RX: Prescriptions for a Healthier Business Mix RX: PRESCRIPTIONS FOR A HEALTHIER RETAIL BUSINESS MIX. RX: Prescriptions for a Healthier Business Mix

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1 RX: PRESCRIPTIONS FOR A HEALTHIER RETAIL BUSINESS MIX RX: Prescriptions for a Healthier Business Mix Small business lending down Not the best time for commercial districts Business starts are down Unemployment between 10-12% Retail sales down South Carolina Rural Summit Newberry, SC March 7 th, 2011 Vacancy rates rising Projects are being delayed RX: Prescriptions for a Healthier Business Mix RX: Prescriptions for a Healthier Business Mix Challenges Facing small towns Few anchor tenants Limited ready to rent space Sales prices unrealistic Cost to renovate often higher than cash flow Retail mix is fragmented or skewed Underperforming retailers Deteriorated infrastructure New challenges Retailers cutting ad budgets Owners are deferring maintenance Local governments cutting funding for revitalization efforts Real estate financing limited Rising vacancy rate Fewer expansions or recruitment prospects Positive trends RX: Prescriptions for a Healthier Business Mix Consumer confidence and spending is improving Unemployment is leveling off Small business credit crunch is easing Tourism is picking up Sales tax revenues are stabilizing BENEFITS OF A HEALTHIER BUSINESS BASE Enhances residents lifestyles with more shopping and dining choices Increase sales=increase rent=increase property values=increase tax base Creates new jobs Attracts residents and business investment to area Multiplier effect of local $

2 ESTABLISHING A BUSINESS IMPROVEMENT PROGRAM How can you help local businesses grow? How do you attract quality businesses? If you want to target specific businesses which ones? Who should do recruitment? What should they (whoever they are) do? What tools do you need to be successful? RX: Prescriptions for a Healthier Commercial Base Do nothing Outside Expert Coffin Decorators Networkers/Facili tators Targeted recruiters RX: Prescriptions for a Healthier Commercial Base DO YOU KNOW YOUR MARKET?? Define your market strengths and opportunities Evaluate your existing business base Develop a strategic plan Riding a wave Consumer changes Consumers are saving more and spending less Consumer loyalty is harder to maintain Customer wants unique experience Needs and wants have changed Consumer has less credit Consumer has more choices 1% increase in savings = 100 billion less in spending (SCORE)

3 Rural Communities Commuting for work Rising Gas prices Tele commuting and home based businesses Social Media and internet sales are blurring trade area boundaries Watch for trends that impact sales Major trends Frugal shopper Local owned Authentic Locally made/grown Green Charitable Trends translate into stores Understand changing customer base Define Trade Area Clarify Shopping behavior Develop Customer Profile Identify potential market opportunities Rural areas are never Typical

4 Use free report from Claritas to draw boundaries For retailers: It s the Customers, Not People Customers can be identified based on: Demographic characteristics Lifestyles Purchase Behavior Media Habits THE 2010 CENSUS IS ALMOST HERE Demographic trends Boomers - 77 million (ages 50-69) Gen X - 44 million (ages 30-49) Gen Y - 70 million (ages 10-29) Sales leakage reports are always skewed in rural areas r surplus Lifestyle trends Religion Ethnicity Employment Income Geography

5 Midlife Junction Enterprising Professinal Old and Newcomers Rust Belt Tradition Cozy and comfortable Aspiring Families Milk and Cookies Boomburgs Up and Coming PERCENTAGE OF HOUSEHOLDS Tertiary trade area Secondary trade area Primary trade area LFESTYLE CATEGORIES Use Public Input to understand consumer Purchase market niche data DO YOU KNOW YOUR MARKET? Surveys: Intercept Define Market Opportunities Local residents Workforce Businesses Students Retirees Regional Visitors Treasure hunters Heritage Recreation COMMERCIAL ASSESSMENT Existing conditions Business mix and types Business concerns and overall viability

6 COMMERCIAL ASSESSMENT COMMERCIAL ASSESSMENT Building Conditions and appearance Streetscape COMMERCIAL ASSESSMENT Public infrastructure COMMERCIAL ASSESSMENT Social Regulatory Environment Crime Homelessness Building code Zoning Parking

