Author Archives: DANTH

Some Thoughts on the Economic Revitalization of Small Town Downtowns

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Posted by: N. David Milder, DANTH, Inc. and Andrew Dane, Short Elliott Hendrickson Inc.

Introduction

Discussions about the traits of strong downtowns and what makes them succeed usually focus on larger cities such as Vancouver, BC, Portland, OR, New York, NY or Charleston, SC. However, a lot can also be learned by looking at things on a smaller scale. This happened to the authors, when we recently looked at downtowns in two small Wisconsin communities. What we learned from them is applicable to many other communities of comparable size.

Our experiences in these two communities certainly confirmed that two basic and broadly held revitalization tenets are just as applicable to small communities as they are to large ones: the need for a comprehensive approach to downtown revitalization and the need to focus on leveraging existing assets. The focus here will be on three other topics that evidence these tenets and deserve our attention:

  • The surprisingly complex economic development challenges that many small downtowns typically face
  • Providing jobs, especially in more rural areas, is a chronic and seemingly intractable problem
  • These small communities too often lack the resources and full range of professionals to initiate and manage broad economic changes.

For the Village of Sherwood, WI, a fast growing community on the fringe of the Appleton MSA, DANTH, Inc. joined a Short Elliott Hendrickson Inc. (SEH) team to produce a comprehensive downtown market analysis and strategy. (1) Village X is a small rural community with a population of about 1,000 in northwestern WI.  Here SEH and DANTH teamed up to prepare a project proposal to submit to this village. Since Village X is still seeking funding for the project, it will remain anonymous in this article.

Small Does Not Mean Simple

Surprisingly Complex Economies and Analytical Needs.  Sherwood is basically a bedroom community with a population of only 2,700. Still we had to analyze the markets for many economic functions, even if their current strength and potential growth were relatively small. Given Sherwood’s recent population growth, the housing market was a very important potential growth engine. The impact of the Great Recession meant that we had to look closely at such factors as vacancies, new construction, foreclosures, underwater mortgages and the affordability of mortgages on both the local and regional levels. We also had to assess various forecasts of housing construction on the local and regional levels. Our analysis of regional housing trends showed a significant shift toward multi-unit structures, and we used that finding to underpin one of our most important recommendations for revitalizing the downtown. Because of its close connection to housing, we also had to take a close look at regional employment trends.

A concern about retail, especially the feasibility of a new grocery store, had motivated the Village to conduct the study. While our market analysis covered the entire retail sector, we did a de facto market feasibility study for a new grocery store. Defining Sherwood’s trade area was a challenge, given its weak retail and lack of retailer customer information. We defined the trade area based on a number of factors, the most important being where people lived, the size and location of competing retailers, commuting patterns and the locations of entertainment, government and medical functions. A lot of time was spent on identifying the competition, because the relevant data available from private market research data firms was inadequate. We also spent a good deal of time finding comparable communities that would inform our analysis. While the idea is simple, the process of establishing the dimensions on which the comparability is to be based and then filtering communities to find those that match is not. Our analysis also paid a good deal of attention to demonstrating which types of retailing a town with a trade area of Sherwood’s size could reasonably expect to attract. Because Sherwood abuts High Cliff State Park, we also had to estimate the retail market potentials that its visitors brought into the area.

We also took a close look at office growth potential because so much of the new retail seemed destined for a growing highway corridor node and the downtown badly needed other economic functions it could capture to build its revival on. Encouragement for this effort came from a focus group meeting where it was reported that a local resident was considering moving his office based company to Sherwood. Further complicating the analysis, a business prospect interested in opening a daycare center in the Village led us to do a market feasibility analysis for it as well.

When we turned to the really rural Village X, we again found an economy with numerous economic components and related markets that would have to be analyzed:

  •  Retail and restaurants
  •  Personal services
  •  Educational facilities
  •  A medical clinic
  •  A seniors’ home
  •  A high tech manufacturer

These two communities may have relatively small economies, but they are neither simple in operation nor in the tools needed to analyze them.

Complex Land Use and Transportation Issues. Even more surprising than the number of markets we had to investigate in Sherwood and the depth of the analyses they required were the complex land use and transportation issues that were hurting the downtown:

  • A high degree of dispersion that might be more readily expected in a larger, more urban community. Even with its small population, Sherwood has four commercial nodes including a growing highway node that intercepts a lot of residents before they reach the downtown and where significant new businesses want to locate, e.g. a supermarket, a childcare center, restaurants. There is really poor economic agglomeration, and in a small economy economic assets benefit even more from agglomeration
  • The downtown is “unfriendly” to pedestrians – it lacks “walkability.” It has significant traffic with lots of trucks. It lacks a solid building wall front and adequate parking spaces. Many of its businesses are closed to shoppers during the day
  • An inability to benefit from a nearby “captive market.” Access to an abutting popular state park was changed so visitors no longer had to drive through the downtown – or Sherwood
  • An underdeveloped local roadway system that does not bring residents in newer parts of town naturally to the downtown. Also, the State recently proposed a highway expansion through the heart of downtown, which would have demolished several businesses and undermined what little pedestrian activity currently exists.

Similarly in Village X, our team found a number of complex land use and transportation issues to address. However, unlike Sherwood, which faces growing pains associated with exurban growth, Village X is facing strong, complex and seemingly intractable challenges, characteristic of other small, often more rural communities and their downtowns:

  • Its region is sparsely populated and has little or no growth
  • The regional economy has long been problematic
  •  Attracting or creating firms that can provide new jobs is tough.

Many smaller communities across the U.S. are facing challenges similar to Sherwood, WI, and Village X.  Our take aways from working on these two small communities: their economic issues are neither simple to analyze nor of little impact and finding viable solutions to them can not be expected to be easy. On the contrary, effective economic development strategies for smaller downtowns require holistic approaches informed by customized market analysis and an understanding of how land use, transportation, regional forces and demographics influence downtown development potential. Given their available resources, they may consequently need to enter into cooperative agreements with other nearby communities where they can aggregate and share resources, personnel and/or organizations.

