Category Archives: Downtown Niches

Is Our Great Recession Saving Downtown Movie Theaters?

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About a year ago, I wrote that downtown movie theaters were increasingly in jeopardy because people were more and more watching movies at home. Lately, I have been asked if I still believed downtown cinemas were in trouble, since recent media reports indicated that:

  • Nationwide, movie attendance was up 21% in the first seven weeks of 2009
  • The National Association of Theatre Owners claims box office numbers climbed in five of the seven economic downturns that occurred over the past 40 years.
  • It is well-known that movie attendance rose sharply at the height of the Great Depression
  • The stocks of the movie theater chains lately have risen substantially.
First, it should be noted that a seven week attendance pattern ought to be treated with caution, especially when it is contrary to a longer term trend.

Total U.S. & Canada Admissions
Year Admissions
2008 1.363
2007 1.400
2006 1.395
2005 1.376
2004 1.484
2003 1.521
2002 1.599
2001 1.438
2000 1.383
1999 1.440
1998 1.438
1997 1.354

Source: National Association of Theatre Owners

Total admissions in the USA and Canada for the full year of 2008 – when we where already in recession – was the lowest since 1997.

But, the primary reason that I still think downtown cinemas are in trouble is the behavior of highly regarded Hollywood moguls such as James Cameron and Jeffrey Katzenberg and the movie theatre chains. Cameron and Katzenberg both believe that the future of the movie theater business rests on 3-D movies because “going to the movies” has to once again become a special occasion, quite different from watching a flick at home. The movie chains have been investing a lot of money in more IMAC screens and now they are trying to raise between $700 million to $1 billion to convert enough screens—at $100,000 a shot –- to 3-D.

Some smaller, but savvy movie theater operators are doing such things as running “dinner cinemas,” where you get both a good film and a quality meal. Others are opening restaurants or brewpubs next door.

The downtown movie theaters that are really endangered – regardless of how they are drawing now – are those that cannot turn watching a movie into a special occasion. That is the key for the future. Dirty sticky floors, uncomfortable seating, inadequate restrooms, uncivil patrons, run of the mill films, etc., are not characteristics of a special occasion that will draw film viewers from their homes, but far too many downtown cinemas have them. Improving these theaters will not be cheap. Nor will it be cheap to provide them with 3-D equipment.

I do not know whether 3-D is the silver bullet. Here in Kew Gardens, we have a six screen cinemaplex that has absolutely no off-street parking, but it has been packed every weekend for many years. It is located in a densely populated neighborhood and features current “indy” films to an audience that rarely has a teenager in it – I’d say most patrons are over 40. Larry Houstoun reports similarly successful small cinemas near him in downtown Philadelphia. Indy flicks for seniors or IMAC or 3-D or whatever that makes going to the movies a special occasion is what counts!

If downtown organizations want their independent cinemas to survive they will have to help the operators again provide a venue where going to the movies is a special occasion.

Recession Evils: Rumors and Facile Solutions

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In a recent newsletter of Red Bank’s RiverCenter, Nancy Adams properly admonished the rumor-mongers who, faster than the recession, can bring down a good business operation. I congratulate Nancy for her spunk. And in contrast to Lou Grant, a lot of us like spunk! I am so glad she told those idiots to shut up!

Let me take up a cudgel against an equal danger – the town leader, manager or guru who thinks they are on to an easy answer for coping with our Great Recession. For instance, since November I have been hearing on and off about how good the student market is for retailers. This flies directly against what I have leaned about student shoppers since I started to study them for a project in Elizabeth, NJ back in the late 1990s. Before the dot,com bubble burst, the teen/tween market was an important growth engine for many downtowns – especially in urban wear. But with the dot.com bust, these youths lost their biggest income – what mom and dad gave them. And a lot of shops that targeted this market were badly hurt. Also, this market is notoriously fickle – a shop or chain that is red hot today can be in the crapper tomorrow. Finally, the potential size of this market is limited – the amount that teens and tweens can spend simply pales in comparison to how much retail spending their mothers control!

Then, if you look closely at what is happening today, you have to wonder some more. You can bet your bottom dollar that as this recession deepens, these kids are going to get less and less from their parents. And do you really think these kids are now getting part-time jobs to cover their retail buying habits? Moreover, if you look at some recent data, the story is a mixed one; some retail chains that target the teen/tween market are doing really well, but others, many that were hugely popular with these young shoppers, are not.

Below are some same store sales comparisons for retail chains that like teen/tween customers. The data are from Barbara Farfan at About.com:

Same Store Sales –Dec 2008

+13.5% The Buckle, Inc.
+ 12% Aeropostale
+ 10% GameStop
+ 4.3% Hot Topic Inc.

