By N. David Milder
My objective in this article is to strongly suggest that many downtown leaders and EDOs should adopt a new way of thinking about business recruitment, especially retailers. They should focus far more on attracting talented people – even those not in Richard Florida’s creative class occupations — than companies. This is especially true for, though certainly not limited to, those in many attractive suburbs as well as in towns and cities with populations under around 35,000 that lack trade area populations over about 70,000. The critical asset they should market is the high quality-of-life (QofL) offered in their communities and/or their surrounding regions. Many will have stronger QofL assets than they might first think. For any downtown that must focus on independent operators, a QofL-based recruitment program is definitely the way to go.
Strangely under recognized and under appreciated by EDO-run retail recruitment programs, QofL long has been serving as an important natural factor that steers independent retailers and other small business operators to specific communities. For example, if you go to almost any popular suburban community and look closely at the independent owners of their retail establishments, you are bound to find several who live in the town or very close by. According to Deputy Mayor Nancy Adams of Maplewood, NJ, who also has managed downtowns in South Orange, Newark and Red Bank, about 15% to 20% of the town’s retailers live in the community. In its strongest commercial area, the picturesque and walkable Village, that number rises to about 40%. These folks bought homes in Maplewood essentially for very important QofL reasons such as terrific schools, sexual and racial tolerance, beautiful homes, a wonderful tree canopy, its residents’ strong sense of community, and a commuter rail station with direct access to Manhattan.
These communities can also have a significant number of residents who work at home. Many are telecommuters, artists and craftspeople. These “Lone Eagles” are relatively free to live anywhere in the nation where there are Internet access and adequate commuter airline or passenger rail access, yet they have selected these particular communities. In Maplewood, for example, about 6.7% –158% above the national average — of its residents who are in the workforce work at home. This suggests that the QofL assets these communities offer are important reasons why these people have chosen to live in them. The wealthiest Lone Eagles establish aeries in places such as Jackson, WY, Aspen, CO and Nantucket, MA, but others are strongly attracted to college towns such as Ithaca, NY and Boulder, CO, as well as to affluent suburbs such as Scarsdale and Briarcliff Manor in NY. Most are attracted to major metropolitan areas, though their presence in non chi-chi rural area is far from negligible. They also show how QofL considerations are often critical for independent business operators.
Quite surprisingly, few EDOs, be they in downtowns or not, have consciously designed and implemented recruitment programs that target potential individual business operators for QofL based pitches. That is probably because so many economic development pundits clearly maintain that if you want a lot of new jobs then you must look at the corporations and companies that have a lot of jobs and they care a whole lot more about such things as workforce stats than a potential location’s quality of life. This needs to change. First of all, the probability of small and medium-sized towns attracting new firms with lots of new jobs is actually pretty small. Even more importantly, we are focusing on retail recruitment and such efforts are seldom if ever undertaken to generate new jobs. Their usual objectives, by far, are to improve the type of retail being offered to local residents, while also improving the downtown’s attractiveness and image. Big firms and corporations are not required to achieve those objectives.
In pursuing this strategic vector, downtown leaders also need to be age and gender agnostic. Many of their best retail prospects may be women who are experienced in business, well educated, computer literate, Internet savvy, over 40 years old and looking for new lifestyles and careers. They also need to jettison any proclivity to focus mostly on hip young Millennials (while not forgetting them) and recognize that young creatives are not where most of today’s business start-ups are coming from. The really viable retail prospects and their spouses/partners probably are members of, or prepared to join, our nation’s growing workforce of contingent workers or they are looking to start their own new small companies. Moreover, they want to do this in geographic places that will best enable them to enjoy the lifestyles they prefer. They are very likely to first think about moving to a place they find most attractive and then look for a job or career near there that can help support their new lifestyles. Where they want to live is a critical question for QofL based business recruitment programs to learn and then leverage.
