Reading Dunning yesterday, he noted:
THE ALMIGHTY DOLLAR – based on a random and completely scientific survey of what folks were purchasing at Target, I don’t think downtown Davis is threatened here – certainly, any time anyone opens something new, it’s unsettling to current retailers, but most Target customers are simply now buying in Davis what they previously would have bought at Targets in Woodland, Sacramento, West Sacramento and Vacaville –
Yes, there is an extensive and attractive and bargain-priced grocery section, but I’m really not worried about Nugget – I’m sure Nugget’s not worried either – or Safeway – comparing the grocery offerings at Target to those at Nugget is truly – and literally – comparing apples to oranges – those who might feel the biggest hit from Target are CVS and Rite-Aid, but those are chains, too, and they realize that competition is fair game –
Perhaps Davis is indeed unique in that it is a city that is near enough towns with Big Box retail stores that building one here will simply shift business inside the city limits. However, this argument flies in the face of research on the impacts of Big Box Retail. Supporters of Target argue that people are just purchasing what they did in Woodland, perhaps that is true. However, as people will likely frequent Target in Davis more than they did in Woodland, it seems increasingly likely that they will buy incidentals as well.
Someone sent me a picture yesterday that was in another publication, it was of a band playing in Target, but I could not help but notice the Halloween costumes immediately next to where the band was playing. So are you telling me that the specialty Halloween stores are not going to be hurt by this influx of competition? Especially in a year that people figure to go cheap on their costumes to begin with? That is but one example.
I can quickly plow through some of the research again. A 2007 study, “The Effects of Wal-Mart on Local Labor Markets” examined 3094 counties across the US, tracking the arrival of new Wal-Mart stores (for our purposes we ought to expect a similar impact, though Wal-Mart is the focus of much of the big box studies since it is far larger in terms of stores than Target). The study was conducted by Cal economist David Neumark, and he found that the opening of a Wal-Mart store led to a net loss of retail jobs on average finding that a new Wal-Mart job replaces around 1.4 workers at other stores.
His findings reflect the fact that the sales gained at the new stores are mirrored by a drop in revenue at existing businesses. That leads back to the question as to whether Target is merely picking up existing customers who shop in Woodland, or picking up new customers. I would suggest that Target must believe they will pick up new business by moving to Davis, otherwise, why go to the expense of running an election campaign and building a store in Davis, unless they believed they would pick up additional business?
A 2004 study in Civic Economics looked at the impact of big-box stores on the volume of activity in the local economy.
“For every $100 they receive in revenue, locally owned businesses hire more local workers, purchase more goods and services from other local businesses, and contribute more to local charities than their big-box counterparts. When chains displace local businesses, it results in an overall loss of economic activity, not a gain.”
The study concluded that every $100 spent at one of the independent businesses created $68 in additional economic activity in the city, while spending the same amount at a chain only generated $43 worth of local impact. The reason for this large difference is that local retailers buy more goods and services from other local business–they do their banking at the local bank, they hire local promoters, accountants, web designers, they utilize the local print shot, they advertise in the local publications. Target already advertised in the Davis Enterprise, so that is not even gained business for the paper and the paper lost a bundle when Gottschalks folded.
A follow up study in the same journal looked at the impact in Western Michigan. That study found:
“in Kent County, Michigan … that the region would gain 1,600 new jobs, $140 million in new economic activity, and $53 million in additional payroll if residents shifted 10% of their spending from chains to local businesses. A shift in the opposite direction —more spending at chains — would cause equivalent economic losses.”
A way to look at this, let us suppose that people really were going to Target and elsewhere in Woodland, Dixon, West Sacramento, even Sacramento. The city has spent a large amount of money bringing in Target, they also have spent money to keep downtown afloat in the face of Target coming, perhaps the city would have been better off putting up the capitol to develop local business that would keep the tax dollars in town and move people away from big box and toward local business. These studies suggest that not only Davis but the region would benefit from this kind of approach. Along these lines perhaps we are fighting the wrong battle and we ought to be working on a regional basis to develop and produce local business rather than going into a bidding way over big-boxes.
