DANTH, Inc.

These Downtown Emperors Too Often Are Not Wearing Any Clothes

2012-05-26T17:18:36Z

As a child I was very taken by Hans Christian Anderson’s tale about The Emperor’s New Clothes, especially the part where every adult seems to go along with the new clothes until a child simply states that the Emperor is nude. Often in working on downtown revitalization I am reminded of that tale: lots of what appear to be basic axioms or essential parts of conventional wisdom about downtown revitalization are too often partially or entirely wrong. They are to me emperors with no clothes. Below I call some of them out and briefly explain why they are “nude.”

Emperor 1 – Urban Sprawl Is Killing Our Downtowns

Reality Check 1- This is a nice one. Thanks to the Great Recession, many recognized experts are now arguing that sprawl is ending. See, for example, John McIlwain at Brookings on the end of urban sprawl http://bit.ly/HA84Bq..

Let us rejoice that sprawl now has a stake in its heart! However, what are the policy implications? Are they really simple and apparent? I believe we definitely need to put our thinking caps on and properly think this through.

Emperor 2 – Retail Gap/Leakage Analyses

Reality Check 2 – Doing a retail leakage or gap analysis is appealing because comparing supply with demand sounds like such fundamentally good economic analysis. But, there are a number of data reliability and interpretive issues that cloud their validity (are they measuring what they say they are measuring?) and their value in program and policy development. First of all, collecting data on business firms and their revenues is a lot more difficult than one might think. The census is out of date by the time it is published. Business data from market research firms such as ESRI and Nielsen Claritas are based on data from InfoUSA, which does large national telephone canvasses of businesses and claims to be 95% accurate on the national level. However, on the local level we have found their data to often have far lower accuracy, and we now try to confirm the accuracy of their data before using them.

Another issue: the basic data on firms’ revenues and consumers’ expenditures are collected by two different federal agencies and, of course, they use two different sets of categories to organize the data. To be able to match the supply and demand data requires statistical manipulation and to my knowledge there has never been any published empirical test that demonstrates the accuracy of the data those manipulations produce.

Interpreting the leakages data also raises issues. For example, a surplus, where store sales are more than consumer expenditures, is usually seen as a situation where there is little prospect for future growth. But, according to niche theory, such a surplus may indicate a powerful retail niche that can expand its trade area. Another issue is that leakage is often seen as an indicator of growth potential, as the presence of “unmet local demand” that might somehow be more easily recaptured by a merchant who does not have to be all that capable. If the merchant is very capable, then he or she could fight for market share and then the whole leakage issue would be irrelevant. From policy, program and business recruitment perspectives, a business operator who will fight for and win market share is far more preferable than an operator who is looking for a situation where there is putative weak competition. Of course, the leakage analysis, does not get into the causes of the leakage, which often is that the competition is so strong that recapturing leaked sales is extremely difficult.

Despite these issues, we continue to do leakage analyses, but with very great care and considerable caution. We’ve found that doing a leakage analysis for a supermarket, restaurant or a women’s apparel shop, where we can gain a firm grasp on the business data gives us greater confidence than doing an analysis for all the downtown’s retail businesses. We also will use them when our prior research experience has given us an in depth knowledge about the local businesses or when the study area is small enough that we can readily confirm the accuracy of the firm-level data.

Emperor 3 – Street and Façade Improvements Will Attract New Customers and New Businesses

Reality Check 3 – Too many downtowns have followed this strategy and only succeeded in creating “decorated coffins.” Yes, these downtown are more attractive, but after much effort and expense they are still deader than a doornail, with low customer traffic, little vibrancy and few, if any, strong new shops. Such physical improvements can be effective, but this is much more likely to happen when they are part of a comprehensive revitalization program that includes successful business recruitment, marketing, redevelopment and place-making elements.

The attractions of these programs are that they mostly require money, not innovative “rocket scientists”, can be done in a fairly predictable time frame, and provide visible proof of an organization’s ability to get things done. These should not be confused with economic impacts.

Emperor 4 – Nearby Strong Pedestrian Traffic Is Critical to a Good Downtown Retail Location

Reality Check 4 – This is a basic axiom of many downtown revitalization strategies and the cornerstone on which our understanding of “location, location, location” rests. Yet, there is pitiful research on it. Behind this axiom are three suppositions. The first is that there are a lot of pedestrians, though no metric has been presented that signifies when “a lot” has been attained. Second is that among the multitude of pedestrians many will be browsing and window shopping and incidentally discovering reasons to enter shops and make purchases. Finally, is the assumption that the more pedestrians passing by, the greater the likelihood that a store’s destination shoppers will pass through its doors.

