How To Retail Small Markets
How To Retail Small Markets
Written by Rickey Hayes, Retail Attractions, LLC
Our company has had the opportunity and good fortune to have been able to work in over 330 cities in 35 states since we started in 2007. We have worked in large, urban markets from New York City to Los Angeles as well as medium markets from Mandan, North Dakota to the lovely City of McAllen, Texas on the Rio Grand River. While a lot of this work has been in the role of a consultant directly contracted to a local municipality, much of it has also been work for a developer, a franchise owner, or a retailer or restaurant asking us to do a specific scope of work in a local market. While working in large and medium size markets, there is an expectation of actually being able to see new private sector investment materializing and actual brick and mortar coming out of the ground. Consumer groups are readily identifiable, disposable income is easy to see, and retail tenants are aggressive to find a home. It’s fun work. The much harder job is to recruit retail interest and private sector investment in smaller markets. And the facts are that there are a bunch more smaller communities that are under-retailed, and that getting that job done takes a lot more work and patience. It can still be done, but it takes longer, and requires certain crucial steps be accomplished through the process. I want to address the issues that small market cities face, and how to overcome some of those obstacles.
Before we start, let me say a couple of things. No matter what size market you find yourself in, having at least a basic understanding of how retail growth works, and the common ingredients in any retail deal is crucial. Secondly, the smaller the market, the more creative the community needs to become. Both of these foundational truths will be covered in more detail as we proceed.
Common Considerations For Retail Growth in Any Market:
· Market Data: Having correct and up to date information on your city: your trade area, your people (including those who live in your community, and those that come to buy goods and services), your real estate, and information on your regulatory climate and your willingness to partner with the private sector is essential. [* know that data is just numbers unless you have a story, and it (the data) may be harmful, especially if your market is small.]
· Population Growth in the Market: There is no surer way to attract private sector investment in your community than new residential growth, or the evidence that your city needs and can accommodate new residential development.
· Other pertinent info to share, like disposable income and traffic counts, and destination points where large volumes of potential consumers come into the market are all critical for small markets to broadcast.
In order to bring new retail and restaurant development and for that matter any new private sector investment into a small (or smaller) market, the key thing to understand is that from the perspective of the retail or restaurant tenant, whether they are corporate or franchise driven, they probably will have multiple other opportunities in stronger markets than yours. That is the reason that smaller markets, and those administrative and elected officials that want to increase their revenues have to be willing to do something different, to consider some other angle, offer some other reason to get the folks who make the retail decisions to pay attention to your specific situation.
I have had the pleasure of seeing some success stories in smaller markets and that is probably the most fulfilling part of our work. Many times the smaller the market the greater the impact from the development of new retail. In small markets, the more innovative the city is the better. At a minimum, I would suggest that if your city is a small market, city leaders should at the very least look at some way to identify, option, and control the real estate dynamic, especially sites that could, in any way, be considered commercial. Whoever controls the real estate controls the future development of your community. Two other things will help as well, first get professional marketing pieces done on all the commercial sites, and then, if possible, city administration should develop a “one stop shop” mentality in terms of entitlements, annexation, platting, site plan review, etc. to save developers as much time as possible.
I have experienced retail development in many different settings. It’s really fun when a city has all the right stuff going for it. This happened in Owasso, Ok shortly after 2002, and we experienced a tsunami of retail. It came in huge waves. But it still took more than a decade to get it all done. And I mean everything was right in Owasso: residential growth was off the charts, retailers were wildly aggressive, banks would loan money for a retail deal at the drop of a hat, and the city had big household incomes and stellar demographics. Still took ten years to get the market retailed. So small market communities should definitely be extremely patient, and let a qualified company like Retail Attractions market them to the private sector. It will save you time and a lot of money and effort. But know going in that it will take a long time. One of the most frustrating parts of my work is the job of educating city councilors about how long it takes. When you see a new retail deal under construction somewhere, you can know without a doubt that, even with an accelerated effort and timeline, some poor soul has been working hard to make that deal a reality for at least a couple of years in most cases.
It is also worth mentioning that the smaller the market the more hesitant the retailers and developers are in meeting with you. This is not really about anything other than the fact that most of the retail and restaurant tenants that are growing have already identified “growth markets” and they have to be educated to all the extenuating circumstances, and the “rest of the story” that makes your small market viable. This is what the real basis of Retail Attractions scope of work entails. Bringing the real story of your market to the retail world is what we do every day. We are known and respected by those who develop and the tenants they build for. And the good news is our relationships have grown every month we’ve been in business.
Call us. We can help. Office (918) 376-6707 or cell (918) 629-6066
Rickey Hayes is the principal of Retail Attractions, LLC, a firm dedicated to helping cities and developers successfully find and develop retail sites, close deals, transform communities, and improve the quality of life for our client cities.