One of the primary problems with downtown revitalization efforts is the independence of downtown merchants. Often, merchants have operated on their own for decades, if not generations, and have developed a perspective that other downtown retailers are their primary competitors. Yet, in the last generation the competitors to downtown merchants has shifted, and primary competition comes from outside of the downtown, from the many businesses associated with suburban shopping centers and malls. The only effective way for downtown merchants and businessowners to compete with these management monoliths is to cooperate with each other, rather than trying to put each other out of business.
A downtown commercial district is not a mall, and it would be an exercise in futility to try to be one. But there are aspects of mall management procedures that could be used to strengthen the environment of the downtown commercial district as well. As shown in a study by the International Downtown Association, "...the key difference between downtowns and their suburban competition is not the physical amenities, but management."1
One method for downtown businesses to work cooperatively is through "centralized retail management" techniques. Similar to the techniques of management used by malls, these include strategies for optimizing the downtown as a retail environment. Some of the elements include:
Management: Downtown stores are managed by individual business owners who make decisions on management based primarily on their individual concerns. They see other downtown businesses as competitors; there is little or no cooperation one with another regarding common concerns such as hours, promotions, parking or general planning.
In contrast, businesses located in shopping centers/malls are subject to very tight control by a centralized management. Many policy decisions are left up not to the discretion of the individual storeowners, but are decided by management. Management establishes common hours, promotions and many other aspects of operations to which the individual businesses must comply. This distinctly different approach to overall management issues is probably the most significant difference between downtowns and shopping centers/malls. Downtown businesses would benefit greatly by adopting a similar Centralized Retail Management (CRM) approach.
Market Analysis and Merchandising Plans: In a significant departure from traditional downtown revitalization efforts, CRM attempts to intervene directly with and support downtown merchants. One of the most important undertakings in improving and enhancing the operations of downtown merchants is an analysis of the market. Usually involving an experienced professional consultant, such a market study identifies current and potential customers for downtown businesses.
A market study also allows the development of a tenant mix target or merchandising plan. While it builds on an analysis of likely economic viability, the final target list may be modified to reflect local objectives. The merchandising plan informs all involved of the downtown retail revitalization effort's overall objectives. It also helps establish priorities for developing retail business recruitment programs.
Coordination of retail promotions: Shopping malls are easily identified by potential customers because of their coordinated promotions. The name of a mall (e.g., "Northwood Mall") conjures up for shoppers an image of an environment with many shops, even though someone may not think of any particular shop by name. Each store may be more or less nondescript on their own, but as part of the "Mall" they all benefit from a common image.
Similarly, downtowns need new, strong images to present to the public representing it as a place with many businesses. Typically, a downtown consists of a relatively large number of businesses each trying to draw customers through individual name recognition. These businesses could benefit greatly from a joint promotional program, especially if it was tied to an effort to enhance business compatibility and retail image.
Visual improvements: Shopping malls are carefully designed both in common areas and for individual businesses. Downtowns could also benefit from better design. Common area improvements could include a number of things, including a coordinated "streetscape" (benches, trees, paving) and better designed signage. Individual visual improvements could include a program giving incentives for storefront improvements.
These strategies do not mean that a downtown should try to look like a mall. Indeed, such an appearance would be completely inappropriate. The strength of a downtown's commercial area is its own integral character.
Business type compatibility: The concept of business complementarity is well understood by shopping center and mall management. Typically, they will have a formula defining the number and types of businesses that should be together to optimize this carefully managed shopping environment. For example, they may insist that three shoe stores and one ladies accessory store be in proximity with an anchor store. As a result, each business will reinforce the others, and this programmed competition will help all.
Downtowns would benefit from an analysis of their own mix of businesses, and then targeting businesses to be recruited to enhance their marketing strategy.
Business Recruitment and Retention: Retail business recruitment is key to a successful CRM program. By building on a formally agreed-upon tenant mix strategy, public and private efforts can focus on an aggressive, sophisticated, and ongoing recruitment and retention program.
Equally important, but often overlooked, is a formalized retention program. The closing or relocation of a high-quality downtown business should not catch a city off guard. Ongoing communication with proprietors should alert downtown leaders to businesses considering a move out of the downtown, and such information should trigger a set of strategies designed to encourage such businesses to stay.