My experience suggests that the impact of pedestrian traffic is most likely to be felt in large downtowns where pedestrian flows of thousands of people/hour are easily found, and 100,000+/day are sometimes reached. But, even here, because of e-commerce, surgical shoppers have emerged who are more focused, going to fewer shops and doing far less browsing and window shopping. The Internet also is guiding more shoppers directly to downtown destinations identified in their searches. Additionally, the Internet has changed a lot of these destinations into showrooms for shoppers who see and evaluate the merchandise first-hand, but then buy online.

Smaller downtowns – defined at some unknown cutoff point – with total daily pedestrian flows only in the 100s or perhaps even a few thousand, have never really benefited much from the browsing and window shopping customer. These downtowns frequently just do not have that many retailers that pedestrians are motivated to do much browsing. Moreover, the retailers in these towns usually do not often refresh their selections or windows, so the browsing is even less rewarding. Unless in a tourist area, the merchants in these smaller downtowns have been made or broken by their ability to be a destination for task-oriented shoppers. Strong destinations survived and weak ones disappeared – except when the weak ones endured, because there was no competition nearby.

I know of neither a simple metric nor a complicated formula that indicates how many pedestrians/shoppers are needed to support X square feet of a particular type of retail store.

Emperor 5 – Hair and Nail Salons, Spas, Gyms Are Bad for Downtown Retailing.

Reality Check 5 – Back in 2005, I wrote a column in the Downtown Idea Exchange on this subject. My argument then was that these firms are part of a “pamper niche” that are not only found in abundance in some of the world’s most famed downtowns, e.g., Beverly Hills, Midtown Manhattan, Paris, etc., but also in many smaller districts where they bring in a lot of women with demonstrated disposable income, who also like to lunch and shop. Downtown retail merchants are crazy if they do not develop cross-marketing programs with the operators of pamper niche shops.

I also argued back then, that because they did not have significant investments in stocking merchandise, pamper niche operators could afford to pay higher rents than retailers. That is why they often supplant retailers in many storefronts.

Today, my arguments all appear to be holding true, but due to the Great Recession, pamper niche operators are taking over even more storefronts as they are vacated by weakened retailers. In some districts, pamper niche shops account for most new commercial rentals.

Downtown leaders who attack pamper niche shops are really off base. Instead of criticizing them, these “leaders” should recognize the customer traffic they generate and help their retailers create cross-marketing programs with them.

Emperor 6 - The Multifunctional Character of Downtowns Gives Their Retailers A Unique Competitive Advantage

Reality Check 6 – The multifunctional character of downtowns and the traffic it generates supposedly means that downtown retailers need less power as a destination to be successful. The downtown, in a sense, generates a lot of traffic for them. But, far too often, the ability of downtown retailers to benefit from their district’s multifunctionality breaks down because of two factors: a) the downtown is too dispersed, so office workers, hotel guests and students are too far away to walk to district retailers, and b) the ability of retailers to captures sales from various “captured” daytime markets is inhibited by operational factors such as:

Companies trying to keep their employees in the building by providing cafeterias and subsidized meals
Retailers are closing their doors when hotel convention guests are ready to browse and window shop
Commuting students needing to quickly return to jobs, children, etc.

Although solutions are available, too many downtown organizations have given up on overcoming the dispersion and operational problems, giving up, in effect, on helping their retailers tap critical close-in market segments.

Other Often Naked Downtown Emperors

Here are some other “Naked Downtown Emperors” that I do not have enough space here to detail:

Attracting tenant prospects is the biggest challenge in retail recruitment – it’s more often a lack of appropriate locations with appropriate spaces
Increasing capacity will solve parking problems – easily finding existing spaces is usually the real problem
High crime rates hurt downtowns – crime rates are often comparatively low, it is the fear of crime that does the damage
Nobody will use the upper levels of a parking garage – they will if the garages are properly designed, e.g. see the garage at The Grove in L.A.

Are there others you would add to this list? Please let me know.

Now I feel like a proper curmudgeon!

WILL DOWNTOWN RETAIL SOON REBOUND?

