketed it as the “Michigan Ave.” of StL! It had everything going for it…location, income, growth potential, mass transit, best school district, many new future residents in townhomes, condos, etc. What has happened there and what does it say about how developers/retailers view the StL culture? Truly an important case study, if not the best example, of how the numerous local governmental units demonstrate their ability to do the opposite of what is recommended in the article.
Steve, I didn’t refer to any new urbanists. The statements were made by the elected leaders,… you know those pointed out in the Governing article as taking the lead in these type of developments. And truthfully, The Boulevard had numerous characteristics that matched the criteria. Again, what went wrong Steve?
The reason we have low standards is because the people have not formed an actually lobby which would demand it. Right now developers monopolize political power. Why would politicians care about what some bloggers think?
DD, are you criticizing public apathy or the failure of elected leaders to represent the public? Probably both and as GM has stated numerous times, it is our leadership which is defining the low standards while Steve has made clear that public input is largely circumvented or unwanted. Of course the culture here is also quite different than other cities. For example, when Macys took over Famous Barr-Marshall Fields, the citizentry of Chicago protested and boycotted the store. In St. Louis, home of the May Co., the evening news applauded the chain and its plan to keep a few employees… the citizentry crowded the store for opening sales!
the boycotted the store for what reason? chicago doesn’t like macy’s? employee layoffs? obviously boycotting was not going to stop the buy-out, so i assume you mean boycotting the laying-off of employees. otherwise i think the change to macy’s is good for the downtown market. breathed some new life into the store and showed there is still interest in downtown retail.
Marshall Fields is a landmark on State Street in Chicago. It has always been a store that put customers first and was owned by a well-known Chicago family. Truly a great store and one I frewquented. People in Chicago are real… and they are also outspoken. Scarborough Research found that in four out of five markets where Macy’s already replaced the name of the hometown department store, shoppers surveyed say they are visiting Macy’s less frequently than when the store operated under its original name.
To learn more see:
http://www.fieldsfanschicago.org/
http://www.chicagotribune.com/business/chi-0608130237aug13,1,4589505.story
http://www.chicagotribune.com/business/chi-0609050029sep05,1,718293.story