There is another point that has not been made here. We are drawing people away from the core of town to do business. As they go to gather at Target (and the adjacent shops when they are built) they are away from downtown. The loss of foot traffic and incidental sales will likely be enormous. That impact will not just effect stores that are in direct competition with Target, but all businesses.
Someone mentioned San Luis Obispo in the discussion on Sunday. What many people do not understand is that San Luis Obispo almost killed their downtown twenty years ago by focusing a huge amount of shopping away from the core. That prompted the city to have to do a major investment in the core to upgrade it. That damage occurred without a big box store being brought to town. The impact on the existing businesses was devastating and while the downtown is thriving again, it is doing so without many of the local businesses that previously anchored it. Many of those businesses are now long gone. The downtown is almost unrecognizable from the place I remember growing up.
The euphoria over the new Target will wear off in a few weeks, and then the impact of Target will become more pronounced. I think there is a shift to buy in town as opposed to out of town retail sales. But at the same time, people once they shop at Target will be more likely to purchase items that Target sells that they used to purchase at other locations in town. The fact that this is occurring during one of the worst downturns in modern history should be far more concerning than it seems to be.
—David M. Greenwald reporting
Seems like anything that Dunning says in his column is going to get attacked here from now on, regardless.
[i]I have to confess, not only have I not gone into the Target, I have not even gone by its location since it opened.[/i]
That makes your take on Target look like something of a prejudgment. You could go there and promise yourself not to buy anything.
[i]Then again I make it a point not to give my business to union busting companies that pay their workers with less than living wages.[/i]
On the living wage question, half of us who live in Davis must be guilty, if you consider housekeepers, gardeners, babysitters, etc. Even if payment is nominally more than living wage, these are zero-benefit jobs with no compensation for time between jobs.
[i]The study was conducted by Cal economist David Neumark, and he found that the opening of a Wal-Mart store led to a net loss of retail jobs on average finding that a new Wal-Mart job replaces around 1.4 workers at other stores.[/i]
I don’t doubt it. But by itself, this is criticizing companies for being efficient. This is exactly one reason that people like Target; if it didn’t require fewer workers, its prices would be high. Are you also against Skype, because it drains jobs from the phone industry?
[i]I would suggest that Target must believe they will pick up new business by moving to Davis, otherwise, why go to the expense of running an election campaign and building a store in Davis, unless they believed they would pick up additional business?[/i]
Target is picking up business not only from the Target in Woodland, but also from the Wal-Mart in Woodland and the Wal-Mart in Dixon. Wal-Mart is their main competitor. Yes, they will also pick up some business from Davis Housewares. The problem is that it is frustrating to shop at Davis Housewares; the selection in a store that size can only go so far.
Besides, I don’t know where I am supposed to buy ordinary clothing in Davis other than at Target. I can’t get shirts and slacks at Pinkadot.
Sorry Davis, I realize I’m nitpicking here but:
So are you telling me that the specialty Halloween stores are not going to be hurt by this influx of competition?
Last I checked, the specialty Halloween store (there is one, unless you want to count the party store on 8th, which isn’t really a Halloween specialty store per se) is the Halloween Headquarters down on 5th street, which:
a) doesn’t provide full-time jobs
b) most likely has worse benefits than even Target
c) doesn’t provide year-round work
d) pays even less than target
e) isn’t really a “Davis store”, it’s just a temporary location for Halloween Headquarters, which is an enormous chain that operates dozens of locations within the Greater Sacramento-Bay Area Region
f) Target doesn’t even have much Halloween stuff anyway; I spent my $50 on Halloween supplies this year at, indeed, the 5th street Halloween Headquarters, despite Target being in my back yard.
Again, I admit I’m nitpicking here, but the only store I’ve seen mentioned which directly competes with Target is Ace. If this is the next best example, then it’s sure an amazing case for why Target is fine in Davis and isn’t going to cause the end of the Davis way of life.