2012-05-22T17:54:58Z

Recent press reports have indicated increased retail sales and I am seeing in most media reports on the subject a kind of optimistic mood emerging about this sector’s recovery. I would suggest, however, that in looking at retail one should keep in mind the “show me the money” rule, i.e., to identify where consumers will be getting the money for their increased retail expenditures. The family house as a “piggy bank” from which consumers took about two trillion dollars in the years prior to the recession is basically gone. Median incomes have not really improved and most of the income increases have gone to the wealthiest households. Unemployment is slowly declining. Gas prices, child care, tuitions and medical expenses have all continued to increase faster than inflation. There does not appear to be much room for increased household retail expenditures.

The one area where there may be some wiggle room that will allow the 60% of our households that fall into the middle income category to increase spending is credit. As Floyd Norris recently noted in his NYT column, American households have been reducing their debt burdens: see http://nyti.ms/Idt8Kf

Some hedge fund mangers have suggested that in our current situation households are bringing down their debts and then using their new available credit to buy things until they again reach a level where they feel uncomfortable, when they will again buy less until they bring their debt levels down. I think they are correct and that we can expect retail sales to follow a bumpy up and down path for many years to come.

However, this pattern is far more likely to hold for downtowns where the median incomes of their trade areas’ households fall in the middle income range. In contrast, those, such as Morristown, NJ or Wellesey, MA, where the median household incomes are well above $90,000/yr are already finding that retailing is improving in a less choppy and more consistent pattern.

TIME IS RIPE FOR DOWNTOWNS TO AGAIN GROW HOME AND HEARTH NICHES

2012-05-22T17:54:02Z

DANTH has long argued (see the September 3, 2008 post to this blog) that many downtowns are very congenial locations for home and hearth niches. Independent operators in this niche often do not require spaces in vanilla box condition, but will satisfice with serviceable spaces in decent condition that have affordable rents.

Unfortunately, this niche was badly hurt by the Great Recession as deliberate consumers cut back on big ticket GAFO expenditures.

But, with the stalled housing market, folks are paying more attention to improving their current homes and recent improvements in our economy have apparently encouraged them to do so. For example, according to the latest American Express Spending & Saving Tracker://bit.ly/HBjgwL :

“Most homeowners (70%) have home improvement plans in 2012 and expect to spend an average of $3,500 to spruce up their homes, an increase in $100 from last year. More than one third of homeowners with improvement plans are spending their bucks on home accessories from throw pillows to appliances (an average of $170)—and new furniture (just under $700).”

Furthermore, this uptick in consumer spending plans for home improvements has been mirrored by higher sales reported by Home Depot, Lowes and other major retail chains in this niche.

These facts strongly suggest that now is the time for downtown organizations to focus on the recruitment of new retailers in this niche as well as the expansion of their current home and hearth firms.

SOME INTERESTING DATA ON 2011 TWITTER USAGE FROM PEW INTERNET

2012-05-22T17:53:04Z

According to a PowerPoint presentation by Mary Madden at Pew Internet, their survey showed that in 2011 about 74% of adults are now online. Their survey also showed that only about 13% of the surveyed online users use Twitter!

These findings suggest that for most downtown merchants, Twitter offers limited ability to reach shoppers in their local trade areas.

However, the table below from Pew shows that those in the 18 to 34 year old range are much more likely to be Twitter users — 18% or 19%– than those over the age of 45 (no higher than 9%). Downtown merchants with a local geographic market area and a younger customer base will probably be more interested in experimenting with Twitter. The ease and low cost of using Twitter also argues for such experimentation by them. For those able to offer merchandise to a large regional or national market, Twitter will probably be even more effective.

NOT JUST FOR TWITS: OUR ASSESSMENT OF TWITTER

2012-05-22T17:52:05Z

I have been using Twitter for almost two months now and I am coming to a number of observations and conclusions that I hope downtown business operators may find of interest and use. Some of these conclusions and observations should be treated as those of a relative newbie to Twitter, someone who is still learning and trying to figure out the best ways of using it for his business and how it might be used by others. They are being presented on the assumption that if you also are a Twitter newbie, you probably will be facing similar challenges and rewards.

However, my views are not like those of the ardent Twitter “fanboys” who account for so much of the writing about it. I am less concerned about detailing how Twitter works –there are lots of sources for that — than evaluating how it can achieve key marketing objectives such as relationship-building, especially maintaining and growing apostles, finding and driving potential new customers, etc. Moreover, my concern is how Twitter might strengthen firms with downtown locations and not how it can free them from their geographic locations.