Properly Scoping Out the Retail Recruitment Problem in These Communities
The Barriers They Face Recruiting Retail Chains. These downtowns are usually hindered by a number of very strong factors when it comes to attracting national and strong regional retail chains:
- Their trade area populations are too small to attract GAFO retailers, though they are often large enough to attract restaurants, drugstores, convenience stores and other neighborhood type retail chains. This may be the result of large and very powerful commercial centers being close enough geographically to push in the town’s trade area boundaries or it may be that nearby mountains, rivers or lakes mean that substantial parts of the downtown’s potential trade area are sparsely populated.
- Their downtowns do not attract the level of auto and/or pedestrian traffic these chains look for
- They often lack a cluster of chain stores that the big chains like to be close to
- Very importantly, they often lack the appropriately sized “vanilla box” spaces that these chains look for
The Pivotal Importance of Small Independent Operators. If the downtowns in these communities want to attract GAFO retailers, then they will have to focus on small independent operators, small regional chains and some larger chains that specialize in smaller communities, though the smaller the community, the more it will likely have to rely on independent merchants.
Moreover, when we look at non-GAFO retailing and food services, e.g., McD’s, Dunkin Donuts, 7-Eleven, GNC, etc., the importance of the independent operators in these communities remains very high, even though those with populations of 5,000+ will typically be able to attract some well-known non-GAFO national and regional chains. Many of those chains’ locations are franchises, owned and managed by local independent operators.
The communities under discussion can offer some significant advantages to independent small retailers and restaurateurs:
- Many of their restaurants will not need to capture large market shares to survive
- Rents likely will be substantially lower than in larger communities
- Labor costs also probably will be lower
- In-town competition is likely to be relatively low.
It is also important to recognize that the small GAFO merchants in these downtowns do not need anywhere near the annual sales revenues required by the national chains to survive as businesses, while adequately supporting their own households. Many are leading prosperous lives with annual store sales that are no more than 40% or 50% of what a national chain would want from one of its stores.
But, Let’s Be Real and Recognize That While Small Merchants are Great, They Often Mean Big Problems. Despite their critical importance, the failure rate of new independent merchants is notoriously high. One might reasonably argue that the smaller the labor pool and retail base a community can tap, the less likely it is to develop successful merchants from its local population resources. Also, in my travels, I have frequently heard local shoppers and community leaders in these communities report that, while they were glad they had their small retail merchants and/or restaurants, they also strongly wished they were of significantly better quality. For these shoppers and leaders, better local retailers are seen as those who can provide bigger selections, higher quality merchandise and more value pricing.
As I have written previously, in my book Downtown Business Recruitment and elsewhere, the retail recruitment task of a downtown EDO should not be to just fill vacancies – natural market forces will eventually do that – but instead to attract stronger retail prospects who are both more likely to succeed and better able to run a high quality retail store or restaurant. (See: http://www.ndavidmilder.com/wp-content/uploads/2015/10/DANTHMilderBusinessRecruitmentAll.pdf)
Economic gardening programs capable of nurturing small independent retailers definitely have considerable potential value. However, my observations suggest that they must overcome some strong challenges:
- While by definition, half of any town’s small merchants will have under average abilities and performance, they, who most need outside technical assistance and education, are usually the most resistant to getting it and actually using it. They often simply lack the time. Also, their independence and desire to do things their way, traits that often underpin their entrepreneurial aspirations, too frequently also inures them to new business ideas and methods.
- Most of the downtown EDO’s in the communities under discussion lack the resources, interest and/or skill sets to mount an effective economic gardening program. I know of some very large BIDs that have put considerable resources into such a program, with little return to show for it. I have broached the possibility of such programs with several other downtown EDOs and their leaders simply shuddered at the thought, while dutifully acknowledging the need. At heart, a lot of them don’t like the prospect of working with small merchants who are in trouble or soon will be. This suggests that these programs might be best anchored in a larger geographic jurisdiction, such as the county, under a functionally dedicated agency umbrella.
Recruiting Retailers From the Outside.