7 Types of Businesses COMMERCIAL ASSESSMENT Types of businesses NAIC Impulse-Convenience- Destination Local-Franchise-Chain-Start-up Strivers-Status Quo-Functional vacancies Immigrant merchants Part-time/hobby retailers COMMERCIAL ASSESSMENT RETAIL LOCATION DESTINATIONS RETAIL LOCATION

8 COMMERCIAL ASSESSMENT COMMERCIAL ASSESSMENT TARGET MARKETS Demographic Lifestyle Employment CLUSTER Compatible Complementary Competitive ISSUES THAT CONCERN BUSINESS OWNERS Availability of capital Rising expenses Changing technology ACCESS TO CAPITAL RISING EXPENSES 44% small business depend on credit cards Down payment for Franchises went from 15% to 40% Friends and family have less to give Credit card terms and rates are changing Small business loan criteria is changing It is taking longer to get paid Fees and permits Rent Insurance costs Shipping Energy costs Cost of goods CHANGING TECHOLOGY COMMERCIAL ASSESSMENT High speed internet in rural areas More mobile customers Track and alert Mass Mingling (foursquare, google latitude, fire eagle) Warning signs

9 COMMERCIAL ASSESSMENT COMMERCIAL ASSESSMENT Survey businesses to clarify issues Personal interview Survey monkey Zoomerang Conduct in-store audits Changes in inventory, advertising Owner-tenant issues Parking and traffic studies Public Improvement plan Façade renderings Building inspections First Impressions visits Health Report DEVELOPING A Where do you want to go? NING PROCESS Vision Market niche opportunities Priority projects Recruitment and Retention What makes a town great?

10 High Q of L What makes a town great? Strong Sense of place Cadre of passionate citizens Progressive government Revitalized Business Mix Vision Set your own vision Focus on your unique strengths and attributes Broad base support Avoid projectitis or tunnel vision Define desired market niches Eating and drinking Regional restaurants Contemporary café Franchise snack, drink and take-out Music clubs Book store-cafe Lifestyle Exercise Recreation (camping, cycling) Hobby, art, Craft Art-related production Tenants Active lifestyle Bicycle, Skateboard Wild Bicycle, Bird Skateboard Bicycle, Skateboard Education Wild Bird Wild Bird supply Paint/Pottery Education supply Education supply Coffee Paint/Pottery Shop Exercise, Ice creamdance Exercise Paint/Pottery Hunting,fishing Coffee Shop Exercise, Dance Destination or Catalyst projects Housing Recreation Medical Farmers market Destination or Catalyst projects

11 MAP OF RETAIL CLUSTERS CONCEPT MAPS DOWNTOWN KINSTON MARKET STUDY Implementation Program Business Retention Program Promotion and Image Business Skill Financing Business Recruitment Program Specific tenant recruitment Referrals and general leads Property Redevelopment Program Acquisition Financing Partnerships RESPONSIBILITY Business Retention/Expansion Merchant Association Business Mix Promotion Committee Chamber- retail committee Business Recruitment Business Mix ER committee City County EDC Chamber RESPONSIBILITY VOLUNTEERS WANTED: positive and cheerful passionate about community networking skill VOLUNTEERS TO AVOID: The Latecomer The Early leaver The Broken record The Gossiper The Know-It-All The Doubting The Pet project Thomas Keys to success Active Committee Work plan Priorities Time line Relationships Realtors Owners Govt. Community

12 GROWING YOUR BUSINESS BASE BUSINESS RETENTION Retail promotions create foot traffic Program elements Increase sales Reduce expenses Immediate sales and cash register sales Seasonal Improve business operation General Improve business environment Targeted BUSINESS RETENTION BUSINESS RETENTION Develop a Shop Local Campaign Targeted Retail Promotions Farm-Residents Benefits to residents Other targeted promotions Home and hearth Wellness Small indulgences (Personal services, gifts) BUSINESS RETENTION BUSINESS RETENTION Image Campaigns Use Events to create image

13 BUSINESS RETENTION IMAGE CAMPAIGNS Print Website BUSINESS RETENTION DESTINATION BUSINESSES Best Of Façade Improvements Façade Improvements

14 Streetscape BUSINESS RETENTION BUSINESS RETENTION Promote progress Minimize negatives Minimize negatives BUSINESS RETENTION Business skill and expenses Workshops Window displays Cash management Website/e-commerce Technical assistance Design assistance (interior and exterior) Energy efficiency Dr. Business Mix Selling business