My basic take-away is that Twitter definitely has very significant potential utility, but overwhelmingly only when it is tied to websites, other social media such as Facebook, and traditional face-a-face activities.

1. Twitter is not just for Twits– it’s a useful way to get and distribute information. Until I really used it, I had ignorantly dismissed Twitter as mainly a communications vehicle for vain, egotistical, self-indulgent TWITS who thought that everyone should know about their most recent activities, be they a meal, a purchase, going to a movie, sex, or a bout of flagrant flatulence. And while it is true that I have had quite a few people trying to connect with me on Twitter (you can block them) who either appear to be in the porn industry or are prone to tweet pious platitudes and dull observations, I also have found that many tweets have led me to a lot of very valuable information and that my own tweets are an exceptionally easy and low cost way to distribute or highlight information that I feel is interesting and of real import and value.

2. The vast majority of my friends, family, and business associates/contacts are not on Twitter. This may be a function of my age and social network — few of the people I know are on either Twitter or Facebook and many of those who are only allow limited access. My tweets are now being followed by 42 people or organizations, of which I knew about 12 prior to joining Twitter. Only two of DANTH’s major recent clients are among them. Furthermore, none of the client prospects we now are trying to cultivate are among them.

On the other hand, many of our Twitter followers are organizations we are very happy to establish relationships with and that can add power to our marketing efforts. Since we also follow them we are often learning from them as well. We look forward to attracting many more of them. But, we do not know who we are reaching within these organizations and whether any tweets are redistributed internally. In addition, I tweeted about a posting to the Downtown Curmudgeon blog, which was retweeted or mentioned in other tweets. As a result we had a very large number of new visitors to the blog and a lot of them looked at other pages on our website. But, most importantly, so far — and it is still very early — that increased website/blog traffic has not translated into new business.

3. How, then, does Twitter now fit into DANTH’s marketing strategy? DANTH, Inc is a relatively small, boutique consulting firm. Our marketing strategy has always been predicated on the effective use of limited resources, which has translated into a focus on repeat business and a very targeted cultivation of potential clients. In that way we are very similar to many downtown merchants. So far, Twitter does not seem to mesh with that strategy except in one marginal way. We find that many client prospects visit our website and use the Internet to confirm the word of mouth reports that originated their interest in us. DANTH’s activity on Twitter may become an additional resource for us in that confirmation process.

DANTH’s presence on Twitter is taking us in a new, more amorphous and more untargeted than we like direction. We are used to targeting specific organizations and executives in them. So far, with a limited list of followers, we are depending on using Twitter’s hashtags –#s — to target our tweets to people interested in certain topics like downtowns, revitalization and economic development. We continue to tweet because:

Very frankly, it is so easy and low-cost to do
For many years we have been doing (and continue to do) something similar via email blasts to a targeted mailing list
Of the increased visitation Twitter has generated to our blog and website.

4. Where we would like to go with Twitter…and where we probably will go with it. Our biggest objective is to figure out if we can use Twitter as a quicker and more efficient tool to communicate with people we are now reaching through our email blasts. But, I strongly suspect that email is much better suited to our marketing strategy and its primary objectives. One of those primary objectives is long-term relationship building, something for which Twitter seems to be ill-suited because, at best, it’s a quick, electronic one-way sharing of information and, at worst, someone talking at you who is full of pieties, platitudes, inanities, garbage and/or outright crap.

But, what Twitter has already done for us is a good indication of how it can help us in the future. Twitter can send new people to our website and blog and if they then decide to contact us, we can try to build a relationship with them. This would be a complicated and indirect causal path for Twitter to impact our new project assignments and one where much attrition can be expected between the tweets and potential clients contacting us. It would be akin to gold mining — you process a lot of earth to extract an ounce of gold. As long as tweeting is not a resource hog it probably will be worthwhile.

We are also using Twitter to feed content regularly and frequently to our LinkedIn and Facebook pages. It already earns a lot of its keep because of this.

The big payoff in relationship building could happen if Twitter could send people to our Facebook page and if that page could be a place for discussions and community-building around downtown issues and problems. For our Facebook page to play that role we need a lot more friends and attracting more friends is difficult because the vast majority of the folks we are now cultivating are not on Facebook and quite a few have overtly proclaimed an aversion to joining.