The Chronic Problem of Finding Jobs for Small Rural Communities – An attempt to think outside the box

The Challenge. The economic problem with rural America is not that people no longer want to live in small towns and rural areas. For example, a survey done in 2011 for the National Association of Realtors found that among respondents from the Midwest, 19% preferred living in small towns and 23% in rural areas. (2) The problem is that rural areas are losing jobs and cannot attract new companies that will bring in new jobs. It is the lack of employment opportunities that underlies the depopulation of our rural areas. Since labor force size and skills are often key variables in business locational decisions, the situation seems to be one of a perpetual downward spiral. The challenge in Village X is how to keep it from falling into this downward spiral.

Getting Around the Jobs Problem, Strategically, many experts have advocated the importance of leveraging existing local assets to bootstrap or pump prime growth. Following this broad strategic thrust, our assessment of the situation in Village X suggested that if attracting job-producing firms is the problem, then perhaps significant population growth might occur by attracting people who like living in small rural towns, but who do not need jobs to be provided for them. They would include those who:

  • Do not need jobs
  • Bring their jobs with them
  • Or create their own jobs.

Indeed, a recent report found that self-employment already is more prevalent in rural Wisconsin than in urban areas and growing:

“In the period from 2000 to 2010, rural wage and salary jobs decreased by over 22,000 (-2.6%). Conversely, there was a significant jump in self-employment jobs, well over 45,000 (+ 18.7%)….” (3)

 Boomers provide a number of different possibilities. The 50+ age segment is 100 million strong and will expand 34% by 2030. They control 70% of the nation’s disposable income. (4) Superior, NE, for example, lured back former residents who were retiring, an effort that was strengthened by the town’s cluster of available and attractive Victorian homes.  Many other retirees who now live in urban areas may want to spend the last part of their lives in rural areas similar to those where they grew up.

Many of these Boomers either will not want to retire completely or cannot afford to do so, and they consequently “reboot” into new careers. (5) The Internet means that many of them can engage in new careers that are not tied to a specific geographic location. For example, one study of people engaged in crafts and art businesses in Northwestern Wisconsin found that:

  • 20.8% of them were retired
  • 62% of the craftspersons used a computer and among the computer users 67% had a website.(6) This study was done in 2006, and it is very reasonable to expect that the computer/Internet usage rate only has increased since then.

There are also some non-boomer market segments that small rural towns might try to tap. For example, Phil Burgess and Joel Kotkin have independently described business operators of all ages who can take such strong advantage of the Internet and telecommunications that they are free to locate their firms in communities that maximize the quality of life attributes they most prize.(7) Burgess calls them Lone Eagles and Kotkin sees them dwelling in scenic Valhalla communities. Some years ago a field to the Rutland /Killington, VT area found several residents who were managing investment funds in NYC or building websites or providing graphic services for clients mainly based in that city.

Second homeowners are another market segment some small rural communities might target.

To tap into all of these potential markets small rural towns will benefit from leveraging such assets as:

  • Lakes, rivers, streams, forests and other scenic venues
  • Adequate healthcare facilities within a reasonable traveling time
  • An attractive housing stock
  • An attractive and walkable “Main Street” commercial area
  • A satisfactory “pipe” linking it to the Internet
  • Existing economic niches/clusters.

This approach to getting around the rural jobs problem is an unlikely cure all, but it may be an effective pump-priming strategy in some towns and even more potent in communities blessed with many of the above described assets.

Organizing for Economic Development

Unlike many larger communities, smaller communities often lack the resources and full range of professionals to address the complex challenges they face, including downtown revitalization.  It is not an exaggeration to say that, in many of the smaller communities the authors have worked with, the Village Administrator literally does serve as the town dog catcher, in addition to providing administrative duties, planning, zoning, permitting and many other services.

Consequently, even professionally managed communities have little resources or attention to sufficiently address complex economic development, land use and transportation challenges.

In response, smaller communities across the U.S. turn to a variety of approaches to identify and pursue downtown development strategies.  Successful programs are put in place by either a single organization focused on the downtown or multiple organizations working together (8).  A brief discussion of possible approaches follows below.

Main Street Associations. Many smaller downtowns in the U.S. are affiliated with the National Trust for Historic Preservation’s National Main Street Center. Local Main Street programs focus on downtowns following a four-point approach: 1) Organization; 2) Design; 3) Economic Restructuring and 4) Promotion. Main Street programs emphasize historic preservation and often receive some level of technical expertise and organizational development assistance through their affiliation with statewide Main Street programs. Main Street programs typically involve a broad range of stakeholders to accomplish their mission.

Business Networks. They can take a variety of shapes. Some are structured independently and some are affiliated with larger networks, such as BALLE, the Business Alliance for Local Living Economies. Business networks may arise to address specific issues and then disappear. For example, many business networks have formed over the past decade to put into place “Buy Local” programs across the United States (9).

Circuit Rider Programs and Consortiums.  Smaller communities may turn to circuit rider programs to staff local development initiatives, research opportunities, write grants and recruit developers and businesses. Such programs provide a shared resource for multiple communities at a lower cost when compared to hiring a full time staff person for a single community. In Sherwood, WI, for example, there may be a logical opportunity for similarly situated communities on the eastern shore of Lake Winnebago to support a circuit rider program.

In other instances, small communities have formed “consortiums” to handle joint projects that none of them could afford to undertake by themselves. For example, such a consortium in northwestern Connecticut produced a retail market research study that all of its members could use.

Economic Development Organizations. As a result of economic decline, many smaller communities have formed development organizations specifically focused on promoting economic development. Historically, many of these focused on luring branch plants or attracting other forms of outside development to increase the local tax base. More recently, focus has turned toward more endogenous growth strategies including supporting local entrepreneurs and home grown businesses.  While most EDCs focus the bulk of their attention outside the “downtown” areas within their communities, many of these organizations have a committee in place focused specifically on downtown issues often including parades or other larger events.

Like EDCs, Chambers of Commerce are often not explicitly focused on downtown development. They may support downtown development efforts through a variety of activities and programs, however most Chambers are set up to serve their members’ interests primarily, and often these interests include businesses located well outside the downtown area within the City or Village.

There are a number of organizational options for smaller communities to revitalize their downtowns.  Each has its own strengths and weaknesses, and smaller communities should tailor an approach that fits their unique situation.

