Sunday, November 26, 2006

Repeat retail:
When is enough enough?

By Anne Blythe, Staff writer

As the holiday shopping season whips into a frenzy, Triangle residents who do a quick survey of the retail landscape may sense a certain monotony. Like leftover Thanksgiving turkey, it all starts to look alike, no matter how you slice it.

From Clayton to Hillsborough and Pittsboro to Bahama, the Triangle abounds with Targets, Best Buys, Linens-N-Things, Home Depots, A.C. Moores and Wal-Marts. Shoppers looking for something different, for merchandise not available Anywhere USA, lament the proliferation of familiar chains here.

"It's all the same, and it's not just in Raleigh, either," said Kate Lesser, a professional shopper who combs malls, boutiques and big-box stores to help her clients from A Distinctive Image find make-up and clothes. "We're becoming more and more of a mass market."

It is not by accident that the Triangle's retail scene seems like a sea of sameness. The mixture and number of stores in the region result from careful calculations by big retail chains.

"My notion is they all have very sophisticated algorithms and logarithms," said Gary Armstrong, a professor at UNC-Chapel Hill's Kenan Flagler business school. "They're experts at economic forecasts and demographics."

Marketing analysts and university researchers say retail corporations consider a variety of data when coming into a market.

Companies review a community's median income and age, as well as its racial makeup, education levels and the percentage of annual pay spent at local grocery stores. Their analysts look at the type of merchandise already available in a three- to five-mile radius of a possible site. They take into account residential growth, available retail space and potential for expansion.

From 2000 to 2005, population in Wake, Durham and Orange counties increased 14 percent to 1.109 million, according to U.S. Census Bureau data. The amount of retail space grew faster — by 35 percent from 2000 to 2006, when it hit 38.9 million square feet.

"The Triangle represents a great opportunity for growth, and given that growth, there's an opportunity to open up new chains without cannibalizing existing outlets," said Carl Mela, a professor of marketing at Duke University.

Just don't expect retailers to share their secrets. Bed, Bath & Beyond, for instance, is tightlipped on why the company decided Wake and Durham counties could support eight of its home goods stores.

"That's something we would not comment on," said Catherine Gentile, a spokeswoman for Bed, Bath & Beyond, based in Union, N.J. "Our biggest focus is customer service. If we can make it so our customers don't have to travel so far, that's what we're looking to do."

Retailers treat their numbers and formulas like secret codes to protect their interests, experts say.

"They really don't want you to be able to guess where they're going next," said Emil Malizia, chairman of the department of city and regional planning at UNC-CH. "They have legitimate reasons."

For example, Malizia said, a landowner might jack up the asking price for a piece of property if he knew a deep-pocket corporation wanted into the market.

The big squeeze?

Many shopping centers have a familiar look because certain franchise retailers often congregate when they go into a market.

Developers often are able to get better financing packages when they can show a lender that established chains will be in their space, analysts say.

A company's calculations may involve factors beyond meeting market needs, said Stacy Mitchell, author of "Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses." Otherwise, why has the amount of retail space per capita doubled nationally since 1990, while median household income, adjusted for inflation, has gone up only 10 percent?

"It used to be the way retail worked was they would look out on the landscape and they'd look where there were unmet demands," said Mitchell, whose book has spawned numerous grass-roots alliances for independent businesses. "That's not what we see today. It's almost like these companies are in an arms race."

Companies flood markets, she said, so they can squeeze out competitors. That can cause retail vacancies and lasting scars.

"It's communities and local economies that end up paying the price," Mitchell said.

The national retail vacancy rate was about 7 percent in March, according to Reis Inc., a New York research firm. In the Triangle, the retail vacancy rate was at 6.4 percent in June, up from 3.15 percent in 2000, according to a report by Karnes Research Co.

The Raleigh Independent Business Alliance, a group of merchants and business owners, is urging Triangle shoppers to shift at least 10 percent of their business to local stores. Through a Web site (www.raleighunchained.org), alliance members hope to educate people about the value of spending their money at businesses that return much of the wealth to the towns and cities they are in.

"When you shop locally — there are several studies that show — 45 percent of your money stays in the community compared to the unlucky 13 percent if you shop at a chain store," said Linda Watson, the alliance's previous executive director, a board member and a Web page designer. "It's through sales tax, and it's also through the local multiplier effect that communities benefit. The local people are using local printers, local advertisers."

But families with two parents working and children going to soccer practice, ballet, music lessons, basketball leagues and other after-school activities do not always have time to hunt for locally owned stores and make cross-town trips to pick up what they need.

So shopping centers with familiar chains become the outlets of convenience.

"Part of it is just the extreme busy-ness of everybody," said Matt Kalb, an Orange county resident who advocates shopping at locally owned stores. "It just tends to homogenize things. They just want to show up at a mall and be able to buy everything."

Nancy Olson, owner of Quail Ridge Books & Music in Raleigh, tries to offer something different to compete with the big-box bookstores in the region.

"It's been extremely difficult because the readership has not increased with the proliferation of the chain stores, so we're all fighting for the same pie," Olson said. "I hand-pick all the books in here. I try hard to give the readers an alternative selection."

Variety or price?

Some Triangle shoppers are taking it upon themselves to recruit new retail to fill voids in the market.

An online petition to bring an IKEA furniture store to Raleigh has more than 3,000 supporters. The Swedish company recently opened a store in Atlanta, marking the first venture into the Southeast beyond its northern Virginia site.

Although Saks and Nordstrom recently entered the Triangle market, some shoppers would like to see more upscale stores such as Bloomingdale's and Neiman Marcus open here.

Margaret Brickell, 73, a Raleigh resident since 1959, speaks fondly of trips to Neiman Marcus in Dallas, where she grew up. A former model and TV broadcaster with four children, Brickell used to ask her mother to send her clothes from Texas. During her four-plus decades in the Triangle, Brickell has been able to find the styles she likes, but sometimes it takes effort.

"There was a time when I didn't see anything; it was all for the teenyboppers," Brickell said. "The fabrics were not good. But it depends on need, and it depends on the individual. You just simply look, and when you find something, you get it."

The great portion of shoppers in the Triangle, though, must be comfortable with chain-store shopping, researchers say. Studies show that people are prone to shop within a mile of their homes.

"My suspicion is people shop in the chains because the variety and the merchandising create an experience that is not a big risk," said Mela, the Duke marketing professor. "People tend to bemoan a lack of variety, and in the end, when faced by choices, they go with price."

http://www.newsobserver.com/690/story/514605.html

© 2006 Raleigh News & Observer

 

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