The place for national chains

Evanston’s experience with downtown revitalization highlights a question that often arises in reviving commercial areas: Do chain retailers detract from local character? Often local people erroneously think chain stores outnumber independent businesses. “Of 270 ground-level businesses in downtown Evanston, around 200 are independent,” says Terrence Jenkins, president of Business Districts Inc., consultants to downtowns. Yet, he says, “If you went into the neighborhoods, people would say downtown has become a franchise haven; the little guy has been forced out.” People form this false impression because franchised and chain retailers have been growing, “the things they build tend to be more eye-catching and bigger, and they’re more publicized in the paper,” he says. Some chains are good for a business district. Big chains thrive because on the whole, they provide goods and services that consumers want. Jenkins notes that highly successful businesses such as chains have the wherewithal to pay for new construction or major renovation — something that most downtowns need. Though nobody likes to knock little shop-owners, chains frequently do a number of things better than small, local businesses. What’s needed, Jenkins says, is the right mix. A good development plan for a downtown, he says, should balance four types of retailers: nationals, regional chains, “local regional chains” (entrepreneur-run businesses with perhaps three or four units, all within a 15-minute radius), and local entrepreneurs. One of the things that makes entrepreneurs valuable, he says, is that “they often want to be in older, urban-feeling kinds of buildings, older urban blocks, rather than steely, modern buildings. We strongly encourage downtowns to recruit these people.” His method: “Go to the successful [nearby communities], look for stores in the niche you want to fill, give a packet to downtown entrepreneurs, and suggest they consider opening in our downtown.” “Commercial gentrification” is the term sometimes used for the forcing out of less profitable, locally owned businesses. Donovan D. Rypkema, operator of Place Economics, a community revitalization firm based in Washington, DC, gave a speech last June to the Urban Main Street Forum in Boston in which he argued that the dangers of commercial gentrification are sometimes overstated. Change cannot be avoided, Rypkema said. “There is no business district that is static — it is getting better or it is getting worse.” Rypkema noted that “most of the interesting, creative, imaginative businesses and business ideas come from newcomers, not longtime existing businesses.” New arrivals — some of which are chains — are needed, especially since there are some local merchants “who haven’t changed their window displays in 15 years, who are open from 10 to 4, five days a week, whose merchandise is shoddy and prices uncompetitive, and are just lousy business people.” New businesses bring benefits for consumers and communities. However, the balance can shift so far toward chains that local identity is threatened. Rents may rise so high that useful lower-profit businesses are forced out. Here are some of the remedies Rypkema recommends to protect “good businesses, locally owned, who add to the differentiation of our business district, and who meet a need of our residents”: • “Advocate for small businesses owning their own buildings.” • “We should create neighborhood-level tax-increment financing districts. Use the proceeds to acquire properties to resell to businesses that we want to retain, but that are at risk of being priced out of the market.” • Supply neighborhood business owners with access to information on “marketing, inventory control, personnel, financing, accounting, Internet selling, merchandise display, and a dozen other areas where the national chains are extremely knowledgeable.” He added, “If their response is, ‘I don’t need to know any of that, just give me more parking,’ I question whether we should want them to stay.” • Because existing businesses in a gentrifying market may need to expand, upgrade, buy new equipment, or add inventory to survive, “perhaps we should establish pools of patient equity — make investments in the businesses that are neither grants nor loans but are equity contributions” receiving a return “on a time-deferred basis.” • The nonprofit sector should “own enough space in our district to serve as a fallback location for good businesses we want to keep in the neighborhood but who, in the short run, cannot survive by paying rapidly escalating rents.” • Avoid demolition of historic buildings, since this “reduces both quality and affordability.”