– 1% Urban Outfitters
– 10% Pacific Sunwear
– 12.3% Zumiez
– 12.5% Wet Seal
– 17% American Eagle Outfitters
– 24% Abercrombie & Fitch

Same Store Sales –Jan 2009

+ 14.7% The Buckle Inc.
+ 11.0% Aeropostale
+ 6.0% Hot Topic
+ 2.0% American Apparel

– 11.0% Pacific Sunwear of California
– 14.8% Zumiez
– 20.0% Abercrombie & Fitch
– 22.0% American Eagle Outfitters

Same Store Sales –Feb 2009

+ 21.0% Buckle, Inc.
+ 11.0% Aeropostale
+ 10.8% Hot Topic
+ 4.8% Torrid (Hot Topic)
+ 3.0% Urban Outfitters

– 6.6% Wet Seal
– 9.0% American Apparel
– 13.0% Zumiez
– 23.9% Arden B (Wet Seal)
– 30.0% Abercrombie & Fitch

The Buckle, Hot Topic and Aeropostale are indeed doing well and it would be great to discern a winning formula they share. Hot Topic is hot because it sells the clothing that the vampires or zombies wear in some book series that tween and teen girls now adore. Gamestop is hot because it resells computer games to the avid gamesters. But, Ambercrombie’s, Amercian Eagle, Zumiez, Wet Seal and Pacific Sunwear are not flourishing. And Amercian Apparel and Urban Outfitters – some retail analysts thought they were immune to this recession – are up and down. This market segment still does not sound to me like a rock downtowns now can build their retail upon.

The Apparel Niche and the Home & Hearth Niche: The Growing Importance of Independent Operators

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Introduction

The apparel niche and the home & hearth niche may seem unrelated, but they share several commonalities:

  • They are both particularly important to downtowns
  • They are both facing challenges, and
  • They will both be relying on the success of independent operators for their future well-being and growth.

Apparel

First, let’s consider apparel. This niche is important to downtowns because women are our most prominent and powerful shoppers (making 80% of the purchases for the home and family). And clothing, shoes and accessories purchases for themselves and their children are an important part of women’s purchases. As we’ve reported in previous blasts, time-pressured mothers are willing to accept higher prices from downtown vendors if they can shop quickly and easily close to home. In addition, a successful apparel niche adds diversity to the downtown mix and stimulates interest in strolling and window shopping.

But apparel has been an at-risk niche for the past two decades. While the industry has grown, it has grown at a pace much slower than other retail sectors. Additionally, major retailers like Ann Taylor, the Gap and Chico’s – the kind of trophy apparel shop that many downtowns have targeted as their dream tenants – are not opening new stores as they suffer reduced sales in a difficult economic climate.

What to do? We all know of downtowns where there is more than sufficient unmet demand for apparel within a ten-minute drive shed to support a new store with $300,000 to $400,000 in annual sales. Such revenue may be too low for a national chain, but very adequate for an independent operator.

These new merchants will need a great deal of support from the downtown organization in finding affordable space, negotiating leases and perhaps even “sourcing” their merchandise. To succeed it will help that these merchants:

  • Be a local resident – for instance, a local mother – with a network of friends and colleagues in the community
  • Represent and market to a specific and strongly populated ethnic group in the community
  • Be opening a very high-end shop that provides an exceptional level of pampering and customer service
  • Be able to solve the problem of sourcing attractive merchandise

In many instances, an independent operation apparel niche is not going to be recognized or realized without the proactive intervention of a downtown organization. Your organization can help foster such a niche by:

  • Having market research performed to identify opportunities
  • Indentifying and cultivating possible entrepreneurs
  • Helping the entrepreneurs form a viable business plan, find appropriate affordable space, find loans or investors, etc.

Home & Hearth

For decades, revitalization advocates have searched for a type of retailing that can thrive in downtown locations despite the presence of nearby malls and big box discount retailers. DANTH has found that home and hearth niches are very often the answer.

Home and hearth niches are groups of shops that feature goods and services that enable shoppers to make their homes more comfortable, more entertaining and more beautiful. They include retail establishments selling furniture, carpets, antiques, table top goods, window treatments, hardware, electronics, art works, picture frames, tiles, appliances, kitchen and bathroom equipment, plumbing supplies, telephones, and gardening equipment. This niche can also include architects, plumbers, carpenters, contractors and service firms that deal with lawns and septic tanks.

Usually, the firms in this niche are overwhelmingly independent operators or small regional chains. They usually don’t need vanilla box spaces.

The home and hearth niche is very dependent on the housing market and the niche’s current economic woes have traced the decline in home values. But DANTH believes that demand for this niche’s products and services soon will begin to grow as consumers start to put more money and attention into fixing up their current homes instead of buying new ones. Home Depot and Lowe’s have already pivoted their marketing in this direction. Economic conditions have also sent Americans into more “cocooning” in their homes which is leading to strong sales of flat screen TVs and other home theater accoutrements.

