Tuesday, March 26, 2019

Is the Future of Retail Un-Deliverable?

By Alex Pearlstein, Vice President

You’ve seen them and maybe even visited them – possibly more often than your pocketbook can accommodate. This expanding retail category is about experiences, a commodity that can’t be shipped digitally, in brown/white/blue delivery trucks, or by drone. As the “retail apocalypse” continues to thin the herds of mall anchors and tenants and cause “for rent” signs to proliferate on commercial streets and shopping districts, establishments that provide a unique entertainment product are demonstrating market viability in a difficult period for brick-and-mortar retail.

Even restaurants – a tried-and-true destination retail staple – face growing competition from make-at-home meal distributors like Blue Apron and on-demand food delivery juggernauts like Grubhub and Uber Eats. Same goes for markets, where browsing for the ripest tomato can now be done by a gig worker who drives it to your house in a matter of hours, or less. Just about anything that can be bought in a store can now be purchased online or through an app.

Entertainment retail centers (ERCs) and family entertainment center (FECs) offer a “delivery-proof” experience that’s just hard to mimic despite the size of your home gaming console and big screen. It’s also about community – the chance to meet friends and strangers in an environment conducive to shared encounters. If you can get a booze buzz, all the better. Hence the happy hour specials at Dave and Busters, Topgolf, and other ERCs.

For families, buck-toothed staple Chuck E. Cheese has been joined by play centers like Monkey Joe’s and Sky Zone trampoline parks in the battle to empty your wallets and your children’s energy tanks.

Smaller footprint hybrids like “Barcade” (bars with arcade games), active-game bar/restaurants like the buzzy Woolworth in Birmingham, and other models are also finding success with patrons looking to spice up the typical night-out experience. For kiddos, restaurants are equipping outside space with play areas to lure families and birthday parties. During a recent trip to Austin for a wedding, we were drawn to the Hat Creek Burger Company like moths to a char-broiled flame.


The Woolworth in Birmingham, Alabama


Hat Creek Burger Company in Austin, Texas


It’s not just chains that are finding success. Local centers like Smash Park in West Des Moines, Iowa  and Two Bit Circus in Los Angeles are examples of entrepreneurial ERC/FEC plays.


Smash Park in West Des Moines, Iowa

Importantly, entertainment centers are becoming substitute anchors for malls that have lost their department store tenants and represent desirable new-build options for developers looking to fill thousands of square feet of retail space. The ERC/FEC category typically features floorplates of 15,000 to 50,000 square feet and can even go larger. Even with new centers opening rapidly, experts feel the FEC market is far from saturation and will continue to expand. Allied Market Research estimates the global FEC market size at $18,907 million in 2017 and projects it will rise to $ 40,814 million by 2025, a combined annual growth rate of 10.2 percent.

Economic developers must stay abreast of the new trends roiling the retail landscape and connect property owners and leasing agents to investment prospects in the ERC/FEC market. As technology continues to blow up the retail paradigm, the health of a community’s tax base – especially those dependent on sales taxes – will increasingly be tied to opportunities to create destination experiences that can’t be matched by the click of a button.

Friday, February 22, 2019

Co-Ops for Economic and Community Development

Stephanie Allen, Project Assistant

Although they have been around for nearly two centuries, cooperative businesses (co-ops) have never really attracted much attention from economic developers. That may soon change.

Business start-ups are at an all-time low. Income inequality is at a high. And, we are still reeling from the effects of the unbridled, investor-driven, socially irresponsible capitalism that led to the great recession. Co-ops offer an interesting and more socially responsible alternative to shareholder- and proprietor-owned business structures. Economic developers take note.

The Urban Institute lists co-ops among their “Five trends to watch in community and economic development in 2019.” They predict that there will be more policy and philanthropic interest in co-ops, especially worker co-ops in 2019.

So, what exactly is a co-op (aside from an alternative grocery store)? And, what’s so interesting about them from a community and economic development standpoint?

A co-op is a democratically run business whose members are also its owners. Co-ops exist to serve the needs of their members (rather than to maximize profit) and each member has a say in the business decisions the co-op makes. Member-owners answer to one another, not to outside investors. And, they return surplus revenue to one another too instead of rewarding outside investors with their profits. The co-op philosophy is a community approach to business where they are built by the community and for the purpose of serving the community.

Most of us are familiar with grocery co-ops, many of which started as buying clubs that allowed members to pool their resources in order to place bulk orders and save money. Credit unions are also based on a co-op model. Co-ops run many resident-owned buildings in large cities and are becoming more popular in mobile home parks as well. There are worker co-ops, agricultural marketing co-ops, insurance co-ops, utility co-ops, childcare co-ops, and dairy co-ops, just to name a few. A 2010 study conducted by the University of Wisconsin found that there were some 29,000 co-ops in all sectors of the American economy, their revenues exceeded $3 trillion, and they employed more than 850,000 people.

