Aspiring to be what we’re not?

Krispy Kreme closed its Franklin Street shop earlier this month after Nancy Oatesless than 5 years. A few doors away, Cold Stone shut down two months earlier. Farther west along Franklin, GiGi’s Cupcakes left town at the end of last year.

But locally owned Sugarland still plies its pastries and gelato after nigh on eight years.

Caribou Coffee ended its 18-year run on Franklin Street in December. Carolina Coffee Shop is still going strong as it approaches its century mark.

Several years ago Gap put in an appearance on Franklin Street, then left, while Julian’s has nearly reached the three-quarter century mark. Years ago, Swensen’s Ice Cream Parlor came and went. Sutton’s soda fountain is going strong after more than 90 years. The Greenbridge commercial spaces languished empty until local businesses signed on.

If Dwight Bassett and numerous developers of mammoth “mixed use” projects cluck nervously about the difficulty of finding businesses to come to Chapel Hill, maybe they’re looking for the wrong kind of business.

National chain outlets come and go quickly in Chapel Hill, but independent and local businesses have much more longevity. Why do town leaders ignore what the market heralds?

Krispy Kreme, Cold Stone and Gap all cited poor sales as their reason for shutting down. If a donut shop, an ice cream parlor and a jeans store can’t make it in a college town, something’s wrong.

National chains have more rigid expectations for profit than local business owners. Chains have customers, but corporate retailers have a model with specific performance goals and regimented consequences. Chains have little flexibility to make local customers happy, because those decisions are made at headquarters.

If sales begin to fall off at an independent business, the owner tinkers with the product to give customers what they want. Local owners can customize and be nimble. The independent owner may be more invested in success — after all, it is his or her livelihood — and more motivated to do whatever is necessary to keep the business going.

At last Monday’s council meeting, developer Roger Perry played the “grow or die” card, apparently unfamiliar with the concept of “evolve.” Perry and the Chamber of Commerce crowd, along with some council members, want to increase the number of residents to meet the thresholds of chain stores that will flit in briefly and leave. They seem oblivious to the irony that Perry’s apartment building aiming to bring more residents to Village Plaza has forced out long-standing businesses because shopping center managers want to charge the higher rents that chain stores are willing to pay.

By chasing chain stores, Chapel Hill may be trying to be something it’s not. Why are council members who approve large-scale residential growth so intent on setting us up to fail? As one community member told council last Monday night, “We want to be the Southern part of Heaven, not the southern part of Manhattan.” Bassett and council members would do well to pay attention to what works in town, and look for businesses closer to home.
– Nancy Oates

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22 Comments

  1. Bonnie Hauser

     /  May 25, 2015

    Don’t forget Med Deli, the Chapel Hill RestaurantGroup, Top of the Hill and the Carolina Inn. Oh and of course Vimala’s

    Personally I like Trader Joes, Whole Foods,and a host of other major players A mix is good.

    I’d love to hear more from the businesses – why they are staying or not, and what would help.

    I keep replaying the CHALT talk on complete streets and how improving transit, pedestrian and bike features could help revitalize downtown,

  2. David

     /  May 25, 2015

    There does seem to be some sort of market failure at work here. A set of landowners, each seeking to maximize his or her individual rent, in the aggregate end up creating a commercial environment with too little consumer spending—relative to the rents being charged—and high turnover.

    A number of cities, recognizing the value that distinctive, independent businesses add to the local economy, regulate the establishment of chain store outlets (“formula retail”). The idea seems to be that limiting the number of chain stores in an area will help keep commercial rents down, which in turn will make it easier for independent, local businesses to thrive. It’s implicitly a form of commercial rent control, which is anathema in the current political climate. But does it actually work to foster more stable and vibrant commercial districts? Anybody know?