Conclusions

In communities large and small, downtown revitalization is always difficult.  However, it may be most difficult in small downtowns. Smaller communities have fewer resources available to adequately assess their current conditions and develop appropriate strategies.  Far too often, they lack a real strategy and pin their hopes for revitalizing their downtowns on just beautification projects, events, and “wishful thinking.”  Developing a strong understanding of the local economy is a necessary step toward formulating a successful downtown revitalization strategy.

Beyond resources, smaller towns face a number of additional challenges. They are typically much less dense than larger cities, have poor destination accessibility (aren’t located near other frequently visited destinations), lack a sufficiently diverse business mix to leverage or develop niches around and often suffer from state highway decision making that routes traffic out of their downtowns.

Faster growing exurban communities face additional downtown challenges including poor street design and connectivity, lack of civic gathering spaces and weak community identity.

In exurban and more rural downtowns, jobs creation remains a critical issue, although the Internet, the behaviors of the baby boomers and a number of other trends may provide new paths for stimulating rural population and job growth.

Dealing with all of these issues requires a comprehensive approach to planning and adequate financial, skilled personnel and organizational resources for plan/strategy implementation. To develop a sound strategy as well as for effective implementation, smaller communities will need to seek out external resources. One promising path is to leverage their limited resources by working with other nearby communities and sharing resources.

Endnotes

1. https://www.ndavidmilder.com/wp-content/uploads/2012/05/Market-Strategy-FINAL.pdf

2. Belden Russonello & Stewart LLC, “The 2011 Community Preference Survey: What Americans are looking for when deciding where to live”, Analysis of a survey of 2,071 American adults nationally conducted for the National Association of Realtors. March 2011, p. 17

3. Wisconsin Rural Partners, Rural Wisconsin Today, Spring 2013, pp.41, p3

4. The Nielsen Company & BoomAgers LLC, Introducing Boomers: Marketing’s Most Valuable Generation, 2012, pp.16

5. See Phil Burgess’s blog www.BooterNation.com

6.  Jerry Hembd and Andrew Dane, Craftspersons and Artists in Northwest Wisconsin: Putting a Face on a Creative Industry, Research Report December 2006, Northern Center for Community and Economic Development, University of Wisconsin-Superior/Extension, pp.24

7. See: Philip M. Burgess, “Lone Eagles Are a Varied Species”, The Rocky Mountain News, April 12, 1994 and Joel Kotkin, THE NEW GEOGRAPHY: How The Digital Revolution Is Reshaping The American Landscape, Random House Digital, Inc., 2001, Pp.242

8. Walker, Philip L. Downtown Planning for Smaller and Midsized Communities. Chicago, IL: APA Planners Press, 2009. Pages 171-178. Print

9. See: Article here

Helping Independent Downtown Merchants Engage Effectively In E-Marketing: Part 2

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Introduction

This is the second of a two part article. Part 1 can be found at http://tinyurl.com/bxhdx8a

Over the past year, DANTH Inc. has experimented with such social media as Facebook, LinkedIn, Twitter and Pinterest and revamped our website, blog  and email program. To support this effort we did a lot of research on what the various e-marketing tools do best and the challenges small firms like ours have in using them. In this two-part article I would like to share with the downtown revitalization community what we learned from our e-marketing overhaul, so that more independent downtown merchants (e.g., retailers and restaurateurs) might make an effective transition to e-commerce.

What we learned was the importance of an analytical process able to identify the e-marketing tools that will most effectively use an organization’s scarce resources to achieve critical marketing objectives. This process:

  • Starts off by looking at and prioritizing the organization’s marketing objectives
  • Then matches them with the e-marketing tools (e.g., website, emails, Twitter, Facebook, blog, etc.) that can best achieve each of those objectives. These two topics were covered in Part 1
  • And next selects those objective-matching tools that  can be implemented, because the organization has the required financial resources and either has or can acquire the needed skilled employees. This topic will be covered here in Part 2.

Selecting the objective-matching tools that  can be implemented, because the organization has or can hire the required resources

The types of resources required to use a particular e-marketing tool will vary by the package of objectives it is targeted to achieve and the amount and complexity of the usages that are required to achieve them. In my field observations, this is the second area where small merchants are likely to encounter problems — or have them made by consultants who just focus on the mechanics of using the e-marketing tools with which they are enthralled.

In Part 1, I argued that “being found” online is probably the e-marketing objective most independent downtown merchants should focus on first. The initial inclination of these merchants – or their formal or informal “consultants” – might be to create a complex website with many pages, a full catalog of its merchandise, a matching e-store purchasing capability and to fill the site with lots of short marketing movies. Nonetheless, many small firms plainly lack the resources for such a robust effort and, more importantly, they probably do not need it to accomplish their e-marketing objectives.

Here are three brief case studies DANTH encountered over the past few years to demonstrate this point

The High Effort E-Store For A Fast Food Shop. Last year, in a NYC neighborhood that had sustained impressive economic growth through the Great Recession, I interviewed a fast food operator in the 6-10 employees category, who was very interested in penetrating the rapidly growing nearby office worker and high rise residential markets. Though both market segments were strongly represented within a 5-minute walk of the eatery, neither accounted for many of the pedestrians passing by or entering its doors. The owner was interested in creating a website where office workers and residents could find and learn about the eatery and its menu, order from the menu and daily specials, have their orders charged to their credit cards, and have their food delivered to their workplaces or homes.

This small merchant was unaware of the intricacy and full costs of such an operation. He was expecting to pay consultants to set-up his website, merchandise basket and credit card charging. However, he did not foresee that he would also need:

  • Someone to update the “specials” daily on the website and to periodically keep the overall menu up to date. Updating and maintaining a website can easily eat up far more resources than creating it
  • Additional part-time employees to process the lunchtime orders
  • Additional part-time employees to deliver the ordered food
  • Someone to provide the copy for his website pages
  • Someone to provide the photos and other graphics for the website pages
  • To spend a lot more of his time and money  putting together the needed new team and then managing a complex new operation.