One of the reasons for the interest in recruiting national and strong regional retail firms is that strategy brings in outsiders with proven retail skills who also usually have needed resources. Although I argued above that these communities are even far less likely to recruit GAFO chains today than they were a decade ago, I have observed over the past twenty odd years that they have been able to attract a significant number of individuals who opened some of their downtown’s most successful retail and restaurant operations. Here are some examples:
- Karen Allen Fiber Arts in downtown Great Barrington, MA, pop=7,104: In 2003, the well-known actress Karen Allen opened her own store in downtown Great Barrington. The shop sells, among other things, items Allen knits herself. She still takes on acting jobs as well. She was born in IL and lived all over the USA before deciding to live in Great Barrington because it would be a good place to raise her son.
Karen Allen in her shop in Great Barrington, MA
- Heron in Narrowsburg, NY, pop= 400 Paul Nanni, opened his restaurant in this small town near the Delaware river to escape “the constant stress that city chefs live with.” He said “the parking tickets alone would have driven me crazy.” (Many chefs and their families are locating to new towns based on quality of life factors. See, for example, http://www.nytimes.com/2013/08/14/dining/city-chefs-head-to-the-hudson-valley-lured-by-fresh-ingredients.html and http://www.nytimes.com/2010/02/17/dining/17amuse.html )
Fruition Fineries window in downtown Rutland, VT
- Fruition Fineries, Raw Honey Apparel in downtown Rutland, VT, pop= 16,495: Rebecca Buonadonna, who grew up in nearby Mendon, left the area after graduating from high school. She resided in MA for 17 years, where she opened and eventually sold a business she had founded there. She returned to the Rutland area to marry and was happy to live again in her hometown. She then realized she would have to create a new business. The success of Fruition Fineries was followed, a few years later, by the opening of Raw Honey Apparel.
- Tattersall’s in downtown Rutland, VT, pop= 16,495: The following is from Christine Tattersall, the owner of this apparel shop, and is quoted directly from its website: “My husband, Bill, and I made our first visit to Vermont in 1969…to the beautiful little town of Grafton…where we immediately fell in love with the town, and with Vermont. We visited Grafton every year since that time, usually in the fall, and gradually began to feel more like Vermonters… and less like folks from Connecticut, where we lived at the time. So, in 1990, after deciding that if we really were Vermonters (we know that no one is a true Vermonter unless you are something like 10th generation, but that doesn’t stop us from feeling like Vermonters) we bought our home in Grafton as a weekend and vacation home. By 1995, Bill had retired, and I was seeking new challenges. Colleagues in Connecticut suggested that Rutland would be a good place to start a clothing store, and have a business with my name on the storefront. At the time I was the manager of a retail store that catered to runners and outdoors people, so I felt I had the experience to run my own business.”
Tattersall’s in downtown Rutland, VT
The Graham & Co Hotel in Phoenicia, NY
- The Graham & Co Hotel in Phoenicia, NY, pop= 309. This small hotel was opened by four “creative class” types from Brooklyn, NY who were looking for a more rewarding and relaxed lifestyle. Hipness apparently may become tiresome and boring.
What all of these entrepreneurs have in common is a desire to change their lifestyles by moving to a different kind of geographic location that maximizes the lifestyle opportunities they prefer and/or taking up a new type of career. They also share having abundant business related and professional skills. All also were able to raise the funds needed to successfully establish their new ventures.
To my mind, many downtown retail recruitment efforts would be enormously more effective if they could attract more of these lifestyle rebooters. In these downtowns, there may be 100 to 200 shops, though far fewer will be in retail. These downtowns will be durable if among their retailers there is a quality core of about 10 really strong and attractive shops. A retail recruitment effort that can add to this core group just one new strong retailer each year, or even every other year, may not seem, at first, as such a big deal, but when viewed over a 10 year period, the potential percentage growth can indeed be impressive.
What Does Quality of Life Include and Where Can Its Assets be Located?