    Examples include San Francisco:

    http://www.amlegal.com/nxt/gateway.dll/California/planning/article3zoningprocedures?f=templates$fn=default.htm (Section 303.1)

    and Sanibel, FL (Section 126.102)

    https://www.municode.com/library/fl/sanibel/codes/code_of_ordinances?nodeId=SPBLADECO_CH126ZO_ARTIVCOUS_S126-102FOREST

  3. Mark Marcoplos

     /  May 25, 2015

    A recent Commentary on WCHL:

    Orange County Database of Local Independent Businesses

    Our local, independent businesses are the backbone of our economy. They provide the majority of business jobs while accounting for the biggest share of sales in the county. Additionally they help to bind our communities together.
    Locally owned businesses retain their profits in the community and are more likely to purchase business inputs and professional services from other community businesses. Therefore fewer dollars leak out of the local economy.
    Local business will also tend to support local causes while national businesses tend to make charitable donations to national organizations and in the communities surrounding their distant headquarters.
    There are numerous studies that have proven unequivocally that local businesses provide a superior return over national chains. For example, a study from the Maine Center for Economic Policy concluded that $100 spent at a locally owned business generates an additional $60 in local impact. That same $100 spent at a national chain store generates only an additional $33 in local impact. This is a 78% greater return to the local economy by local business activity.
    The Orange County Economic Development Department should actively promote and support our local business community by compiling a comprehensive database of local, independent businesses detailing the goods and services that each one provides.
    In addition to directing more customers to our local businesses, there are other potential uses for this tool. Businesses could be offered the opportunity to list waste products that they generate and waste products that they could use. For example, one business may generate shredded paper and another business may need packing materials. This information could save them money and keep useable material out of the waste stream.
    We’re expecting an influx of new residents all over the county, but let’s look specifically at Hillsborough which has approved about 1000 new residential units. Many of these new folks will come from other regions. In the absence of a comprehensive guide to local businesses, they will likely jump on the interstate and head for the nearest mall to get the things they need.
    Imagine if they were informed of a local business directory as soon as they moved here. Many of them would choose local shopping options and immediately begin injecting more money into our communities than the big chains. And they would begin connecting with their new community on a personal level.
    A county database of local independent businesses would strengthen our communities economically and build stronger connections with our neighbors. The businesses are already there. Let’s do our best to support them.

  4. many

     /  May 25, 2015

    Nancy

    You forgot to mention that franchises are often locked into noncompetitive supply chain agreements that do not benefit the local owner or local suppliers so their economic impact is also muted. If people want national brands they are available (often at outlet prices) nearby or online.

    This is exactly the point the town seems to be missing. Chapel Hill should not pretend to be a “me too” place when we are perfect incubators for new business. Who better than a college town to encourage innovative ideas, helping to build confident new brands whose potential is well tested by a diverse and educated population of independent thinkers? Executing on that sort of strategy however takes leadership, risk tolerance and that vision thing.

  5. Bonnie Hauser

     /  May 25, 2015

    Yes the retail world is changing. And last I looked Walmart provided 12% of the county’s sales taxes.. I’m sure Lowes and Home Depot are high and Harris Teeter (Kroeger) and Food Lion probably follow close behind,

    The good news is that OC is poised for a windfall if the state goes ahead with plans to change the sales tax allocation formula. (Estimates are 30% increase). IMO, that changes everything.

  6. Mark Marcoplos

     /  May 26, 2015

    Wal-Mart’s are also burdens on local government social services. So the question is: What is the net gain?

  7. bonnie hauser

     /  May 26, 2015

    Obviously, many people like the store and use it regularly. For many Orange County families, Walmart is part of their “affordability picture” – although some prefer Mebane because the sales tax is lower

  8. bonnie hauser

     /  May 27, 2015

    The closing of Plaza Cleaners is another side of this conundrum.

    http://ourtownchapelhill.org/2015/05/27/unintended-consequences/

    Does the town have a policy to actively protect its local businesses during development?

  9. many

     /  May 28, 2015

    The New York Times has a somewhat related to “what we are” travel piece with video this morning entitled “36 Hours in Chapel Hill-Carrboro, NC”: http://www.nytimes.com/2015/05/31/travel/what-to-do-in-36-hours-in-chapel-hill-carrboro.html?emc=edit_th_20150528&nl=todaysheadlines&nlid=32431568

  10. Bonnie,

    The Town does has an economic development “strategy statement,” which begins as follows:

    “The Town of Chapel Hill will innovatively and proactively diversify local economic opportunities by retaining and supporting existing jobs . . .”