Plus, the long-term trend for this niche is very good, showing that businesses in the home and hearth sector have grown at a pace greater than GAFO in eight of the last ten years for which data are available. DANTH expects that as the current housing crisis is resolved and household formation again rises, sales in home and hearth stores will follow suit. Now, as the market is bottoming out, is a good time for downtown organizations to strengthen or build their home and hearth niches.

Another positive for this sector is that downtown organizations will need to do less work in attracting and building this niche than with an apparel niche – since less home and hearth business owners are “newbie’s” to the industry. The downtown organization can take on a more traditional business recruitment effort without having to provide the large amount of business development assistance that independent apparel operators will require.

This posting was condensed from my longer report by Mary Mann. To read the full report on Apparel and Home & Hearth Niches, visit www.ndavidmilder.com.

RETHINKING DOWNTOWN ENTERTAINMENT NICHES: Non-Formal Entertainment and Work-as-Entertainment

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Thesis: In a contracting economy populated by time-pressured consumers, downtowns need to rethink their entertainment niches to include and foster informal entertainments that are low-cost and convenient.

Most economic development experts have come to agree that entertainment niches are good fits with the assets of many downtowns and such niches have indeed flourished across the nation.

While “formal” entertainment facilities such as concert halls, legitimate theaters, rehabilitated movie theaters, sports stadiums and arenas can generate subsidiary economic benefits and make towns more attractive to residents, visitors and workers, they are often expensive to build and many small and medium downtowns do not have the means or the capacity to develop such large-scale formal entertainments.

In addition, data from the Bureau of Labor Statistics indicate that most American households began reducing their expenditures for formal entertainments even before the current economic downturn. With the vise closing on the discretionary income of most American households, it is reasonable to assume that entertainment expenditures may be among the first to be reduced. When you factor in the time pressures experienced by the modern household (and detailed in previous reports), formal entertainments seem likely to get further squeezed. In addition, as DANTH noted in our assessment of the future of downtown movie theaters, watching films at home and other home entertainments are eroding the downtown movie theater audience.

The good news? Downtowns of all sizes can develop vibrant niches based on informal entertainments to capture the potential lost audience for these formal entertainments. In a contracting economy populated by time-pressured consumers (research indicates that time –pressed families are increasingly looking for entertainment opportunities that last about 45 minutes rather than the two to four hours usually demanded by formal entertainments), downtowns can compete for time and dollars by providing low- or no-cost entertainments that are close by and do not require long car trips and expensive amounts of gasoline. This entails “rebranding” entertainment as something other than – or in addition to – theaters, arenas and the like. In this scenario, entertainment is “anything that amuses observers.” Reinforcing such informal entertainments can help to bolster the economic health of downtown – its housing, retail, office, and, yes, its formal entertainments.

Public Spaces

Great public spaces provide opportunities for people to engage in activities that they enjoy and that also interest and amuse nearby people-watchers. Think of the ice skaters drawing the ever-present crowds above the rink in Rockefeller Center. Similarly, in Manhattan’s Bryant Park, lounging patrons watch chess players – as well as each other. In Greenport, NY, a much smaller community, a carousel and waterfront location create a wonderful public space where people can watch and be watched by other people. Other downtowns have fostered entertainment with facilities such as:

  • model boat ponds
  • children’s pony rides
  • tables where people can play chess, checkers, or dominoes
  • Wi-Fi hotspot to access and cruise the Internet on laptops
  • places to catch the sun — a favorite pastime for office workers and young tourists in the spring and summer
  • places to buy food and eat lunch alfresco
  • outdoor cafes for sipping coffee and eating snacks
  • slot car racing for kids
  • interactive art installations that capture and play with people’s images, make music or move


Visitors will “perform” if the opportunities are there. Informal entertainments are usually public and usually priced right – either free or, when there are fees (e.g., to ride a carousel), affordable. They are also “sticky” activities. Retailers can feed off of the traffic the informal entertainments bring in, as demonstrated by the busy pedestrian traffic on the street next to Mitchell Park in Greenport, NY. Informal entertainments are also liable to be open when the public would want to use them as opposed to theaters, concert halls, etc. Most often they are child-friendly – and therefore mommy-friendly, too.