A year later, this small operator has no website, but has affiliated with a telephone-based service that takes orders and delivers food if customers know about the delivery service and call them. The eatery also does have a simple “name, rank and serial number” page on its BID’s website, a Facebook page with one like and no postings and is listed on a few special websites such as Foursquare. Right now, not much info is to be found on the web about this eatery. It still needs a much stronger “being found” on the web capability.

This could be accomplished by a modest website, without the e-store. It would successfully provide name and contact information as well as information about the menu and reasons to patronize this eatery. Such a website would provide an affordable and acceptably better, if not optimal, penetration of the office worker market. Website visitors, for example, could see the full menu and be invited to visit or phone the eatery to learn about and order the daily specials. An even simpler solution would be a substantial improvement of the information provided on the eatery’s BID web site page, combined with a campaign to get it listed on more special web pages.

The prime take aways from this case study are that:

  • Small merchants should be wary of complex uses of e-marketing tools that are beyond their resources
  • More modest deployments of these tools are often more viable and ultimately more effective
  • BID/SID web pages can be very useful for a small merchant if they do more than just provide the store’s name, contact information and business category. They need to also provide space for information about the shop’s merchandise and to tell the merchant’s story. This is the prime way that BIDs can help their merchant members gain a viable e-commerce presence.

The Low Effort Ice Cream Parlor. In Part 1 of this article, I mentioned a very popular ice cream parlor in a New York City neighborhood. It is a unique and highly regarded operation that has been around for over 50 years and, for decades before that, it was an ice cream parlor under a different owner and name. Today, it is “a functioning antique,” with an old soda fountain, tin ceiling and marble small tile floor. It makes its own ice cream and is famous for its fresh home-made whipped cream.

When I spoke to the owner about his e-marketing activities, he smiled, reporting that he knew nothing about such things, but his workers, most of whom are high school or college students, had created a Facebook page that gathered 8,000+ likes. He felt Facebook definitely had helped generate some additional sales. The shop occasionally offers special flavors only to its Facebook page visitors, with the young workers doing the postings, and they are always quickly sold out. The owner said, with another smile and shrug of his shoulders, that he would like to do more with Facebook, but…. My guess is that the shop was doing well enough that there was no great need now to do more online marketing.

Googling the shop’s name showed that this ice cream parlor had a lot more going for it than just its Facebook page.. The search showed that its authentic, old time story and favorable customer reviews and contact information were available on a whole slew of specialty web sites such as: google.com, plus.google.com, www.yelp.com, www.facebook.com, patch.com, newyork.seriouseats.com, www.zagat.com, www.urbanspoon.com, newyork.citysearch.com, untappedcities.com, www.tripadvisor.com, www.delivery.com, www.menupages.com, www.bridgeandtunnelclub.com, events.nydailynews.com, newyork.grubstreet.com, www.scooponcones.com, chowhound.chow.com, www.flickr.com. That these positive reviews were coming from customers and not the parlor’s ownership enhances their credibility and power.  Aside from the Facebook page, all the other listings, came about organically without any effort by the ice cream parlor owners or employees.

The net result is that this ice cream parlor, with little effort on its part, can be very easily found on the Internet and its story is certainly being told. The very nature of its limited menu means that people do not really need to know much about all the flavors to be convinced they should visit the shop. Consequently, it probably can do fairly well without its own website. On the other hand, given its ability to easily attract a significant number of Facebook likes, it also might easily garner many Twitter followers and  also use Tweets to inform followers of special flavors or coupons. It might then also use its Facebook and Twitter capabilities to further cultivate its existing store apostles –frequent customers who advocate a shop within their social networks– and garner new ones.

This ice cream parlor had very substantial name recognition and a bevy of store apostles well before or separate from any of its e-marketing activities. The strength of this non-electronic customer network substantially eased the challenge and costs of collecting 8,000 Facebook likes. A new ice cream parlor would need to expend a lot of resources to get enough Facebook likes to make its use worthwhile. The same is true of using Twitter. Indeed, one might ask if the use of these social media is cost effective for small merchants with say 30 transactions or less a day. Might they achieve the relationship building and customer service functions much more effectively and efficiently by focusing on face-to-face interactions? However, they still would need to be found online.

One thing the ice cream parlor owner probably should do is to have his young, Internet capable,  employees check their listings on the special web pages to make sure they are accurate and up to date. Research has shown that this is where most small businesses are apt to  fall down (1). Another thing he certainly needs to do is to keep hiring young employees who know how to use Facebook.

The prime take aways from this case study are that:

  • Strong small businesses that have been around for a while probably will have strong assets that can make their entry into e-marketing a lot easier than start-ups  or weaker operations
  • A robust easy-to-be –found on the Internet capability does not always require a complex website if the merchant has sufficient positive listings and reviews on the special website pages and a narrow range of products are offered
  • These special website pages are too often overlooked, especially by the food related operations that they so frequently cover and that account for such a high proportion of downtown businesses
  • Young, internet savvy, employees can often be a source of the internet related skills a small merchant lacks, but needs.

A Well-Calibrated Retail Website. A toy retailer has two brick and mortar stores in the Chicago suburbs and a very interesting website. The retailer quickly appears at the top of searches for toy stores in its two towns. Its website does not present a catalog of all of its toys, but has a page that shows all the toymaker brands it sells with their logos. It does not have an e-store that sells scads of different toy products online. Its e-store is limited to selling just one new toy a week. Customers can sign up to get the “new toy” newsletter each week via email. The website has short movies, one to two minutes long, for each of the new toys. The website shows that the “new toys” are sold out every week. That they are sold out so often strongly suggests that the retailer is building up a core of repeat purchasers. Repeat customers are the makings of a band of store apostles, a solid revenue stream and a strong word of mouth network.

The website reportedly was put together and is maintained by a relative of the store’s owner who is skilled in developing websites.

It also has a Facebook page that has garnered 604 likes. People in the 35-44 year old age group are its most frequent visitors and they are most likely parents.

I do not know what this merchant’s e-marketing objectives are, but I hope to connect with him in April, when I am again in the Chicago area. I am particularly eager to find out about their website’s impact on their brick and mortar store’s customer traffic and sales.

