Shawn Massey, CCIM, SCLS

Cultivating Entrepreneurship: They key to building and sustaining retail growth our Town Squares and Metropolitan Downtowns!

Being in the commercial real estate profession, I am asked constantly about the best properties for investment?  What is the hot retailing trend? How do we lease our town square or downtown area of our city?  The last question is where I tell them if I could find the magic formula to lease the many town squares of our rural communities or the downtown metro areas of many cities then I would have that million dollar idea.  There is no magic formula or easy path to re-tenant and grow retail in the town squares and downtown metro areas of our country.  Although, I do know a way a community can help in the process with the understanding it is marathon undertaking and not a sprint.  The secret is “Cultivating Entrepreneurship!”

Cultivating Entrepreneurship is the process by where a community works together to seek out talented individuals with an entrepreneurial spirit and matches them with individuals, physical spaces, programs and in many cases capital to make a new business a success.  If you read the numerous articles in the Memphis newspapers last week alone you will see that this is happening for high tech and growth businesses, but not so much for retail start up businesses.  Such groups in our area such as Launch Memphis, Seed Hatchery and several others should be applauded for their recent and ongoing efforts to spur entrepreneurism.

Entrepreneurs and retail are a vital part of our local economies.  The future of nearly all communities in Tennessee and the United States depends on their ability to compete for consumer expenditures.  Becoming a market center by re-establishing our town squares and metro downtowns is the new model for economic growth in our communities. No longer will industries like manufacturing, either durable or non-durable goods, drive local economies forward.  Manufacturing will continue to be important, but it will not be the sector that shows dramatic growth.  Employment in manufacturing has been declining steadily for decades in the US, the industrial north, and throughout many areas of the Sunbelt South.  At the same time, employment has been expanding in private sectors like services, health care and trade, and many public sectors like education and government administration. These private and public sectors will be the highest growth segments of the economy in the future. 

Personal consumption of goods and services makes up 68.4% of domestic GDP.  Consumption is the largest part of the domestic economy and consumer sales reflect the condition of households across the nation.  Consumption of goods and services including health care are the largest segments of the local economy.

Our rural communities and metro downtown development organizations need to take a look at playbooks of those entrepreneurial growth iniatives and adopt the strategies that make sense to build a similar system to support retail growth and retail entrepreneurism.  These may include;

  1. Provide training and technical assistance.  These do not need to be new programs but we can match up our budding entrepreneurs with existing programs at SCORE and other existing programs.
  2. Business Incubation!  We have seen new incubators starting up for more office or industrial based business.  The communities need to partner with landlords in their town squares and metro downtown areas to make space available to start up retail businesses that may not have the credit or financial stability to enter into a multi year lease agreement.
  3. Seek out angel investors who like retail and try to partner up entrepreneurs who may have the ideas and skill set to make the business a success, but not necessarily the required capital.
  4. Work with area banks who want to see the community grow and target individuals who the banks would lend money their efforts.
  5. Work with franchisors on approving certain retail franchises that fulfill a niche in your community. Advertise those retail spaces that would work and have been approved by franchisors to potential entrepreneurs. 

Strategies such as those above should become the bedrock of our retail economic development program.  This process is defined as “Economic Gardening” and is the simple process of growing retail businesses and jobs internally within our communities by seeding and nurturing potential entrepreneurs.  This process works far better and has more lasting success and sustainability rather than attracting new retail businesses from the outside.  We can stop hunting for new businesses by creating an environment for retail growth within our community.

This entrepreneurial support system will need to integrate a wide range of programs that tailors its assistance from products and services to meet the diverse needs of individual entrepreneurs.  Its approach should be comprehensive, flexible, culturally sensitive and fully integrated to provide collaboration amongst the community retailers rather than individuals working in isolation.

Starting and growing a retail business is frightening with well documented perils.  Opening a retail business may differ between a rural town square and metro downtown area.  Both have unique advantages and disadvantages.  The advantages of a rural town square can include;

  • Low cost of doing business.
  • High quality of life when you live in a small town for many individuals
  • Improving education system
  • A growing level of entrepreneurism
  • High quality of local craftsmanship may exist
  • Spread of faster telecommunications will allow a rural retailer not only to sell via bricks and mortar, but possible to establish an online presence.