15 BUSINESS RETENTION FINANCIAL RESOURCES Experiment with different types of communication Webinars blasts Twitter, Facebook Encourage Businesses to use E- commerce Business Mix web store Develop virtual sales space Connect with larger community Friends and family Specialty lenders SBA Community banks and Coops Regional banks USDA City Revolving Loan City façade grants BID, TIF Historic Tax Credits LLC Property owner BUSINESS RETENTION PROGRAM ATTRACTING NEW INVESTMENT Develop local sources of funding Support small business entrepreneurs and innovative concepts Partner with Govt. Agencies, foundations and Lenders Process 1. Establish relationship with owners/brokers/developers 2. Develop a target list 3. Develop marketing tools and incentives 4. Canvass leads 5. Make cold calls 6. Close the sale ATTRACT NEW INVESTMENT ATTRACTING NEW INVESTMENT REAL ESTATE COMMUNITY Realtors/Brokers Developers PROPERTY OWNERS LOCAL GOVERNMENT City council Residents Carrots Sticks PROPERTY OWNER SUPPORT Financial or public incentives Marketing and PR assistance Options, Easements, purchase Peer pressure Maintenance Code City ordinance Zoning Condemnation

16 PROPERTY DEVELOPMENT IDENTIFY NEED FOR QUALITY SPACE OR CATALYST PROJECTS IDENTIFY MOTIVATED OWNERS DEVELOP CARROTS AND STICKS CONDUCT FEASIBILITY STUDIES DEVELOP FINANCIAL INCENTIVES USE LLC OR DEVELOPMENT CORP. TO PARTNER Priority Back burner ATTRACTING NEW INVESTMENT Brochures Priority to community Web Will attract pagecomplementary uses Priority to local businesses Direct mail Space is in move-in condition Trade shows Owner is motivated Multiple listing Personal Compete with contact existing businesses Space limits specific tenants Unmotivated owner Requires gap financing ATTRACT NEW INVESTMENT ATTRACT NEW INVESTMENT Financial Technical services Revolving rehab loans Tax credits LLC or Angel investor Donation/CID Housing Bonus/Relocation Grants Code ombudsman Design assistance Consultant General leads Signage in windows listing in MLS Signage Networking Broker or Realtor Open house tours Web-site FACT SHEETS SIGNAGE WI Main Street

17 SIGNAGE ATTRACTING NEW INVESTMENT Identify Target tenants Review market information Evaluate condition and location of available vacant rental space Evaluate vacant and underutilized space Review property owner agreements Feedback from community Discussion with local realtors, developers ATTRACTING NEW INVESTMENT ATTRACTING NEW INVESTMENT Potential tenants Brochures Local Web page businesses Start-up Direct mail businesses State Trade or shows regional Businesses Chains Multiple and listing Franchises Personal contact Local businesses Brochures Realtors Web Referrals page from businesses, civic Direct leaders mail or residents Trade Interviews shows with business owner Multiple Website listing Personal Field work contact Sales reps ATTRACT NEW INVESTMENT ATTRACT NEW INVESTMENT Start ups Brochures Web Word page of mouth Direct Trade shows mail Trade Schoolsshows City Multiple Referrals listing Personal Residents contact Chains Franchises Brochures Trade shows (ICSC) Web Brokers page Direct Leasing mail Services (Buxton, Lease Trade Trac) shows Special Multiple incentives listing Personal contact Group together

18 ATTRACTING NEW INVESTMENT ATTRACT NEW INVESTMENT Evaluate prospect Sales help Displays Dunn and Bradstreet Newspaper Lease constraints Target customer Contacting the prospect Site visits Direct mail Brokers Referral Main Street Towns ATTRACTING NEW INVESTMENT ATTRACTING NEW INVESTMENT Signing the Lease Tenant upfit allowance Facade or sign Review of proposed uses Hours of operation Participation in Business Mix events Employee parking Personal appeal works best Use website to market Ask residents to help find targeted prospects Media coverage is critical Practice pitch on other Towns Ask for a referral Periodic follow-up LESSONS LEARNED RX: Prescriptions for a Healthier Business Mix Vision can t be copied Recruitment takes time A CRISIS IS A TERRIBLE THING TO WASTE Rohm Emanuel Must set high standards Requires Collaboration Work plan must be realistic