The important take aways from this case study are:

  • The one new toy a week strategy is a great example of how calibrating a small firm’s deployment of an e-marketing tool to its level of available resources can help assure its successful use
  • The site appears to be meeting all of the “being found” challenges, while also building a core of store apostles and making significant online sales
  • Family members can often be a source of the internet related skills a small merchant lacks, but needs.

How Can Downtown Organizations Help?

The transition to e-marketing calls upon small merchants to innovate, something most of them feel very uncomfortable doing. DANTH’s experience with trying to get them to improve their facades suggests that many more – but not most – would innovate, if innovating can be made easier for them  to do (4). This means providing them with needed information in easy to digest terminology and helping to bring the costs of their innovation down to affordable levels.

Some questions to which they may need answers are:

  • What can they do and accomplish with e-marketing, what are the benefits and how much will it cost?
  • Are there local merchants who have made this transition who they can talk to?
  • Which types of skilled people will they need help from to get into e-marketing? Where can they find them? Or who can do a whole package for them?
  • How can they afford to create and maintain the e-marketing effort?

Here are some actions downtown organizations and other EDOs might take:

  • Post a 20-minute webinar or podcast on the organization’s website — that the merchants can access at their discretion, when they have sufficient time —  focused on what small merchants can do with e-marketing, its benefits and costs
  • A tie-in to SCORE or other free or low cost consulting assistance to help clarify the connections between the e-marketing tools and the frm’s overall marketing objectives
  • A mentoring program that connects e-marketing “newbies” to local merchants who have successfully made the transition
  • Provide a vetted list of technical assistance providers
  • Most importantly, offer each merchant who lacks a website a web page on the organization’s website that can provide name, contact information, information about products or services sold and the firm’s story.
  • Perhaps the downtown organization can charge a fee for an “enhanced page”, i.e., updating, writing copy, supplying graphics, creating movies, etc., that would be meaningfully lower than what the merchants would have to pay if they did it by themselves
  • Provide website consultants to merchants at a lower than market rate cost, because the downtown organization can aggregate member demand and “buy in in bulk”
  • Provide an expert, on a reduced fee basis, who can help merchants get listed on special web pages. This is something different than search engine optimization
  • Use a downtown organization’s strong Facebook and Twitter presences to help the merchants get sufficient likes and followers to be able to effectively use them. It is getting followers, not setting up and using the Facebook or Twitter page that now impedes most small merchants from effectively using these e-marketing tools
  • Set up an “e-department store” where merchants, like the toy store described above, would only sell a few items. A dedicated and limited e-department store may be a good way to strengthen a downtown niche.

N. David Milder

Acknowledgement: Thanks to Mark Waterhouse of Garnet Consulting Services for his input and editorial assistance.

Endnotes

  1. MarketingCharts staff, “1 in 2 Small Businesses Fail to Update Their Online Listings, Find Inaccuracies”  February 6, 2013,  http://tinyurl.com/atexhky
  2. Mitch Lipka, “These Big Companies Are Abandoning Twitter And Facebook For Customer Service” Business Insider 1/18/13   http://read.bi/11EbziS
  3. Findings of a survey of small businesses conducted for the Center for the New West as summarized in an email by the center’s former CEO, Phil Burgess
  4. N David Milder, “BEING A DOWNTOWN CHANGE AGENT: Facilitating Change for Downtown Business Operators” June 3, 2007, https://www.ndavidmilder.com/category/formats-facades-signs

Invitation: Please join me at Session S681: Integrated Small Town Planning at  APA’s 2013 National Planning Conference in Chicago, April 17, 2013, at 10:30 a.m. I will be presenting along with Andrew Dane of SEH.

Helping Independent Downtown Merchants Engage Effectively In E-Marketing: Part 1

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Introduction

Over the past year, DANTH Inc. has experimented with such social media as Facebook, LinkedIn, Twitter and Pinterest and revamped our website, blog  and email program. To support this effort we did a lot of research on what the various e-marketing tools do best and the challenges small firms like ours have in using them. In this two-part article I would like to share with the downtown revitalization community what we learned from our e-marketing overhaul, so that more independent downtown merchants (e.g., retailers and restaurateurs) might make an effective transition to e-commerce.

What we learned was the importance of an analytical process able to identify the e-marketing tools that will most effectively use an organization’s scarce resources to achieve critical marketing objectives. This process:

  • Starts off by looking at and prioritizing the organization’s marketing objectives
  • Then matches them with the e-marketing tools (e.g., website, emails, Twitter, Facebook, blog, etc.) that can best achieve each of those objectives. These two topics will be covered here in Part 1
  • And next selects those objective-matching tools that  can be implemented, because the organization has the required financial resources and either has or can acquire the needed skilled employees. This topic will be covered in two weeks in Part 2.

Where Not to Start

In the years preceding DANTH’s entry into the social media, a slew of e-marketing consultants and downtown management types had suggested that we do so because:

  • These e-marketing tools were popular
  • They were chic
  • The astronomical number of people on Facebook and Twitter
  • Most importantly, their purported and vaguely evidenced ability to attract new customers and drive sales.

For us, such “follow the pack” reasoning was plainly inadequate. DANTH is, like many independent downtown merchants, a small establishment, with fewer than five employees. There are limited financial resources available for our e-marketing activities. We long have hired  consultants to set up and technically maintain our website and email blasts and guide our entry into the social media. However, most of DANTH’s e-marketing activities fall directly into my hands, where they compete with many other demands for my time and attention. It was essential to know, when we used an e-marketing tool, that it would be consistent with our overall marketing strategy, effective and affordable in terms of money, my time and the skills sets of the current DANTH team as well as any other skilled professionals we could afford to hire.

Possible Downtown Merchant E-Marketing Objectives

Our field observations strongly suggest that one of the biggest mistakes independent downtown merchants make is to not identify the specific marketing objectives they want their e-commerce activities to achieve. It is essential for them to do so, if they want to effectively use e-marketing tools. Typically faced with a scarcity of money, skills and time, a small operator: a) needs to have objectives in order to make any judgment about the effectiveness of the e-marketing tools the firm invests in, and b) cannot hope to achieve all of the possible objectives. Therefore,  prioritizing them and then focusing on the most important are essential.