Twitter does seem to be useful if you are targeting at the level of groups and subject categories — such as small businesses, economic developers, your town or community, downtown revitalization, poverty, etc. — but less so if you are trying to reach lists of specific individuals. With the former, current Twitter users who identify with those groups or categories can find you through searches and your use of hashtags. With the later, the specific people you are targeting must be on Twitter, find you and sign up to “follow” you.

5. Arguing by analogy, for retailers, Twitter is probably not as good a tool as email and other tools for relating to existing store apostles and attracting new customers from local markets. I am a great believer in the value of attracting and maintaining store apostles — very frequent shoppers who like a store so much that they tell their family, friends and neighbors about it. Initially, I had thought that Twitter might be a good tool for quickly communicating with them, but I quickly saw that this was not the case. Store apostles and frequent customers are discreet individuals and retailers who are paying attention to them probably have their email addresses and possibly other contact information. Email provides an existing, fast and effective communications channel to them and one that is not limited by a 140-character limit on messages. The merchant can easily send information to these key customers about new merchandise, sales, store events, etc. Twitter’s advantages are hard to discern, but its costs in terms of limited message length and the need to have customers sign on as followers and possibly even to join Twitter are evident.

Downtown merchants in their cultivation and leveraging of store apostles may also want to provide financial incentives in the form of coupons, which is a function that is sort of possible on Twitter, but in a way that to me seems far from optimal. In this regard, the SaveLocal service from Constant Contact has caught my attention because it is focused on meeting the operational needs of small merchants and helping them to capture more local shoppers. Constant Contact rewards current customers for sending a store’s discount offering on to members of their electronic social networks.

Ben Burgess, of NorthStar Advisers, has been guiding DANTH’s social media reassessment. He counsels that Twitter can drive a lot of new customers or clients to a firm’s website or Facebook page which can be structured to build a customer community for a store or a service provider. If so, it could be another very valuable tool for cultivating and leveraging store apostles. But, Facebook is not the subject of this article and is still something I have a whole lot to learn about. More about it in a later posting.

But, please note that in this process Twitter is not the place where the customer cultivation and relationship building that produces apostles occurs – that is on the Facebook page. Twitter’s function is more akin to an input mechanism that attracts and steers new customers to the electronic apostle-building venues.

Of course, for many downtown merchants, their brick and mortar stores and their “backdoor” off-site activities will provide critically important face-to-face opportunities to maintain and attract store apostles.

6. If you are a small merchant who is selling very unique merchandise or product lines, Twitter may be very helpful. If you are making and/or selling unique ceramics, brooms, aprons, candles, jewelry, enactors clothing, duck decoys, etc., or selling out of production patterns of dinnerware and silverware or are one of a few retail outlets for a furniture or clothing designer, etc., then reaching a large national customer audience is probably of considerable value. Even low penetration of this large potential customer base could yield very significant sales for a small merchant.

Here Twitter may well be very useful, especially if the tweets can drive more visits to a merchant’s website or Facebook page.

It seems likely that in these instances, increased sales will not be from Twitter driving more customers to brick and mortar stores, but to increased online or telephone purchases, with the merchandise being delivered to the customers.

7. For small downtown merchants with a focus on local customers (that’s most of them)…For these small merchants there is a very important and fairly well defined geographic focus. To my knowledge there is no way of accurately knowing how many Twitter accounts are within a store’s trade area or how many of those accounts are active. However, Twitter does have a search function that might help a merchant gauge in a ballpark way the magnitude of the number of Twitter users within a 1, 3, 5, and 10 mile ring-defined trade area who may have tweeted words associated with their merchandise or services. In this regard, Rich Brooks at The Social Media Examiner has written about how Twitter’s advanced search function can help restaurants, a chiropractor, florist or pet shop build their Twitter audience (see http://bit.ly/w6IcPw). Following up, I did an advanced Twitter search for tweets that originated within a 5-mile radius of Morristown, NJ that contained the words flowers or bouquet. Eight tweets between March 11 and March 17 were identified as meeting my search criteria. Several of them appeared to be from merchants offering goods or services. Others appeared “advisory”. Few appeared to be from likely shoppers interested in buying flowers. A similar advanced search focused on Cranford, NJ produced 23 unique tweets, of which a lot contained “suggestive language” and a few indicated possible potential customers. The results probably would be more productive if the search was done just before Mothers Day or Valentine’s Day.

For downtown merchants, shoppers are close enough that most will probably want to do a walk-in store purchase, so an important objective of tweeting is probably to drive more customers to their stores.

