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: .

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