A strong quality of life can be associated with a wide variety of assets. The beauty of a geographic place, its surroundings, public buildings and homes. It can also include the opportunities a place has to engage in athletic activities, attend cultural events and enjoy great restaurants. Additionally, it can include a low crime rate, good schools, great commuter rail access, a walkable and lively downtown, and nearby first-rate medical facilities. Less noticed, but often pivotal in residential location decisions are an area’s social tolerance and acceptance of strangers and the existence of an ethnic, racial or sexual sub-community ready to welcome new members. Some people prefer fast paced large cities with dense populations and numerous opportunities to engage in recreational and leisure time activities, others prefer slower paced, small rural communities, while still others prefer suburban living, where detached single family homes are cornerstones of a distinctive lifestyle.
There Are Lots of QofL Opportunities for All Types of Communities. There are lots of ways for a community to have a very desirable quality of life and there usually are significant numbers of people who are likely to enjoy or highly value those assets.
This is amply demonstrated by some large national surveys that show the types of communities – urban, suburban or small town rural — where Americans now live and where they would like to live. The table above was created by Trulia based on its survey of 2,000+ respondents. Its findings about where Americans want to live are very consistent with those of two similarly large telephone surveys done for the National Association of Realtors Smart Growth studies. Most Americans, today, still prefer living in a suburban area, but 22% prefer urban living and 28% prefer small towns and rural areas. Converting some of those percentages into population numbers helps convey fully the survey’s findings:
- 28% means that about 69.3 million American adults prefer living in rural areas. That’s greater than the entire population of the UK or Italy
- About 7% or 17.3 million American adults would like to live in a rural area, but now don’t. That’s greater than the entire population of Greece, Hungary or Sweden.
For many years, it was conventional wisdom that Millennials were all flocking to hipster urban areas. However, many more recent studies have found this is not the case. For example, one of these studies found that most of today’s Millennials (those between the ages of 18 and 34) want to live in suburban areas or small towns and rural areas:
- 37 percent want to live in cities
- 36 percent prefer the suburbs
- 23 percent want to live in small towns and rural areas. See: http://www.pamplinmedia.com/pt/9-news/257884-127741-study-most-millennials-want-to-live-in-burbs-small-town
True, a substantially greater number of Millennials, 37%, prefer urban living, than does the general population, 22%, but other evidence suggests that this preference may be in flux as Millennials, nest and have children.
Your Downtown or Community Does Not Have to be the Location of All QofL Assets. The QofL assets that helps a downtown attract a new retail operator do not have to be in that downtown or even the surrounding community, but they then need to be in the surrounding region, within about a 30 minute drive. For example, the retail operators in a place like downtown Rutland, VT, may live in one of the many smaller nearby communities, e.g., Mendon, Killington. Retail operators were drawn to downtown Laramie, WY, but the wide array of attractive places to ski, snow board, bike, rock climb, fly fish, hunt, etc., that helped lure them to the city are all about a 30 to 40 minute ride away.
Looking at Those Most Likely to Have QofL Concerns Shape Their Business Locational Decisions
While the number of QofL seeking potential retail prospects may be relatively modest, the number of people with very serious QofL concerns is significantly larger. In my opinion, a retail recruitment effort will be most successful if it is embedded in a broader business recruitment effort aimed at all QofL prospects:
- Since QofL concerns are the first key filter for identifying potential retail prospects, a lot of prospects for other types of business ventures probably will also be identified. It would be insane for an EDO to ignore these prospects
- Their attraction means more skilled people moving into a town or its region and, consequently, probably more savvy shoppers
- Their growth and clustering can make a town even more attractive to others like themselves and to retailers
- Among this group of QofL prospects will be those with an established desire to open a retail operation, others that will come to that conclusion after moving to their new communities, and still others whose spouses or partners will end up wanting to open a retail shop or restaurant. A successful QofL retail recruitment program needs to identify each of these types of people and then facilitate their successfully opening a retail or restaurant operation.
Let’s take a look at the folks who are likely to have strong QofL concerns.