Work-as-Entertainment

Often overlooked is the delight and amusement people can derive from simply watching other people do their jobs. In particular, people have shown a great interest in watching craftsman and artists at work. Historical villages such as Williamsburg (VA), Sturbridge (MA) and Old Town (San Diego, CA) have long had many “demonstrations” by blacksmiths, glass blowers, bakers, weavers, etc. The Miami Ballet rehearses in a ground floor studio with a storefront window, which always attracts crowds of passersby and helps build the company’s audience. At the Torpedo Factory in Alexandria, VA – one of the most successful and innovative downtown retail projects in the nation – each artist and craft studio has windows and often open doors, so the public can watch the artists and craftsman as they create. At the Simon Pearce retail store at The Mill in Quechee, VT, visitors to this converted mill/retail location can watch glass being blown, ceramics being thrown and decorated and fabrics being woven, and then enjoy a meal with views of a waterfall.

This posting was condensed from my longer report by Mary Mann. To read the full report and find the complete sources for “Rethinking Downtown Entertainment Niches,” visit www.ndavidmilder.com.

In addition, DANTH has created photo albums relevant to informal entertainments and work-as-entertainment that can be downloaded now, free of charge, from the Internet:

For the album on informal entertainments, visit:
Article

For work as entertainment, visit:
Article

For photos of the Torpedo Factory, visit:
Article

The Mommy Niche

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Cultivating the Mommy Niche
In the last few postings, we have detailed the trends negatively impacting downtowns as the economy constricts, but we have also discussed strategies for overcoming those negative trends.

One such strategy for downtowns is building and/or strengthening the “Mommy Niche.”

The reason is simple: Women are our nation’s shoppers. Though they comprise little more than half the population, women make over 80% of the consumer purchasing decisions. Mothers with children make up about a third of all households and they are spending a lot of money.

Why will mothers be attracted to downtowns instead of regional malls or big box retailers? Mothers employed outside the home are the most time-pressured group and the one most likely to give convenience a heavy weight within their purchasing decisions. These mothers are looking for shorter shopping trips and are more inclined to “satisfice” (compromise between price and convenience) with merchandise available in their downtown shops. They are also looking to spend “quality time” with their children as conveniently as possible, and downtown restaurants and activities can provide the perfect venue.

Activity-Driven Retail
While women’s apparel and children’s apparel shops are very helpful, activities seems to be driving a lot of mommy niches. Family friendly restaurants are key. Restaurants that encourage children with play areas, baby and child-friendly restrooms – even toys – and affordable prices and kid-friendly food will attract mothers with young children. Another key factor is children’s learning centers – dance studios, art studios, kids yoga, karate, even the town library. Mothers can spend time with their children at these activities or drop their children off and be free to shop and catch up on salon needs, grocery shopping or buying presents.

This mix of services and activities provides a customer traffic flow of moms that downtown retailers and restaurants can capture.

Mommy Networks
Through their own social activities as well as their involvement in those of their children – car-pooling, preschool, soccer, etc. – mothers need to be networked with other parents. This need is especially strong for those who work outside of the home and rely on the networks to provide some level of care or supervision for their children. Consequently, in most communities there are strong “mommy” social networks that provide word-of-mouth communications channels.

Local “Mommy Merchants”
Over the past year, DANTH has noticed increased reports about local mothers opening commercial establishments in New Jersey downtowns. These “mommy merchants” have many assets that give them a higher probability of success. For example, they usually bring along networks of local friends who constitute a close-in customer base and cadres of likely store apostles. They are also more likely to be attuned to local mommy needs, tastes and shopping habits. Even more, they are sometimes friends of other district “mommy merchants” and these connections provide a spine for referrals and informal cross promotions. Many mommy merchants can probably use technical assistance. DANTH estimates that between 7% and 25% of downtown merchants are interested in obtaining and actually using such assistance. However, because of their high education attainment and prior professional experiences, it is likely that mommy merchants will have a higher participation rate in such programs.

Despite all this, few downtown revitalization strategies have a “mommy” focus.

How To Make A Mommy Niche Happen?
Downtown organizations need to think about how to make their districts more convenient for visitors, especially busy working mothers and /or stay-at-home moms. Thinking about physical improvements in terms of a “convenience analysis” is the first strategy. Downtowns need to have streets that are easy to cross, public toilets available and kid-friendly, parking that is easy and safe for mothers with children and strollers, short-term parking that generates lots of quick customer trips, and a reasonable distance between parking facilities to shopping and activity. Downtowns also have to cultivate relationships with their local mommy networks. This means identifying the networks and the women in them who are the opinion leaders and message transmitters. Hold focus groups with local mothers or arrange discussion groups between downtown business operators and local moms. Finally, help potential local “mommy entrepreneurs” prepare viable business plans, find downtown locations and link them to other sources of assistance such as business schools, the SBA and state economic development agencies.

This posting was condensed from my longer report by Mary Mann. For the full report on “Cultivating the Mommy Niche” and for a full citation of sources, visit www. DANTH.com after June 17, 2008.