There are a wide range of marketing objectives that a small merchant can try to realize through the use of the right e-marketing tools. Here is a brief list of some potential e-marketing objectives:

  • Reaching target market segments
  • Being found on the Internet
  • Finding new customers
  • Branding
  • Making direct sales: setting up an e-storefront
  • Advertising: information about new merchandise, sales , discounts, fun events; driving customers to brick and mortar stores
  • Relationship building with customers; grooming “store apostles”
  • Customer service.

I would argue that when considering e-marketing, for the small independent downtown merchant, the most important of these objectives, the one that all should focus on, is “being found on the Internet.” Here’s why. The most significant impact the Internet has had on retailing is that, today, most shoppers first go online to research the merchandise or service they are interested in and the stores that sell them. For example, a 2010 Pew survey found that “58% of Americans research online about the products and services they buy,” with 78% of Internet users engaging in this online researching (1). Merchants who are not in on the search, consequently, are unlikely to be in on the sale!

“Being found” is complex and entails several components, such as:

  • Name recognition – shoppers can learn who you are
  • Contact info – shoppers can learn where you are
  • Info about merchandise offered – shoppers can find what they want to buy
  •  “Why this store” info – reasons why the shopper should buy what he/she is looking for in this shop.

Merchants in different situations may vary in their needs for each of these components. For example, a new downtown merchant or a pure Internet retailer needs to be concerned about all four components, but a longtime downtown merchant may already be fairly well-known and found with relative ease. If the number of downtown merchants and the trade area population are small and/or relatively stagnant, then more merchants are likely to be in this situation. As a result, in many small and medium-sized downtowns, shoppers are probably more likely to want to know which merchants are offering the goods and services they want to buy and the reasons to make that purchase in that store.  The websites of too many downtown merchants and downtown organizations that provide member merchants with a web page usually just focus on the shop’s name and contact information. Actually, the merchants usually have the stronger additional needs to display their product information and make persuasive appeals to patronize their shops.

Regarding online sales, although they accounted for an estimated 7% of the USA’s 2010 total retail sales, a study by Mckinsey & Company estimated that by 2011 the internet had played a role in 45% of the nation’s retail sales(2). So the vast majority, around 80+%, of the internet’s impact on retail is not via direct sales. E-marketing’s impact is primarily indirect, but still critical. Also, many observers have noted that e-retail stores demand a lot of complex and expensive infrastructure related to storage, shipping and payments. While this barrier that has kept more firms from competing with Amazon, it also is a major reason that more independent downtown merchants have not attempted e-stores and why so many that did have failed.

Some Examples of Matching E-Marketing Objectives to Appropriate E-Marketing Tools

Research on e-marketing tools is still unfolding, with many issues yet unanswered, but this much is clear: e-marketing tools differ in their ability to achieve various marketing objectives. It is critical to select those e-tools that are best able to  achieve your firm’s objectives. For example:

  • The social media differ substantially in their penetration of the online audience: according to a 2012 Pew report, 66% of online adults use Facebook, 20% use LinkedIn, 16% use Twitter and 12% use Pinterest (3).
  • The social media will also differ in their ability to penetrate specific market segments. Some illustrative findings by Pew: “African-Americans, young adults, and mobile users stand out for their high rates of Twitter usage” (4); 19% of online women use Pinterest compared to 5% of online males (3); LinkedIn attracts the most educated and male audience (5).
  • E-commerce tools also vary in their ability to enable a downtown merchant to be found in Internet customer research efforts. The Pew Research Center studied the sources that people rely on to get news and information about local restaurants, bars, and clubs. They found that 38% used a search engine and 17% specialty websites (e.g., zagat.com, urbanspoon.com, tripadvisor.com, etc.), while only 3% relied on a social networking site or Twitter. For finding information about other local businesses Pew’s survey had similar findings: 36% of respondents relied on a search engine, 16% on specialty websites and just 1% on a social media (4).
  • The most searched for online categories, when shoppers seek information about local businesses, are restaurants, financial services and beauty services (8). Firms in these sectors definitely need an easily findable online presence
  • Research also suggests that social media do not drive online sales. For example, one study found that the average order value of e-commerce sales sourced from social media is 25% lower than the average sale coming from emails and 35% lower than those sourced from Internet search. (5). Another study in 2012 by Forrester Research found that only about 1% of e-retail transactions could be traced back to “trackable” social media links. Consumers making a first-time purchase with an e-retailer were far more likely to originate their purchase by first making a direct visit to the vendor site (20%), or finding it via an organic or paid search (16% and 11%, respectively). For repeat shoppers, e-mails and direct site visits are the keys: 30% of their online purchases are sparked by an e-mail from the retailer, while another 30% of repeat customer searches start with a direct visit to the retailer’s site (6).
  • For downtown retailers, the more important question is can e-marketing tools drive customers into their brick and mortar shops and increase sales. We could not find a reliable systematic survey of consumers that addressed this question. However, we did come across numerous anecdotal reports of special product and discount offers distributed via emails, Facebook and Twitter that did bring more customer traffic and sales into traditional retail shops and eateries. For example, one ice cream parlor we visited in a New York City neighborhood reported occasionally offering special flavors only to people visiting their Facebook page and they are always quickly sold out. But, this ice cream parlor has been around for about 50 years and has 8,000 Facebook likes
  • Many e-marketing experts claim that e-marketing tools, especially the social media, are very effective at building customer traffic and sales indirectly through stronger branding, relationship building and better customer service. For example, a 2012 survey of business to consumer marketers by Webmarketing 123 found that the top objectives of their digital marketing programs were increasing brand awareness 33%, increase sales 26%, generate leads 22%, generate site traffic 11%, build online community 6% and other 3% (7). It is interesting that only about a quarter of these marketing professionals were focusing on directly increasing sales. Among these marketers 49% reported search engine optimization had the biggest impact on lead generation compared to 26% reporting it was pay-per-click advertising and 25% the social media.  

What About the Personal and Professional Service Operations? This question was posed by a reviewer of a draft of this article who noted that these firms are so strong in many downtowns. My expectation is that most of the above applies to them too, but that there may be some important differences. For example, I suspect that the potential for effectively using the social media is greater among hair and nail salons, gyms, spas, etc., because they do not primarily sell merchandise and personal relationships are so important in the delivery of their services. Also, as DANTH found, LinkedIn will be very important for professional service firms.

