Chain stores are a
new development. They moved mostly to the malls. They had a price
also had more sophisticated systems such as centralized buying,
merchandising, advertising, personnel training, and profit sharing. In
other words, these stores had all kinds of systems to make a store
work (support systems). This makes it much tougher for the
neighborhood merchant to compete against them. Chain merchants are
perceived by the consumer as doing a much better job. The
expectation of community support is not enough, in and of itself, to
insure the success of neighborhood merchants.
Commercial areas used
to be thin
strips. Modern chain stores are being built on larger blocks of land.
As a result, when you want to attract large chain merchants into an
older neighborhood you have to assemble larger tracts of land. In
the inner city this means that displacement will often result.
Consumers make decisions based on such factors as:
convenience (including location),
loyalty" is not on this list because it not an important factor in
consumer decisions (there are, however, important exceptions like
Don't put too many
into a commercial revitalization project. The lenders don't want to
make a social statements. An example of a revitalization project
that was "heavy" on social objectives (without fully taking
into account market factors) was the shopping center that was built
in a neighborhood in reaction to a riot. The main marketing tool was
ideology (i.e. loyalty to neighborhood). The shopping center failed.
Consumers will not change patterns merely by saying "shop with
the brothers". They will only change their patterns when you
have attained a level of sophistication so as to give them a "great
little place to shop".
Many time local merchants do not do a good job. They do not provide a quality product and service at a good price. The question then is how do you change this.
creating more wealth in
the black community than individual efforts because there are not the
role models in that community. Franchises provides a system that
merchants can plug in to. Franchises can make up for the fact that
black business persons do not have parents or other role models in
the community who can provide the training to insure business
Before the automobile
and malls, a
typical strip might support eight blocks. Now, with reduced
population and market, the strip might only be able to support three
blocks of businesses. It might make sense to "decommercialize"
a number of marginal commercial blocks and turn them back into
housing. In other words, concentrate the effort on just a few
VIII. PUTTING TOGETHER A DEVELOPMENT TEAM
The following is a list of the types of people that need to be put on a development team. Not all of these need to be on the team for every development. It depends on the circumstances.
Management Company (sometimes)
Broker (site negotiator)
Banker (don't invite to all the meetings)
IX. TRADE AREA
The factors that determine where and when people shop.
Competition - size and quality
Man-made and natural barriers
How to determine trade area:
Map the area and mark where the competition is.
Mark the traffic flows.
Map the natural and man-made barriers.
Map the demographic distribution.
Then determine how easy or convenient it would be for residents to get to your potential site.
Besides defining trade area by demographics, competition, barriers ect, you can also define target area for existing businesses using INTERCEPT SURVEYS where you ask people on the street where they live. You then put dots on the map and draw a circle around the 80% closest to your center and you call this your trade area.
X. RANKING POTENTIAL BUSINESSES AND DEVELOPING TENANT MIX
Call computer service
in Los Angeles
(Urban Decisions Systems) and they will give you information based on
census tracts. This service costs about $100.00-$200.00. They get
this information from such sources as the Census of Retail Trade,
sales tax data, economic studies based on regional differences in
spending patterns and economic studies based on racial differences in
spending patterns. This data answers questions like "how big a
drug store will our trade area support?". Contact Urban
Decision Systems Inc., P.O. Box 25953, Los Angeles, Calif. 90025. The
telephone number is (213) 820-8931. Call up United Decisions Systems
and give them the census tracts or zip codes (or portions thereof)
that you are interested in. Say to them that you want a store
summary, population report and some individual reports.
The "Store Report"
you The annual sales potential for different types of businesses in
your target area. It tells you the aggregate volume of sales for
that store type, the per capita expenditure and the gross supportable
With this information
you can estimate
the potential market share of a particular type of store for your
If a business would
have to capture an
excessive share of the market, it should not be included on the list
of good potential businesses for a target area. As a rule of thumb a
"convenience goods" store should not have to capture more
than 30% in order to break even and a "shoppers goods"
store should not have to capture more than 15%. If the actual
business would have to capture a greater percentage than this the
business would not be feasible and should not be included on the list
of potential businesses for your target area.
You can estimate the
market share as
Once you have
determined, in a general
way, what types of stores might be feasible, you might then want to
do a consumer survey in order to really focus.
At this point you should have your tenant mix.
Use these market
studies to determine
which tenants to talk to. Market studies can get you beyond merely
using politics to talk banks and potential tenants into
participating. You are not asking them to make a decision based on
politics but on market factors.
XI. COMMERCIAL REVITALIZATION ACTIVITIES
Physical improvements-facades & streetscapes
Business packaging for merchants
Public space improvements
Commercial real estate development
Developer recruitment and arranging subsidy
Crime and security programs
Special service districts (special tax assessments) Merchant technical assistance
XII. THREE CYCLES OF REVITALIZATION
focus is to stabilize the businesses that are already there.
2. Then, create a climate for investment.
3. Then, Re-commercialization
If you don't do the preliminaries, the Winn-Dixies of the world won't be interested in coming in.
XIII. REVITALIZATION PROCESS
1 Physical Improvements
2 Business Assistance Services
b. rebate (e.g a county program to reimburse facade improvements)
c loan assistance
d merchant education
3 Coordination of Public Resources
b private sector
c educational resources (e.g work-study in the urban planning department).
d law enforcement
e ordinance enforcement
4 Organizing Component
b property organizing
c customer base (e.g block clubs)
5 Marketing/Promotion Component
c promotional events when facade completed, when tenant moves in, etc.