I haven’t been in Target either. It represents a fundamental shift from supporting local business. I am sure it is keeping big box retail taxes in Davis. It is also changing people’s buying habits. Buy cheap underwear. Grab some groceries or impulse items while there. Ride a bike? Haven’t seen many there. Go back again because it’s easier to shop. Yes downtown Davis shops don’t offer many standard items. Why? They can’t compete w/ folks like Target. Bogey’s Books is a case in point. They’re gone because of Border’s. Interesting slightly wacko business goes away but now we can get more books for less money. What if the town helped local business provide some of the basics by reducing costs or actively promoting downtown shopping w/ street closures and other innovations? How about more bike racks (gasp) to encourage use? Oops not quite as much revenue for the City. Too late. Target’s built. With so many currently approved developments, this town is becoming less and less innovative. There’s nothing wrong w/ building more houses and retail. Why not do it w/ a focus on green, support of the downtown and the preservation of the small town community feel? That’s what makes Davis attractive to many people. Do fast pace car based peripheral development and innovative small town becomes a lot less prominent (or disappears). We slow growth folks get accused over and over of stopping progress. Nothing wrong w/ SMART growth rather using the standard development model that has diluted or eliminated the character of many CA cities and towns.
I just very briefly want to say that I disagree with the opposition to Target.
THat said, this is my last post and I cannot continue to post here. too much intrusion with the new policy. It is too easy to use it to identify people.
that’s all I have to say.
So… you’re saying Target put out of businesses all those shops that could have opened downtown over the last decade, but didn’t? If they were such good ideas, they would have been done.
The only other store which sold cheap underwear in town was Gottschalks, and again, they went out of business – before Target. They probably had about the same working conditions/wages/benefits too.
All I keep hearing is about how evil the big bad Target is, because it pays its workers so poorly in comparison to the small downtown retailers (who last i checked, hire students and pay them minimum wage), because it squashes small businesses (although almost nobody sells competing products downtown), or because people are going to drive out to Target instead of the stores they’ve been shopping at for the last couple years (like who? again, Target is in my backyard and I still shop there quite rarely, only once since they’ve opened, it hasn’t changed my shopping habits, I dare you to find someone who says it has drastically altered theirs).
It’s really easy to point at a scarecrow and talk about how ugly and scary it is. But when you examine it up close, it’s not a real threat.
There is another point that has not been made here. We are drawing people away from the core of town to do business. As they go to gather at Target (and the adjacent shops when they are built) they are away from downtown. The loss of foot traffic and incidental sales will likely be enormous. That impact will not just effect stores that are in direct competition with Target, but all businesses.
I haven’t visited Target yet, but I think these same arguments that keep resurfacing are without merit. Except for (open-late, close-early) Davis Housewares, I cannot think of many stores that directly compete with Target products. The lease/rent cost for downtown retail requires merchants to sell higher-priced specialty products… things Target generally does not carry. Even so, Davis is large enough to absorb the extra shopping capacity. The demand far exceeds the supply in this town and so the Davis downtown merchants should calm down a bit. They should also consider that their lower-paid, car-less employees will greatly benefit from having a Target in Davis.
My family has a place in Chester, a small mountain town on Lake Almanor. It is 30-miniutes away from Susanville. Susanville’s downtown was decimated by a Walmart that went in several years ago. I also have roots and family in a small farming town McCook Nebraska… same deal. One main difference between these two towns and Davis is supply and demand: supply of consumer dollars and shopping alternatives, and demand for both low-cost and premium/luxury type goods. Folks in Susanville and McCook don’t have much if any discretionary dollars, and there is little demand for premium/luxury goods. Davis, on the other hand, has both. Davis also has a significant socio-economic class separation including the student population and service industry employees. Just like Walmart in Susanville and McCook, the result is not all bad, as low-income people can save a few bucks on necessities and enjoy some fake luxury goods.