N. David Milder

ENDNOTES

  1. Jim Jansen, “Online Product Research: 58% of Americans have researched a product or service online,” September 29, 2010, Senior Fellow, Pew Internet Project http://pewinternet.org/Reports/2010/Online-Product-Research.aspx
  2. Steve Noble, Amy Guggenheim Shenkan, Christiana Shi, “The promise of multichannel retailing”, McKinsey Quarterly, October 2009.
  3. Lee Rainie, Joanna Brenner and Kristen Purcell, “Photos and Videos as Social Currency Online,” Sept. 13, 2012, Pew Research Center’s Internet & American Life Project, http://pewinternet.org/Reports/2012/Online-Pictures.aspx
  4. Aaron Smith and  Joanna Brenner, “Twitter Use 2012,” May 21, 2012, Pew Research Center’s Internet & American Life Project, http://pewinternet.org/Reports/2012/Twitter-Use-2012.aspx
  5. Keith N. Hampton, Lauren Sessions Goulet, Lee Rainie, and Kristen Purcell “Social networking sites and our lives” June 16, 2011, Pew Research Center’s Internet & American Life Project, http://pewinternet.org/Reports/2011/Technology-and-social-networks.aspx
  6. The Forrester report, The Purchase Path of Online Buyers, is reported in Brad Tuttle,  Study: Posts on Facebook Almost Never Lead to Retail Sales” TIMEMomneyland Sept 27,2012  moneyland.time.com/2012/09/27/study?posts?on?facebook?almost?never?lead?to?retail?sales/    and Zak Stambor, “Social media posts don’t lead to sale,” Social Media, Sept 25, 2012,  www.internetretailer.com/2012/09/25/social?media?posts?dont?lead?sales
  7. Webmarketing 123,  2012 State Of Digital Marketing  http://go.webmarketing123.com/rs/webmarketing123/images/DMR%202012%20FINAL.pdf
  8. YP.com, “The YP Local Insights Digital Report” http://i2.ypcdn.com/radiant/radiant_assets_47482_YP-Local-Insights-Q3.pdf

Right Fit Your Downtown Retail: Adapting to the new normal for downtown retail

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There’s a New Normal for Downtown Retail
Today, it is essential for downtown developers, landlords, economic development organizations and local elected officials to recognize and adapt to the new normal that has emerged for downtown retailing. Consumer behavior has changed significantly – they are buying less, more deliberately and increasingly online.

The demand for downtown retail space has changed accordingly. Chains are looking for fewer and smaller spaces, while developing smaller formats for entry into new market areas. The strategic importance of small merchants has increased, but their success is still tied to finding affordable rents and adequate financing. Many downtowns now have significantly more retail space than they can fill.

Downtown Leaders and Investors Need to Adapt
More than ever it is essential for downtown leaders and investors to respond effectively to the questions of how much and which types of retail can be attracted to fill vacant storefronts or the street-level spaces of new mixed-use projects.

To be of value and use, it is critical that these answers be informed not only by traditional retail market research techniques, but also by relevant experience and a full understanding of retailing’s new normal.

DANTH, Inc. Is Uniquely Positioned to Help
DANTH, Inc is uniquely positioned to provide its clients with a downtown retail strategy and action plan that is consistent with the market trends of the new normal.

For municipalities, DANTH’s analysis will provide market information that will enable better overall mixed use redevelopment planning, identify the retail that is most sustainable, and establish a plan of action for recruiting viable downtown retail and experienced downtown developers.

For developers, DANTH’s analysis will right size the retail for their new downtown redevelopment projects which will help eliminate overbuilt retail space. In addition, DANTH will provide a list of viable tenant prospects that are right for their development. With years of experience, DANTH will provide the crucial support necessary to ease the local redevelopment approval process.

Our Right Fit Team
DANTH, Inc. is proud to announce that Michael Fabrizio has joined our Right Fit team. Michael has many years of downtown redevelopment and revitalization experience. As Executive Director of the Morristown Partnership, he worked with real estate development companies to generate interest and investment in redevelopment projects in Morristown. He worked with the Town of Morristown to establish and implement multiple redevelopment projects throughout the central business district worth nearly $600 million. He has served as a Commissioner on the Morristown Redevelopment Agency and is a licensed New Jersey Real Estate agent.

Michael joins David Milder, DANTH’s president and founder, on our Right Fit team. David has developed effective niche-based downtown retail revitalization strategies, business recruitment campaigns and redevelopment programs for downtowns across the nation. He is nationally recognized for his leading edge research and writings on the new normal for downtown retail. In New Jersey, his clients have included SIDS/BIDS in Bayonne, Cranford, Elizabeth, Englewood, Morristown, and Washington Borough. Elsewhere they include: the 34th Street Partnership, the Greater Jamaica Development Corporation, and the City of White Plains in NY: the City of Charlotte, NC; the City of Peoria, AZ, the Rutland Partnership (VT); the Greater Meredith Program (NH), and the Village of Sherwood (WI).

For a Free Initial Consultation on How Our Right Fit Program Can Help Your Community Contact:
Michael Fabrizio at (973) 727-8635, [email protected]
or
David Milder at (718) 805-9507, [email protected]

Many Downtown Movie Theaters Have Closed: Some Lessons For Downtown Organizations

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Introduction.

Across the nation, about 10% of our movie theaters recently have closed or will do so in the near future. They are folding because of long term declining attendance and, more immediately, their operators’ inability to pay for the equipment costs of transitioning to the digital film distribution and projection techniques that the major Hollywood studios have made mandatory – no digital, no films. Most are relatively small houses located in small and medium-sized downtowns. Obviously, their closings probably will have huge adverse impacts on their downtowns.

The tragedy is compounded by the fact that, while some were seedy and many others had very low ticket sales, there were still many of these critical downtown assets that might have been saved. It was well known that these theaters were in danger and that the major studios were moving toward costly digital film distribution and projection upgrades. Tools for potentially saving these theaters were available. However, few downtown organizations had formulated viable action plans they could quickly implement should their cinema be threatened with closing. Once the problem appeared, they were overwhelmed by its complexity, the money needed to remedy it and the short time available to formulate a viable plan for the cinema, win community support and implement it.