    As the closing of Plaza Dry Cleaners and the loss of 17 jobs makes clear, however, the Town is not actually doing anything to retain and support existing jobs during redevelopment. At least not dry cleaning jobs.

  11. Terri

     /  May 29, 2015

    David–what do you think the town can do to support existing buildings in the face of development plans, like at Ephesus Fordham (or Southern Village businesses in the face of Obey Creek)?

  12. Bruce Springsteen

     /  May 30, 2015

    I don’t think there is anything wrong with chains per se and frankly I think the ultra-local focus around here is dogmatic and borders on being a fetish. With regards to anything, circumstances dictate what might be better or worse, and circumstances vary. People sometimes bemoan the lack of affordability around here but has anyone considered the possibility that even aside from the possibility that a particular chain could be cheaper and save people money, automatically eliminating chains from consideration in shopping reduces choice and thereby decreases competition and increases prices?

    Lots of chains near our county borders are doing quite well. One of the few that have failed (Borders) did so because it didn’t innovate in a changing market and one of the competitors it lost out to was Amazon, which is even less “local” than Borders was.

    Has it occurred to anyone that a large state university with a national and international focus is just about as un-local as you can get? How can anyone with a straight face be against chain businesses while living without protestation in the shadow of UNC? Faculty, students and funding mostly come from elsewhere. And at UNC even a lot of the staff come from elsewhere because the cost of living is so high that staff can’t live here.

    By the way, if doing business only locally was what created wealth then the isolated tribes occasionally found in the wilds of New Guinea or whatever would be the wealthiest people on the planet. Instead they’re typically the poorest. Exchange amongst humans is what creates wealth and the more opportunity for exchange the more wealth is created, generally speaking at least. Individual circumstances can affect things but everything else being equal, the more people involved the better.

    If you think that local exchange creates more wealth then you try to sell your old Led Zeppelin albums to only your neighbors and I’ll put my old Led Zeppelin albums up on Ebay and we’ll see who gets more.

  13. many

     /  May 30, 2015

    Hi Bruce.

    Trade as you observed is good; agree. Different people and ideas, good; yes we agree there too. The point made earlier about being a test bed and incubator was to suggest we enable and leverage those exact things.

    Chains (presumably you mean national brands); we disagree slightly here. While there is nothing wrong with them, I find them kind of ho-hum faddish commoditized goods that contribute little to the attraction of trade, or of different people. This does not mean I won’t shop there, but these days I will more likely buy my commoditized goods online at the cheapest prices and avoid the hassle of traffic and parking. You make that exact point with your eBay example; there is a lot more choice and therefore more of a market online.

    Hyperbole about tribal wealth creation in New Guinea aside, I do not think I hear anyone automatically eliminating “chains” from choice and even if they were they would not be successful, but the primary driver for competition is not chains anymore it is the virtual marketplace. As you observe, for most people circumstances matter. Terms like “local”, “natural” and “organic” have been reduced to advertising tactics.

    You have noticed there is a whole lot of creative destruction going on in many industries; telecommunications, art, books, print, music, video, photography, travel, finance, advertising, privacy, war, employment and trade itself. Now it’s transportation, energy, law enforcement, retail and design. Soon it will be education, medicine, food and who knows what else. The churn and disruption is not over by any means and is accelerating, all because of the desire for trade and those diverse groups of people with new ideas for the underlying technologies. I suggest we find a meaningful way to participate in the change as it relates to our circumstance because that is the only way to affect it.

    Despite being the social rock that many depend on, government is not immune to the forces of change. Government decisions affect all of us and those decisions in turn are judged by the changes. We need people who are looking forward and making decisions that acknowledge the changes and take advantage of what the changes bring while planning for what they will destroy.

    BTW what kind of condition are those Led Zeppelin albums in? Have you tried craigslist?