It seems to me that it is too intrusive and therefore somewhat foolhardy to ask customers for both their email addresses and to sign up as followers on Twitter. Of the two, email still seems the more powerful, versatile and useful option. However, merchants most likely will get the email addresses from shoppers who are already coming to their stores. Twitter, on the other hand, has the potential of reaching shoppers who have never been to the store or may not even be aware of it without them knowing the stores’ names or handles.

For downtown merchants with geographically limited market areas, tweeting will be akin to a brief broadcast to an audience of unknown size and fairly unknown characteristics, though:

Trade areas with denser populations will likely have more Twitter accounts
There seems to be a general supposition that younger, better-educated folks are more likely to be active on Twitter.

Given this scenario, it would seem that the best path for these merchants is to try tweeting if the costs of doing so are not too time-consuming or financially burdensome and the merchant feels at ease doing it. It need not be complex. For example, a Twitter account named Red Bank SleepShoppe in Red Bank, NJ tweeted the following:

Visit our website to see some of the brands and products we carry! -http://ow.ly/9urtD
If your current mattress is over 8 years old, it’s time for a new one!

Also, the potential shoppers engaged on Twitter as well as their concerns and interests will likely vary day by day. So a multi-tweet effort by merchants over an ample time period will probably be much more effective than a tweet or two over a day or two.

After a few weeks the merchant can see what the response is and adapt his or her Twitter use accordingly, perhaps even dropping it entirely.

Very important: It also seems likely that merchants will be more effective with Twitter if they have an effective website and/or Facebook page that the tweets can send shoppers to. On the simplest level, tweets do not have room for a lot of contact info. Nor are they a venue for relationship building.

Finally, tweeting is easy to do with few direct financial costs. That helps make giving it a shot worthwhile.

CLOSE, BUT NO CIGAR: DOWNTOWN MERCHANTS AND CAPTIVE/DAYTIME MARKETS

2012-05-22T17:50:23Z

The Problem. Downtown economic development 101 long has taught that one of the strongest competitive advantages of downtowns is their multi-functionality, which leads to a number of “captive” daytime market segments, and stimulates multi-purpose and multi-destination downtown trips. These market segments –e.g., workers, students, hotel guests, etc., — are coming to the downtown continually, so merchants do not have to do anything to attract them to their commercial district. It also has long been thought that the merchants could then just concentrate on getting them into their stores and selling to them. Yet, in almost every community DANTH, Inc. has worked in or pitched a proposal to, local retailers were not capturing the sales dollars they should from nearby office workers, hospital workers and visitors, students, hotel guests, etc. Based on my conversations with other consultants and many district managers this problem is fairly widespread…and possibly, even probably the norm.

Lack of Market Segment Awareness and Knowledge. Many of downtown merchants simply lack an awareness of these captive consumer markets or know very much that is useful about them. For example, one eye opening presentation at the recent conference of the Wisconsin Downtown Action Council reported on research by Bill Ryan and Jangik Jin at the University of Wisconsin Extension that indicates important captive daytime markets are not limited to large cities, as often supposed, but can be found in communities with populations as small as 2,500:

“Overall, approximately one in five Wisconsin jobs are affiliated with businesses that are located downtown. A very small city with a population of 2,500 will, on the average, have close to 1,000 employees within a half-mile (a 10 minute walk) of the middle of downtown. A larger city with a population of 50,000 will, on the average, have over 5,000 employees. These figures indicate that there is a high density of employment in these small geographic downtown areas. Clearly not all are employed in the shops that line Main Street. Instead, they are employed is a diverse mix of businesses and organizations within and around the retail core.”[i]

While the Ryan-Jin study just focused on towns in Wisconsin, the picture it paints seems to fit the other states I have lived and/or worked in. Consequently, I bet that if similar studies were done in other states, they would reveal some variation, but substantially comparable results.

The audience’s reaction indicated that they were certainly learning something new and I doubt if nationally many downtown merchants in small (or large) communities know how many people are employed nearby. The Ryan-Jin study is also unique because its focus is on “employment” and not just office workers, white-collar workers, knowledge workers or creative types. They include the blue collar and uniformed workers that I have seldom seen targeted by downtown revitalization plans, but who account for most employees in a whole host of small and medium-sized downtowns.