Knowledge Workers/Creatives One of the things that both Richard Florida and Joel Kotkin point out is that today’s creatives/knowledge workers tend to put lifestyle opportunities ahead of job opportunities. This may mean that they move to where they want to live and then find a job or that they will not accept a job offer in a place with unacceptable lifestyle opportunities. While it is doubtful that many of them, while relatively young, would want to be traditional brick and mortar retailers:
- They may be interested in an omni channel approach to a new retail venture that would include a brick and mortar store
- Their spouses/partners might be interested in opening a brick and mortar retail shop, bar or restaurant.
Rebooters. My buddy, Phil Burgess is a frequently astute observer of economic and social trends. He has given monikers to two of these groups, the “Lone Eagles” and the “Booters” (I usually lapse into calling them Rebooters – sorry Phil).
According to Phil, Booters are Baby Boomers who are now taking on new careers and often also moving to different geographic regions (see http://www.booternation.com/). An important indicator of this is that according to a Kauffman Foundation report, the 55- to 64-year-old age group accounts for 25.8% of new entrepreneurs in 2014, compared to 14.8% in 1996. These Boomers also have a slightly higher level of entrepreneurial activity than the 20 to 34 year old group, which accounted for 24.7%. See: http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and%20covers/2015/05/kauffman_index_startup_activity_national_trends_2015.pdf
These Boomers may have active rebooted careers well into their late 70s or early 80s.
As reported online by US NEWS, according to an AARP expert on financial security, the fastest-growing age group of folks who are starting their own business are boomers and they generally fall into one of two categories. Those who are launching a new business because they need the money, and those who are looking for something interesting and satisfying to do during retirement. In the first, they’ve been laid off during a recession, aren’t finding a new job and see entrepreneurship as a way to start earning income again. The second group is already relatively financially secure, but they expect to live a long life, and they don’t want to just ‘sit on the porch and play golf. That group is looking into small business ownership as a second career. See: http://money.usnews.com/money/personal-finance/articles/2014/03/26/why-so-many-seniors-are-launching-businesses And that’s the kind of Boomers business recruitment programs should try to identify and cultivate.
While aging in place is still gaining traction, after a Great Recession induced hiatus, Boomers as they retire are moving again. They are not only looking to downsize their homes, which are now marketable, but also moving to less expensive states and smaller cities. See: http://money.usnews.com/money/blogs/on-retirement/2015/12/07/why-retirees-are-moving-again
Others With QofL Mismatches. While Burgess has focused on Baby Boomers, the examples I provided above of retailers and chefs who moved for quality of life reasons suggest that even those who are younger than Boomers, some with new young families, are rebooting their lifestyles, if not always their careers, and moving to new places.
All of those who are now living in a type of community (e.g., urban or suburban) and would prefer living in another type of community (e.g., rural and small town) are mismatches that generate potential prospects for QofL business recruitment programs.
What Might a QofL Retail Recruitment Program Look Like?
The following ideas are intentionally broad brush, meant to be suggestive rather than definitive. They were shaped by a desire to keep the program simple, affordable and focused on what can be done locally, often leveraging local assets. The only kind of travel involved would be electronic via the Internet. They are also informed by my professional experience which found that people are much more likely to undertake important changes, if someone or some organization can make it much easier for them to implement those changes.
Identify Who Might Want to Live in or Near Your Community. This is the critical first step. Over the years, I have noticed that the rebooting merchants who relocated to new communities followed a definite pattern: they visited their new community often as tourists or to see family prior to moving there. Some of these merchants were returning to the towns where they were had grown up.