  14. Nancy

     /  May 30, 2015

    Bruce, I’m not against chain stores at all. I’m the one who drives to Brier Creek for a DQ Blizzard. The original plan for Obey Creek was that it would be similar to Brier Creek — row upon row of low buildings divided into small spaces, most of them filled by national chains. And I was all for that. It would greatly improve our tax base. But realistically, in Chapel Hill, the businesses with staying power are local. The NYT “36 Hours” video did not mention Panera’s (despite its divine double-chocolate cookies) or McAlister’s (have you tried the pecanberry salad?). Independent businesses drive our local economy. Adding high-rise rental apartments so we can meet the metrics to qualify for a DQ isn’t worth the price we have to pay to get it. Especially as Town Council is not paying attention to the added traffic and stormwater runoff from the extra density of those apartment buildings and the people who live in them.

  15. Bruce Springsteen

     /  May 31, 2015

    Re. chains, I’m not speaking in terms of whether I like them but whether I find them objectionable in principle. I don’t. I like some chains and not others but I get the impression that some people around town find them inherently bad because they’re not “local.” I don’t buy that. It depends on the situation. And on top of that, does it occur to anyone that every chain started off as a local place? Weaver Street Market has been a chain for a long time now. And a chain, BTW, whose products are expensive.

    I’m not all that fond of referring to things chains sell as “commoditized goods” because it seems to me that people in general, especially for political reasons, use code words that implicitly diminish those on the other side and that sometimes manifests in oversimplification. In terms of “commodity,” the biggest chain selling something is no different IMO than the smallest, most local vendor, a vendor at a farmers market perhaps.

    As far as saying that “local,” “organic” and “natural” have been reduced to advertising tactics, I think that’s misleading because it implies that those words were ever something other than advertising tactics in the first place. It seems like an advertising tactic that works on a small number of people in the early stage is considered authentic and then after it’s been around for awhile and starts to appeal to larger number of people it is somehow tainted, even though it’s the same thing as before.

    Has anyone ever tried to define “natural?” Try it and then critically analyze your result. It’s hard to come up with a definition that’s not arbitrary and any definition you do come up with doesn’t necessarily equate with “better,” even though “natural is better” is firmly entrenched in the mind of the public.

  16. many

     /  May 31, 2015

    Bruce,

    “……the biggest chain selling something is no different IMO than the smallest, most local vendor, a vendor at a farmers market perhaps.”

    I disagree. The difference is scale (impact) and influence (accountability). Since you brought up the example of food. Take a look at businesses like Monsanto, Wal-Mart, Tyson and Kraft.

    I am not specifically picking on Wal-Mart here (I own stock in the company, so I have source material in their annual report). I find some statistics fascinating. These statistics show that a company such as Wal-Mart (which did begin as a “local” company) does differ remarkably from anyone’s concept of a local vendor now.

    Good or bad; did you realize that Wal-Mart accounts for 25% of the entire US grocery spend? More than half of Wal-Marts sales (55%) are from food and roughly one in five food stamp dollars nationwide (4% of Wal-Marts sales) goes to Wal-Mart. Wal-Mart sales are more than 100 Billion ahead of its closest competitor (Kroger) and it holds the top grocery spot in more major markets (29) than any other grocer. Wal-Mart accounts for more than 50% of the grocery spend in those 29 markets.

    There are reasons for those numbers, not the least of which Wal-Mart supply chain and resulting prices.

    Wal-Marts supply chain is world class, managing stocks products made in more than 70 countries and at any given time, operates more than 11,000 stores in 27 countries around the world, and manages an average of $32 billion in inventory. Walmart has the largest information technology infrastructure of any private company in the world. Walmart’s scale allows them to accurately forecast demand, predict and track inventory levels creating highly efficient transportation routes, There are other strategies such as VMI which effectively reduce the links in the supply chain putting some of the cost on the vendor.

    The result is that Wal-Mart is an average of $3 cheaper (basket of food) than any other brand. Multiply that times the weekly grocery bill, add savings in other areas and you can see the successful model. The growth, size and scope of Wal-Mart’s grocery business is still amazing since the first fully stocked Wal-Mart grocery did not open until 1988.