The Need for Strategically Critical Business Retention Efforts.

In many ways the closings of these movie theaters are classic examples of failed business retention, but they are obviously something much more significant for their downtowns than the closing of the average retailer. Closed cinemas can mean the loss of important customer traffic generators, big hits on downtown images and the throwing of large vacant commercial spaces on the market that are difficult to lease or restructure for reuse. Far too often closed movie theaters become long-term downtown eyesores.

Most downtowns usually have a handful of establishments – businesses, museums, sports teams, cinemas, etc. — that are disproportionately important to their economic well being. Strategically, they are of critical importance. This, in turn, means that they are worth saving and warrant the investment of a downtown organization’s scarce resources.

The closings of the movie theaters suggests that downtown organizations should be aware of strategic downtown assets that are at risk and have at the ready at least the basic outlines of the actions they quickly can take to help retain these assets.

Determining what is and is not a strategic asset is a critical step. A movie theater, for example, is not a strategic asset by definition. A cinema that is in very bad condition and that attracts few patrons will not have strategic import and my observations suggest that some downtown organizations have indeed written off their movie theaters for these reasons. However, in these situations, the question about retaining the cinema then often turns into an even more complex question about the viability of reviving it.

The Downtown Organization’s Role?

In a recent conversation, the manager of small downtown district “X”, with a movie house that is in deep financial trouble, explained that there was little that the downtown organization could do because so much money would be needed not only for the digital projection upgrade, but also for substantial physical improvements. Of course, most downtown organizations, like this one, will never have the financial or staff resources needed to retain through their own actions the critical strategic establishments that are at risk. Nevertheless, that does not mean that they do not have a pivotal role to play in the retention of these critical assets.

Downtown organizations are effective not only because of their own activities, but also because of what they can get other people and organizations to do: e.g., they not only run street fairs and hang Christmas Decorations, etc., but they also get municipal and state agencies to fund wayfinding programs, support façade improvements, fund performing arts centers, etc. I would argue that this means that the most effective way that downtown organizations – especially small ones –   can successfully retain imperiled strategically important downtown assets is to lead the mobilization of the community and its resources in a retention effort. Downtown district X may not have the resources to save its movie theater, but if it can get the municipality, businesses, nonprofits and residents in the community to contribute money and staff, the future of its movie theater probably would be quite different.

If downtown organizations do not play such a role in retaining these strategically important downtown establishments/functions, then who in the community will?

Furthermore, if playing such a role in retaining critically important downtown assets is not a key element of the downtown organization’s mission, then why does it exist?

The Existing Challenges Often Have Been Around For Quite A While.

As the travails of the movie theaters show, the challenges that these critical economic assets were facing were not surprises, but have existed for several years and were well known. In Downtown “Y” in NJ, for example, the possible closing of its cinema has repeatedly come to the fore since the mid 1990s, yet the recent announcement of its demise has sparked a fragmented and desperate effort within the community to save it, in which its downtown organization seems paralyzed. Many other downtown cinemas have had similar histories of teetering on the financial abyss. The downtown organizations in these communities should not have been surprised that their cinemas were on the verge of closing, but my interviews and review of published reports indicate that too many were.

Downtown organizations – even in relatively modest-sized communities– need to proactively identify their critical downtown establishments that are facing challenges and learn about what is happening in the industries they are in. By doing so, those with cinemas would have learned much to alert them of potential problems. For example, about a decade ago the movie industry took a big hit, with many of the chains flirting with bankruptcy or closing and many independents following suit. Furthermore, industry observers for many years have been writing about the attendance decline caused by the public’s growing home film viewing. Back in 2008 DANTH became so aware of this trend that we issued a major report on the challenges downtown movie theaters were facing. Despite the easy availability of such information, too many downtown organizations were caught unaware of the imminent danger their movie theaters were in.

Which Actions Are Timely Depends On When They Are Needed.

When an operator announces the closing of a movie theater, there is little or no time for the downtown organization to determine the economic viability of a movie theater operation, assess how much the community wants a local cinema and then formulate and implement an action plan to retain or save the existing operation. A successful retention effort under this scenario would most likely only occur when the downtown organization has the components of a relevant action plan in hand ready to tailor to the current situation and then implement.

Failing that, the retention focus would probably shift from the operator to the function, i.e., having a strong, viable movie theater in the downtown. This simply may involve the landlord seeking another operator to take over the theater or the far more complicated routes of creating of a community-owned corporation to take over the movie operation or perhaps even integrating it into a new performing arts center.

It is important to note, however, that for several years it has been known that theater operators would need to go digital, that the process would be costly -between $65,000 and $125,000 per screen – and that industry subsidies would not go to theaters with very low ticket sales. Earlier retention interventions would have had more time to work in and probably involved relatively simpler efforts. Instead of finding and recruiting a new operator or having to create and fund a new entity to operate the movie theater, the focus could have been on helping the operator pay for the digital upgrade through traditional bank loans or even crowd funding websites.

Some Relevant Reading:

N. David Milder, “Downtown Movie Theaters Will Be Increasingly In Great Danger”, Downtown Trends Assessment 2008, DANTH, Inc. March 2008 https://www.ndavidmilder.com/wp-content/uploads/2012/05/trends_p1_films_08.pdf

Joshua Bloom, “Community-owned Businesses: How Communities Become Entrepreneurs”, Main Street Now, March/April 2010  http://www.preservationnation.org/main-street/main-street-now/2010/marchapril-/community-owned-businesses.html

Kennedy Smith, “Capital Thinking: Creative strategies to support at-risk businesses”, Downtown Idea Exchange, February 2012     http://www.downtowndevelopment.com/perspectives/dixperspectives020112.pd

Amanda Palmer & The Grand Theft Orchestra are putting out an album. Pre-order it / get more info on the art book & gallery tour, here!

Patricia Leigh Brown, ” Movie Houses Find Audience in the Plains,” New York Times, July 4, 2010 Article