In many other downtowns we have worked in, neither the downtown organization or their local merchants knew how many office workers were nearby and how they were clustered. Nor did they know much about office worker consumer behaviors, e.g., how often and when they shop, what they shop for. Much the same is true for the student and hotel guest market segments and certainly true for blue collar workers.

Poor merchant awareness and knowledge constrains their ability to target these potential shoppers, to merchandise for them and then market effectively to them.

The Weak Magnetism of Many Retail and Food-Related Destinations. Unsurprisingly, the ICSC’s studies of downtown office workers have shown that office workers will spend more in districts that have strong retail offerings than in districts having fewer shops and less desirable merchandise. These findings also speak to a more general principle, the stronger the magnetism of the retail destination and eateries, the more likely they are to get shoppers to:

Go out of their offices, hotels, schools, etc.
Walk longer distances.
Shop at inconvenient times.
Frequent their establishments.

Retailers are clearly unlikely to have much magnetism if they:

Provide customesr with an unappealing in-store experience.
Have lackluster product assortments and/or unattractive store environments.
Offer poor customer service.

Unfortunately, a lot of downtown retailers fall into the low magnetism category. Great proximity and consumer desperation may produce sales, but for them meaningful penetration of these captive market segments is unlikely unless they significantly improve their merchandise, store appearance and operating procedures. In my experience some non-magnetic merchants may be capable of making such improvements, most are not.

It’s Often Tough to Access These Market Segments: Just because these potential customers are downtown does not mean that they are within easy walking distances of retailers. For example, retailers that are farther than a 5-minute walk from office workers and 10- minutes from hotel guests are unlikely to gain a lot of their patronage. This is a very likely problem in dispersed downtowns, especially those that are composed of several nodes, not just a central core. One downtown that we recently looked at had four of these nodes, another had three.

Commuting students, who often have jobs or heavy household responsibilities, are typically difficult for merchants to capture. Their time pressures, frequent after 5:00 p.m. class hours and campus locations distant from the downtown core makes it very hard to grab their attention and dollars. The retailer must be very close and really have what the student needs.

Today, many companies try to keep their workers from leaving their office buildings during the workday. As inducements, they provide cafeterias, subsidized meals and concierge services to do their shopping and errands for them. Some just keep the workload pressures so heavy that going out seems impractical.

As Ryan and Jin noted, blue collar workers typically are not on the primary downtown streets, but in more secondary and peripheral locations. Their lunch hours may be brief and they tend toward not leaving their workplaces. Many will brown bag or be serviced by a “food truck” or “ordered in” food.

Downtown retailers must be open when hotel guests are prone to shop in their stores and these opportunity windows can vary with the downtown:

In Morristown, NJ a huge number of hotel guests are attending conferences that normally “set them free” after 5:00 p.m. By 5:15 or 5:30 they may be outside looking for things to do, including shopping. That does not give them much time to get to and shop in the stores that close at 6:00 p.m.
The skiers staying in hotels near downtown in Rutland, VT will be on the slopes all day and available for dining and shopping late in the day and early evening. But, if the shops are not open….
In Long Island City, NY, the guests at the new cluster of hotels are primarily tourists who will spend much of the day and substantial portions of the evening in Manhattan. As a result, the best time for local merchants to capture their dollars may be in the morning.

The Retailers’ Expectation That Customers Come to Them. The problems of accessing these market segments potentially can be overcome, but that will require merchants to implement targeted operating procedures such as altering store hours or, most importantly, reaching out and interacting in some way with these potential shoppers in their offices, schools, hotels, factories, etc.

Unfortunately, many of today’s merchants have been acculturated to expect that their customers will come to them.

Overcoming This Impasse. Merchants can have vastly greater success with these captive daytime downtown market segments if they adopt the multichannel techniques that are detailed in my recent DANTH Research Paper which is available at no cost at:http://danth.com/storage/pdf/Multichannel.pdf .

I do not want to again go over here the ideas presented in that paper, save for this: the key change is that a real multichannel strategy guides and enables downtown merchants to interact with customers away from the brick and mortar stores. If they are to win more sales dollars from their district’s captive markets, that is precisely what they have to do.

[i] Bill Ryan and Jangik Jin, “Employment in Small City Downtowns,” Downtown Economics, Issue 174, October 2011 http://bit.ly/y1bkc2

Update on the Reassessment of Our Use of Social Media

2012-01-28T16:56:00Z

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

2012-01-23T16:43:00Z

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

2012-05-24T17:21:27Z

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

2011-11-08T20:09:00Z

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