    I want to be clear that I am not criticizing Wal-Mart for being big, nor for capturing market share. My point is due to their size and scope they are far less aware or reactive to local concerns than a local business, (which BTW might control an equal or greater share of the local market). The fact is that Wal-Marts concept of “local” would be “regional” to anyone else and draws business away from local suppliers that would otherwise supply a local concern increasing the local ripple effect impact especially in smaller markets.

    Point taken on the marketing terms. My point was simply that sometimes when there is a popular “movement” that has a label, advertisers co-opt it very quickly. Of course it is just as likely the “movement” is a creation of the marketeers to begin with.

  17. Terri

     /  May 31, 2015

    Natural; no artificial ingredients. Seems kind of simple and straightforward to me. I don’t require “certified organic” food anymore than I think it’s worthwhile to invest in LEED certification. But I want food that is natural, and I like natural fibers for my clothing. I dislike off gassing. Why shouldn’t I have that option?

    The problem with chains is that the bulk of the profits they generate leaves the community. Local businesses keep those profits here in the community: http://www.localmultiplier.com/

    Many chains pay minimal wages without benefits. That’s fine for the companies and for shoppers but it’s a false economy since those workers end up getting social services that the “shoppers” pay for through their taxes. In other words, I object to any business, chain or local, that does not pay their employees a living wage for this county. Anything else is corporate welfare.

  18. Bruce Springsteen

     /  May 31, 2015

    I may have longer answers to those last two posts but one short answer that I simply can’t resist right now is this.

    Terri says that natural is defined as no artificial ingredients. That doesn’t help because artificial is something that is unnatural. You can’t define natural as that which is not unnatural.

    Does something have to occur in nature without human intervention to be natural? If so then agriculture if not natural. If human intervention is allowed then where is the line where it becomes too much? Yadda, yadda. If you try to get specific you’ll find that there are devils in the details.

    That said, while of course you can eat anything you want, I wouldn’t necessarily assume eating something natural is better than eating something unnatural. Some things in nature are good and some are bad. Some things created artificially are good and some are bad.

  19. many

     /  May 31, 2015

    https://www.youtube.com/watch?v=AftZshnP8fs

    What cracks me up about the above it that it is brought to you by “Organic”, which, ooops! Takes more land, more water, is more subject to localized pestilence and disease and feeds far fewer people.

    Of course, at the the same time on the other side of town; GMOs have reduced the genetic diversity of crops to the point where a single unanticipated factor or event has the potential to result in a catastrophic collapse of the global food chain.

    All the while, Monsanto devotes an entire web page to “diversity”….and how important it is. The irony is impressive and goes to show that the companies have consumed their own Kool-Aid at the same rate the consumers are being deluded by “natural” and “organic” marketing.

    Nope there is no silver bullet folks, we all need to stop lying to ourselves.

  20. many

     /  May 31, 2015

    BTW….a shameless plug for a local farm that is struggling to make it. YES! Both natural and organic…. NO! Not a chain but I am sure they wouldn’t mind being one. You can help them become a chain by purchasing their Ran-Lew Dairy milk at Weaver St

    A documentary film made by Ted Richardson and Jason Arthurs of the N&O (having won several awards) on the struggles and successes of the Ran-Lew Farm will play tonight in the Ballroom at the Saxaphaw Mill.

    The film trailer can be viewed here:
    http://lastbarndance.com/#about

  21. Mark Marcoplos

     /  May 31, 2015

    “Bruce”,

    It is a stone cold fact that money spent with a local business circulates longer in the economy and has a multiplier effect.

  22. Terri,

    One thing the town could do to help existing businesses threatened with displacement by redevelopment is to require, as a condition of rezoning, that some accommodation be made to the existing businesses, e.g., financial assistance with relocation or an offer of space in the new building at their existing rental rates. Perhaps we could do for commercial property something analogous to the inclusionary zoning ordinance we adopted for residential property.

    More ideas here: http://www.ilsr.org/tackling-problem-commercial-gentrification/

    Regarding chains vs local, when I have talked to local small business owners, they tell me they like having some chain stores nearby because it increases foot traffic to their own stores. But they obviously don’t want to be replaced by chain stores.

    So the key, perhaps, is to try to strike some balance between idiosyncratic and formula retail.

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