Some research DANTH, Inc. did a few years in Gering, NE (population about 8,500) shows what some important characteristics of such tourist flows can look like. Importantly, each year Scotts Bluff County has a stream of leisure tourists who are prone to being empty nesters, on average are about 51 years old, college educated and have annual household incomes averaging over $83,000 a year. Moreover, these people are interested in the history of the Oregon and Mormon Trails that run through Gering and they appreciate small town lifestyles. DANTH estimated that, among Gering’s hotel guests, in 2012 there were over 900 leisure tourists with annual household incomes over $75,000. Many more probably were to be found among the Scotts Bluff National Monuments 122,000 annual visitors, most of whom must drive through Gering’s downtown, as well as the leisure travelers staying in numerous hotels in Gering’s twin city, Scottsbluff. Given these numbers, what probability would you say a Gering QofL retail recruitment program had of attracting one merchant a year or every other year?
The best way to reach out to people who are passing through your town either as day tourists or overnight tourists is while they are in places where they enjoy the area’s amenities: their hotels, ski lodges, restaurants, marinas, parks, theaters, cinemas, etc.
However, the residents of the local community and even of its surrounding region should not be forgotten. They should be messaged to reach out to their relatives to return home and open retail businesses. Brief letters containing the message should be sent, via email or snail mail, to the alumni of local high schools and colleges. For example, Seymour, NE, contacted high school alums to find people who would purchase and restore its large inventory of Victorian homes.
The message to send is: if you like this wonderful place, why don’t you think of living here or opening a business here. Interested, we can help. Contact ABCDEF at 800-123-4567 or at some email address.
The messages might be communicated via your local hotel’s in house TV channels or in signs in local restaurants, bars, shops, real estate brokerage offices, near ATMs, etc. Messages also could be attached to bills in these establishments
A good website and/or Facebook pages can be helpful for people who live outside of your community’s region and who have not visited it. The website needs first to pitch your community’s quality of life assets to encourage visits. The website also should provide a lot of the standard business recruitment information that traditional business recruitment programs have on their webpages.
Following Up With The “Interested” And Contacting New Residents In Your Town And Region. At the initial level, the recruitment program is focused on identifying new residential prospects for your town and/or region. For most communities, new residents, especially those who are likely to bring in new skills and spending power, is a pretty good thing. But, the QofL retail recruitment program needs to then proceed by taking these new residential prospects and identifying those who also are interested in opening a new business, hopefully including some new retail shops. Most importantly, it then needs to help them establish those new businesses by making their start up processes as easy as possible.
If the initial outreach to visitors has any success, then some should be contacting the recruitment program’s staff. It is at that point that the possibility of opening a local business should be raised. Suggesting a retail operation, especially if there has been some credible market research to identify the types of retail operations most likely to be viable locally, clearly would be in order.
The role of the recruitment program’s staff then becomes one of providing the newly identified retail prospect with relevant information and networking the prospect to other key actors who either might be of help or whose approvals would be required. For example:
- Info about available retail spaces and prevailing retail rents
- Introductions to commercial brokers and landlords
- Information about the area’s demographics, traffic levels and parking, purchasing patterns and purchasing power, other downtown retailers, competitive retail centers
- Introductions to the local SBDC and SCORE
- Introductions to local banks
- Info about any relevant incentive programs
- Info about the town’s permissions and approvals process and introductions to its key actors.
This should not be a burden for any fairly effective EDOs, since they probably have been already providing such assistance to walk-in prospects for many years. In an important sense, a QofL business recruitment program is just a way to increase those walk-ins as well as their rate of successfully starting a business.
It is also helpful to recognize that new residents may have arrived on their own, independent of the QofL program’s actions. They, too, should be contacted to inquire about their interests in establishing a new business.
Some Suggested Take-Aways
- Recruiting independent business operators, especially small merchants, is quite different from recruiting larger companies and corporations.
- Quality of life factors have long played a powerful and organic role in determining where many of these individuals and their households would reside and operate their businesses.
- A significant number of downtown retailers and Lone Eagles , in communities with populations under 35,000, already have made their locational decisions based on QofL considerations.
- A QofL retail recruitment program aims at meaningfully increasing these numbers through simple marketing techniques.
- Competent EDOs will already have appropriate protocols for handling walk-in independent business prospects. They should be easily applicable to the increased walk-ins stimulated by a QofL retail recruitment program.