Through my knight fellowship I promised to research and write about this stuff.  I’m just now getting around to editing my notes, and I’ll post the sections here.  This is a work in progress, so please send feedback and let me know your thoughts and comments on my blather.  

 

(that’s me in greece eating a cheese pie and thinking about retail formats)

-glenn

 

 

There has been a great deal of concern about how to make the retail work in redeveloping downtowns and building new neighborhoods.  As a result parking has been the biggest issue, as large format national chain stores that were cultivated in the 80’s and 90’s are placed in urban locations- but still requiring suburban formats and business structures.   Some stores have adapted nicely, Whole-foods, the Gap & Assoc., and Starbucks, to name a few.  The logic of most new projects is that the retail component will resemble a shopping center more than a shopping district in that it is likely to have a sole-proprietor and manager, draws a market from remote locations (requiring extensive parking) and bases its strategy on being able to attract national chains and standardized tenant mixes to these locations.  The analysis of retail that follows suggests that this formula is not always appropriate and will not necessarily work since retail is based on a combination of market support (mostly population density) and access (road networks).  I will endeavor to explain how different retail typologies evolved as a response to their environment.

 

My sister is an organismic and evolutionary biologist.  She wrote her doctoral dissertation on possums in Massachusetts; she spent years tracking them and understanding how a creature from a warmer climate adapts to a northern environment, presumably by living off the artifacts of human habitation.  As her big brother I am very proud of her and think she is very, very smart.  It turns out that the biology metaphor works kind of well for real estate economics.  From this perspective, we can imagine real estate and the built environment as an organism that responds and adapts to environmental conditions.  Different varieties grow and thrive in different climates.  Just as a cactus or lizard needs an arid climate, a Cyprus or spotted owl needs a more complex system to support it; in the same way, big boxes require highways and main streets require a local market to support them.  By understanding how the things relate to their ‘eco-system’, we can help to shape the economic climate that supports the kinds of places that we desire; that support healthy human interaction, build community, and provide a more valuable business climate.  

 

This philosophy suggests that it is important to first understand what kind of place it is that the local community desires.  Here I will briefly extol the virtues of a community charrette visioning process.  From the point of view of an economist, this is necessary to understand what the questions are that need to be answered.  Standard market reports suggest only what standard products will succeed or not in an existing economic environment.  However, I find that it is very often the case that the places requesting economic advise are not satisfied with their current economy, and what they really want to know is how to change the climate to support more livable places.  But a map to this cannot be developed without actually ASKING the community what they hope for, and what they fear, and in doing so, the economist also discovers the more nuanced political landscape and begins to understand the existing resources of the place that can be channeled to support their vision.  

 

 

Lots of types of businesses, with very different requirements and different users are classified as “Retail.”  As a single category of modern real estate, retail includes businesses that serve everyday needs, such as groceries and drugstores, restaurants, clothing and apparel as well as stores that sell specialized products for narrow markets such as navigation equipment and supplies for aviators.  Clearly these businesses have very different spatial and location requirements, but they all are selling goods and services to their end users.  

 

Despite this variety, there are consistent patterns to the requirements of all retail.  The two obvious and crucial elements to a successful retail business are a sufficient market, and visibility and access.  Without a demand for the product or service, the retail endeavor is bound to fail.  Likewise, if no one knows that it is there, or if it is difficult to get to, it will also face difficulties. Visibility is the most basic form of marketing.  Locating on highly traveled routes suggests a market, visibility and access.  In accordance with this, minimum daily traffic counts are often required by modern retailers; however high speeds are not very desirable since they reduce visibility and access to site.  At the same time, extreme traffic congestion can be a deterrent to access and shoppers.

 

I grew up in the suburbs and we lived on a cul de sac.  When I was a kid, I tried to sell lemonade in our front yard.   The guy across the street was kind enough to buy a cup.

I made 25cents. Less the cost of lemons I was charged by my mother, who is an accountant.  The site in our front lawn had purposefully limited access (that’s the point of a cul de sac) and a very limited market area.

 

Trade in goods and services and lemonade has been the center of activity in cities for thousands of years.  For most of history, retail services have located in cities to be close to concentrations of customers- this provided people with easy access to daily needs and a steady market for businesses.   The demographic trends of the second half of the 20th century saw a shift in population as people moved to low density suburbs.  The lemonade stand made a quick debut in the first ring suburbs and disappeared in the low density suburbs.  In pursuit of this suburban market retailers were forced to adapt.  

 

Retail is dead; long live retail: retail is an ever-changing business.   The changes in the last sixty years represent a significant historical moment.  Through a confluence of historical factors in the United States, cheap gas and highways fueled suburban development and the decentralization of the population.  This American demographic relocation of the mid 20th century, together with the boom in the population created new market demands for services outside of the traditional cities.  In suburbia, lower densities, higher traveling speeds, and zoning laws prohibit the standard format of traditional retail; so new formats evolved to capture and serve markets through other means.

 

-gk