Another difference is the level of development of the downtown. Dixon is an example of a town never having invested in its downtown. All the peripheral shopping development was really a nail in a coffin already started. However, look at Chico… Chico is a college town with all varieties of peripheral big-box stores and the downtown is still vibrant. Part of the reason is the college-related business, but it is also the fact that downtown was developed and vibrant before the big box development. Chico, like Davis, had/has the capacity to absorb more shopping alternatives without severely impacting the downtown.
In Davis there is enough pie to go around, and we should all stop being so stingy with it.
Kane: I don’t know why you think there is much difference between now and before. The only difference is now we verify that you are using a real email and hold you to a single moniker (presumably).
Greg: “I can’t get shirts and slacks at Pinkadot.”
No, I’m guessing James Anthony is more your style.
Yes downtown Davis shops don’t offer many standard items. Why? They can’t compete w/ folks like Target.
Jim, it is not only that… at $2-$4/ per sq. ft. rent/lease costs per month, downtown merchants cannot afford to sell low-priced goods even if Target did not exist. If the anti-Target crowd wants a whipping boy, go after the downtown merchants’ landlords.
[quote]My family has a place in Chester, a small mountain town on Lake Almanor. It is 30-miniutes away from Susanville. [/quote]Jeff, I’m going to have to blame [b]you[/b] for this, then. My family has a place in Prattville. I was up there maybe 5-6 weeks ago, got a flat tire, and in Chester on a Saturday there was not a single place where anyone would repair my stinking tire! Fortunately, my spare did just fine to get me back to Davis, where I bought two new tires from a little box tire retailer named for a climactic sexual experience.
P.S. Almanor is shockingly low, now. And though it is probably unrelated to climate change — and more a result of low snow fall for a number of years straight — I don’t recall in all my life looking up at Lassen and seeing it so barren of snow in the summer and fall. Normally, even in the hottest summers, it had a glacial cap. But that is gone.
Nope, I didn’t say that Target has put any stores out of business. Maybe the number of downtown retail stores won’t change. That’s a win/win. Border’s did put Bogey’s out of business but the two stores were close together.
Jeff, your comments do make financial sense. I’m looking at the subjective. I still feel the character of a town is important. I think Davis (and Winters) are attractive to people because there isn’t a Target on every corner. The decimated downtown you mention means people drive to do things (we used to encourage bike use). Sure Davis can probably support a downtown and big boxes. I still think that trying to encourage retail in the downtown and near downtown helps keep it a standard destination that is easily bike accessible. Can someone downtown sell underwear (at Target prices) and stay in business? Of course not. Is there some combination of City policies and subsidies that would have made it possible? Maybe/maybe not. [PLEASE, the following is NOT serious] Something like buy underwear downtown and receive a discount on your monthly city services. I can find a Target anywhere in the US. Think outside the [big) box and it can be (for some of us) a little more entertaining.
The City of Davis has chosen a standard big box solution. Maybe it IS the best one. However, in the past, Davis has at least considered other solutions (some good, some terrible). Let’s remember that Target just barely got approved by voters. If our pro growth City Council hadn’t pushed it, Target would never have been possible.
Personally I am sorry that the Target building is one of the first things you see when coming from Sacramento. It certainly doesn’t look “small town” or “innovative”. The 10/22 Sac Bee (regional section) talked about “the cool quotient” of finding a tenant for a quirky midtown space. Hey do things a little differently and it’s more interesting.
David: thanks for requiring people to register.
The City of Davis does not have the means to subsidize stores to continually operate a business that is not profitable. It has a limited ability to support these behaviors through redevelopment funding, but it is not sustainable, rational, fiscally responsible, or even socially popular.
Furthermore, such an action would only be in the interests of preserving the downtown culture as you perceive it, which I would argue is protected by virtue of locating the store as far as possible on the edge of Davis. It would have a cost to a town that has no money to spare. You’re talking about city sponsored creation of businesses which are not rationally viable. In contrast, a Target located on the city’s edge is economically viable (or so Target hopes), non-intrusive to downtown culture, and profitable for Davis (it can bring in out-of-city spending due to its freeway location).