Economic and community development agencies should be interested in co-ops for a number of reasons, including the following:

  • Co-ops pool human, financial, and other resources, extending the opportunity of entrepreneurship to those without the capital or resources to start a new business alone.
  • Co-ops spread the wealth by providing jobs and business ownership opportunities to community members. According to a 2008 study from the University of Wisconsin Center for Cooperatives, owning a business is a way for workers to build personal assets, which can lead to higher income, higher educational attainment, and other positive social outcomes.
  • Co-ops can reduce income inequality. According to a report from co-operatives UK, worker co-ops have narrower pay differentials between executive and non-executive workers, leading to reduced income inequality.
  • Co-ops are resilient. According to a 2012 CICOPA study, co-ops had fewer closures and fewer job losses than non-co-ops during the great recession.
  • Co-ops recirculate resources in the community
    Co-ops exist to meet members’ needs, not to deliver profits to outside investors. Their nature is inherently locally-based and participatory, which makes them well-positioned to contribute directly to community vitality and stability. And, that’s the ultimate goal for community and economic development isn’t it? We want vital and stable communities.


    Monday, January 14, 2019

    LEADERSHIP 2019


    By J. Mac Holladay, CCE, PCED, LM, HLM

    Over this holiday season, I was able to read several books on topics of great interest to me. One was Doris Kearns Goodwin’s new book, “Leadership: In Turbulent Times.” What Goodwin, winner of the Pulitzer Prize, does is to examine the lives of four American Presidents – Abraham Lincoln, Theodore Roosevelt, Franklin Roosevelt, and Lyndon Johnson. She has previously written four extensive books devoted to these men, but found many new realities in the exclusive theme of leadership. 

    The book begins by exploring how each President entered public life. All took very different paths and their stories include confusion, hope, failure, and fear. They each had fierce ambition and an inordinate drive to succeed. Each exhibited powerful perseverance and hard work, enhancing and developing the qualities they were given. 

    Dramatic reversals and tragedies shattered the private and public lives of each man. At age 32, Lincoln had a severe blow to his public reputation and his private sense of honor as his progressive infrastructure projects failed in the Illinois Legislature and his engagement to Mary Todd was called off. The resulting deep depression affected him the rest of his life. At 26, when a New York Assemblyman, Theodore Roosevelt lost his young wife and his mother on the same day. In 1921, Franklin Roosevelt was struck by polio and left permanently paralyzed from the waist down. Johnson lost the Senate race in 1941 and saw it as a rejection by the people, and later he suffered a massive heart attack which repurposed his life. These events and how each put himself back together molded his leadership. 

    Each man, in very different ways, made his way to The White House. Lincoln entered when the nation was in the gravest moment of dissolution in American history. FDR faced the question of the survival of the American economy and viability of the democracy itself. While neither Theodore Roosevelt nor Lyndon Johnson faced such immediate difficulties, both became President following the assassination of his predecessor. Amazing, the leadership style and skills of each of the four fit the historical moment almost perfectly. 

    There was no single path for these four Presidents. Each one was looking beyond his own life and wanted to be sure his achievements shaped and enlarged the future of America. The recognition that each one sought bears little resemblance to today’s culture of celebrity. They cared about an enduring place in communal history. Lincoln and FDR died in office. Theodore Roosevelt died in 1919 while working on his dream of returning to the Presidency. Johnson died four years after retiring from office, but in his final public statement returned to his greatest contribution, the civil rights legislation that only he could have gotten passed. At the Civil Rights Symposium at the LBJ Center on December 12, 1972, he said that he had come to believe “that the essence of government” lay in ensuring “the dignity and innate integrity of life for every individual – regardless of color, creed, ancestry, sex, or age.” He continued “We have not done nearly enough” and then concluded with “If our will is strong, and if our hearts are right, and if courage remains our constant companion, then my fellow Americans, I am confident, we shall overcome.” 

    Each of these Presidents was linked to the people. Each listened well and communicated with the American people in every way possible. These four men form a family tree. The lineage of leadership spans the entirety of our country’s history. They set a standard for all of us. As Abraham Lincoln said “With public sentiment, nothing can fail, without it nothing can succeed.” 

    While it was said long ago, this is a statement we should all remember. It is the foundation on which America is built. 

    NOTE: I have in many cases quoted directly from the text of the book without specifically noting those words.