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Business Development, Community Development, Economic Development, Government, Hospitality, Infrastructure, Tourism

The Expanding Role of Downtown Retail Development


For decades, American jobs were synonymous with industry and manufacturing.  The primary focus of economic development was the retention and recruitment of large, industrial facilities.  Historically, rooftops followed jobs and retail followed rooftops.

Today, manufacturing remains a primary economic driver, but is now sharing the top slots with retail, service and technology driven employment.

In communities across the country, the movement of production facilities to off-shore locations has permanently changed the employment and economic landscape.   Many of these same communities now view retail retention and expansion as a vital element of their economic base.  A sound retail strategy is an emerging priority for local economic development agencies and Chambers of Commerce.

Retail store fronts capture the attention of pedestrian traffic

The Benefits of Retail Development

A well thought out retail strategy has several major benefits.

It has historically been successful in revitalizing downtowns.  In older suburban and rural communities, the insertion of retail development brings a sense of place.  Renovated buildings, street level shops, adjusted parking requirements, and utilization of vacant or underutilized second and third floor space has increased opportunities for housing.  These factors create micro-economic engines, built-in clienteles, reduced congestion, and an improved sense of community.  They also reduce the need to provide municipal services via construction of expensive infrastructure to new outlying sub-divisions.

Significant increases in retail development are also a sales tax generator.  Where sales tax is shared between County and Cities, retail development and the improvement of conditions where retail expansion can take place bolsters municipal budgets.

Where retail development is concentrated in city centers, development of outlying greenfields can be slowed, thereby limiting sprawl.

Considerations to Make Retail Work

To fulfill its role as a major contributor to the economic fabric of a community, it is important to understand the four fundamentals that make retail work.  They are known as the “4-R’s.”

  • Retention–  Keeping existing, long-standing retail businesses is far more cost effective and easier than recruiting new ones.  Here, as with industry, relationships are critical to the success of projects.  Locally owned shops support community efforts and causes.   Periodic activities, such as “Breakfasts with the Mayor,” bring shop owners and officials together.  Such interaction plays a critically important part in bridging gaps that so often exist between shop owners and elected officials.  Here, in an informal environment, officials can become aware of out dated ordinances or cumbersome regulations.
  • Revitalization–  Virtually all communities have areas where revitalization is necessary.  Frequently taking the form of streetscaping or façade improvement, revitalization rarely happens in isolation.  To be successful, planners, economic development agencies and elected officials need to develop an understanding of the barriers to reinvestment and anticipate how to use development policy to mitigate the issues.
  • Replacement–  Not all commercial uses are compatible with a dynamic, pedestrian-friendly environment.  In general, auto-related and light industrial operations are not consistent with pedestrian-friendly downtowns.  The movement or relocation of these uses to other parts of the community creates an opportunity for new investment.
  • Recruitment–  Identifying missing services and products in an existing business mix is necessary before an effective recruiting campaign can be implemented.  A current retail GAP analysis will show where the “leakage” is taking place and where a highly targeted recruiting campaign can be initiated.  Access to current demographic and psychographic data is a critical component.

Planning, zoning and development policies that result in the increased density of downtown residency, coupled with attracting higher per capita household incomes, is critical when seeking to improve the success ratios of downtown retail companies.   Action plans for revitalization should be affirmed through policies and their supporting statutes and codes.  These adopted directives are the driving mechanism for the creation of vibrant downtowns.

Retail thinking and planning should address the needs of the community by providing options, experiences and cultivating a unique, distinct identity.  Retail development planning and initiatives should not be restricted to large centers and “big box” developments.

Whether evaluating expanded mixed use, in-fill projects, or adaptive reuse barriers such as setback requirements, minimum parking ratios, on-site storm water detention, or floor area ratios need to be recognized and addressed.  Special zoning districts, zoning overlays and other tools are available to help mitigate the issues.

Conclusions

Developing a cohesive, realistic plan for building a retail driven economic engine is more than simply adding stores, sprucing up sidewalks, holding a parade, or changing the direction of parking spaces. It requires considerable forward planning and recognition that conventional wisdom may need to be re-thought.

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Discussion

One thought on “The Expanding Role of Downtown Retail Development

  1. This is a really timely article. I am currently pursuing a project with a local community to provide economic development services and although some of these ideas were thought of, there were others that hadn’t crossed my mind. Thanks for giving us “something to think about.”

    Posted by Margo | May 11, 2011, 3:10 pm

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