Business Support Services: A CRM program can offer a series of services designed to improve or reduce the operation costs of individual merchants. Many CRM organizations routinely offer merchants counseling and consulting services on topics such as small business bookkeeping, taxes, employee training, window displays, advertising layout, or facade of signage design. Emphasis on such services not only improves the economic viability of merchants but also helps gain their cooperation.
Common Covenants: A major asset enjoyed by shopping centers is their degree of control in enforcing at least a minimal level of quality. Downtowns could also benefit through the use of such covenants. Cooperating property owners incorporate these covenants into new or renewed retail leases and pledge to make a "best effort" to incorporate them into existing leases as well.
Covenants are similar to those used in shopping centers and place controls on items such as cleanliness of display windows, sidewalk or entryway obstructions, external noise or light, handmade signs, certain chronic sales (going-out-of-business of fire sales), the maintenance of exterior frontages, and the approval of remodeling programs. In addition, tenants are required to become dues-paying members of the CRM organization.
Review of Proposed Retail Uses: Another type of control that lies at the heart of CRM relates to a management organization's authority to approve or reject retail operations based on their conformity to overall objectives. One of the most important assets of shopping center management is the opportunity it provides to exclude businesses it deems incompatible and to approve those that complement other establishments.
As practiced within the downtown setting, decision making on compatible uses is problematic. With sometimes high retail vacancy rates, a CRM approach means a community must summon its courage and patience if it is to be selective when filling an empty storefront.
Security: An enhanced security program could be an important tool of CRM. Such a program must be sensitive to the hours of store operations, which should include evening and weekend shopping hours. It also should recognize that downtown shoppers are less familiar with their surroundings than downtown workers, and therefore may need special assistance and courtesies shown them when visiting the downtown.
Maintenance: Common area maintenance is a program that has been applied succcessfully in downtown settings. In practice, merchants also contribute to cleanup and maintenance of downtown spaces in addition to the city's normal responsibilities.
Special Events: Festivals, parades, outdoor concerts, and other special public events have long been popular techniques used to create a greater public awareness of downtown. Retailers, however, are not always pleased with the results. Particularly when held during the popular weekday noon hour, such events compete with stores for the attention of downtown workers, cutting into one of the few remaining stable market sources. To counteract retailer opposition, communities should take care to include retailers in planning such events.2
The most important element in making a CRM effort successful is to have enough retail space, and enough businesses, under management so it is possible to alter the business mix as needed based on ever-changing consumer patterns. To be able to expediently make these changes, stores must operate under common agreements, usually based on some type of master lease. These organizational forms may include limited joint partnerships, property ownersÕ associations, or for-profit or not-for-profit development corporations.
The centralized retail management approach does have some potential pitfalls, however, and it is important to realize concerns and challenges about which people may be concerned.
Business Hours: Common business hours is a highly volatile issue. Potential customers and civic leaders often point to the failure of retailers to establish common hours as an example of their unwillingness to help themselves. Yet, extending hours can place severe financial hardships on small business owners, at least in the short run.
Tenant Mix: Owners are likely to balk at the CRM organization's potential veto of a prospective tenant for a long-vacant space. They are likely even to resist sharing information on upcoming lease expirations, out of concern for loss of confidentiality or fear of a raid by competitors.
Encumbrances: For lease covenants to be meaningful, they must remain in force even with subsequent ownership changes. Ideally, though, property owners prefer that their titles remain as clear as possible, and as a result, typically they resist encumbrances.
Holdouts: Regardless of the degree of owner or tenant perticipation achieved, a few prominent parties are likely to go their own way. That these holdouts will benefit from an overall improvement in downtown business conditions can be a source of resentment and frustration.
Organizational Control: The balance of control and influence over activities, especially expenditures, is delicate. In the case of an assessment district, the property owners usually provide most of the direct funding. Yet a lack of real influence by retailers can lead to early failure.
Retail Representation: Downtown retailers are hardly monolithic. They include department stores and small shops, owners and managers, independent stores and chains, with vastly different trade areas and operational requirements. It is nearly impossible to maintain an accurate sense of the overall picture by dealing with only a handful of merchants or their elected representatives.3
1 Jack R. Stokvis. 1987. "Making Downtown Competitive Again: The Promise of Centralized Retail Management." Urban Land. April 1991. p. 8.
2 Taken from Jack R. Stokvis and James A. Cloar. "CRM: Applying Shopping Center Techniques to Downtown Retailing." Urban Land. April 1991. pp. 9-10.
3 Ibid. pp. 10-11.