The disadvantages for a rural area may include;

  • Lower populations densities
  • Social & economic composition
  • Internal and external linkages
  • In the past economic development efforts focused solely on the development of natural resources of a region, attracting industrial users and small business expansion and retention.  Retail and town square retail recruitment is a new animal for many economic development professionals. 
  • Most college educated graduates are leaving the rural community for the city.  Although, some renewed effort is in place to connect these college graduates with rural entrepreneurship opportunities including retail.

For a metro retail recruitment effort varying opportunities and challenges exist.   These may include such advantages as;

  • The millennial generation who comprises the majority of our recent and future college graduates today is expected to become the most entrepreneurial generation of all time.
  • Most of this millennial generation is seeking an opportunity to live work and play in our downtown areas.
  • Increase need to service this growing metro community with goods and services.
  • Growing immigrant community developing in many metro areas provides not only economic diversity but a future of economic growth.
  • Better access to support services for entrepreneurism.

The disadvantages may include;

  • Higher cost of doing business
  • Higher cost of living

Of all the metro strategies we discussed one of the greatest areas for cultivating entrepreneurism is within the resident immigrant community. Immigrant entrepreneurs have been around for over a century and are entrenched in America.  Such national concepts as El Pollo Loco, Panda Express and Forever 21 were started by immigrants.  You can see the growth in Memphis and the Mid-South with the number of Mexican, Asian and Indian restaurants etc that have been opened in the last decade.  Numerous local apparel retailers in the Mid-South are owned by South Koreans and persons of Middle East descent.   We see the development of the Farmer’s Market supermarket on Winchester and Cordova.   These immigrant entrepreneurs have not been properly cultivated to utilize the local sources and assistance that is available in our communities.    They tend be disconnected from the local government, do not have a full understanding of the city’s rules and regulations and do not tap into the local capital sources to build more businesses and create jobs.  Any metro strategy for retail growth needs to encompass a framework to encourage these immigrant entrepreneurs to be better connected.

As we talk about our town squares and metro downtown areas the top REIT’s in the country are invoking similar strategies to fill their malls and shopping centers throughout the country.  KIMCO, a national retail REIT, has established a “Fast-Track” franchise program for many of their smaller vacancies where franchisors have already approved the potential space for their concept and just waiting for that entrepreneur to step forward.  DDR, another national REIT hopes their two new programs will help create a new generation of small shop tenants.  It’s “Set up Shop” program will seek out and nurture entrepreneurship will offer its participants flexible lease terms including the coveted free rent. Also, it has partner with SCORE to provide free consulting services to these retailers.  In the near future, they will launch “Franchise Connect” to help entrepreneurs find approved opportunities in their retail portfolio.

These same programs can easily be copied for our rural town squares and metro downtown areas.

For more help on developing your retail recruitment strategy I would suggest checking out the following resources;

Greater Memphis Chamber

http://www.memphischamber.com/Economic-Development/Business-Resources/Toolkit.aspx

Memphis Small Business Resource Guide

http://www.stlouisfed.org/community_development/assets/pdf/MEM_RG.pdf

City of Memphis

http://www.scorememphis.org/images/SmallBusinessResourceGuide.pdf

Or you can through the Tennessee iniatives that can be found under Governor Bill Haslam’s Job4TN strategy.

http://www.tn.gov/ecd/Jobs4TN.html

http://www.smallbusiness3.com/pdf/english/tennessee.pdf

Similar sources should be available online for each and every state!

I hope you will check out future weekly commentary at

www.RetailRocksintheMidsouth.com.   If you enjoy the commentary please subscribe online.

Cheers,

Shawn

Shawn Massey, CCIM, SCLS is a partner with The Shopping Center Group a 3rd party retail real estate advisory firm in their Memphis office, an adjunct professor in the graduate real estate program at The University of Memphis and a co-founder and Chairman of the Board for the Memphis Business Academy charter schools (K-12grade) in the Frayser area of Memphis.  

For all your retail real estate needs (tenant representation, landlord representation and property, investment & land sales) I hope that you will choose The Shopping Center Group and me to represent you and your business.  We understand that representation is a privilege and that you have a choice!

468 ad

Leave a Reply

Your email address will not be published. Required fields are marked *


Warning: Invalid argument supplied for foreach() in /home1/retail/public_html/wp-content/plugins/cute-profiles/processors/cute_1.php on line 25