Jeff, I’m going to have to blame you for this, then. My family has a place in Prattville. I was up there maybe 5-6 weeks ago, got a flat tire, and in Chester on a Saturday there was not a single place where anyone would repair my stinking tire!
Yes, Rich, sorry about that. We call that the problem of “Chester Time”. These little mountain communities are a hoot. People don’t make much money, but they also don’t like to work because it cuts into their hunting and fishing time. One of the biggest problems for local merchants is finding reliable labor.
On the lake level, yes it is low snowfall/rainfall that is contributing to it. However, it is always low this time of year. Actually, the lake level was pretty close to normal for the main boating season. Lassen peak is snowless about 2-4 months out of the year… with a dusting here and there. I have climbed it several times during the summer and only once did I encounter snowy weather.
Heading up this weekend to ready the place for the Winter. It is an interesting study in constrast for us living in these two places. There are quite a few section 8 homes, and most residents are at the lower end of the socioeconomic scale. Like the same in Davis, they are surrounded by others with substancial means and wealth. However, everyone gets along very well and there is much less class stratification. Davis is certainly more like that than other places, but there is a much softer edge in Chester… although you still cannot get a tire fixed on the weekend!
Justin – the City of Davis has a lot of money. It supports automatic COLA and generous pensions. There are currently 487 new housing units approved. These often don’t support themselves long term. The City and the residents (you and I) subsidize these at some point. They are NOT revenue neutral forever. Covell Village will once again be proposed. First phase is 388 units. I don’t agree w/ not socially popular. Target barely passed.
I can find a Target anywhere in the US. I can eat at a McDonalds in Paris. Maybe there will be Wal-Marts in Russia soon. Davis has been known for a commitment to green and local community. Let’s hear it for “cool”. Maybe it’s a terrible business model but t’s why people “vote w/ their feet” and pay ridiculous house prices to live here.
Jeff – I agree about rents making low price/low margin goods impossible. However, why would we (the anti Target crowd) go after the landlords? Any businessman will charge current market. That’s business. Target exists to be profitable. One big reason City Council pushed Target is tax revenues (800k – 1 mill).
Could the City subsidize some of the rent? Lower net return of course but we’re subsidizing developers right now ($1,500/unit up front development for the proposed Wildhorse Ranch development when typical fees are $10k – $12k). Could there be a 1x/week “farmer’s market” for the basics that Target provides. All of this is a waste of time since Target exists. I hope this City is a little more creative w/ growth in coming years.
It’s been informative. I do appreciate other viewpoints and I’ll read one more set. The real world calls.
Personally I am sorry that the Target building is one of the first things you see when coming from Sacramento. It certainly doesn’t look “small town” or “innovative”. The 10/22 Sac Bee (regional section) talked about “the cool quotient” of finding a tenant for a quirky midtown space. Hey do things a little differently and it’s more interesting.
Jim, good point. It is too bad that there are not really any quality and efficent department stores that operate like Nugget.
Justin – You leave out an important point. Edge of town placement is, for all practical purposes, car based. Good old standard suburban development. Also more profitable for developers w/ lower land costs. We can talk about people biking 1 mile to get things but it no longer happens in this town. See the traffic studies. My neighbors drive the less than 1 mile to Nugget.
Justin: “because it squashes small businesses (although almost nobody sells competing products downtown)…”
Target sells the following products that are also sold by local businesses:
bikes
books
clothing
consumer electronics
garden supplies
eyewear
housewares
movies
music
pest control products
pet supplies
posters
sporting goods
toys
With all this discussion about competition with downtown businesses, I would just add that Target also is going to draw business away from the neighborhood shopping centers which are not in the downtown. A lot of us aren’t downtown retailers.
Prior to Measure K, the goal was to strengthen and preserve both downtown and local neighborhood shopping options, so that each neighborhood had a nearby grocery store and a mix of retail options. Some of those centers have been more successful than others; two have been struggling for years. Target will further hinder them. Whereas a 35,000 sq. ft. Target could have located in one of those shopping centers in east or west Davis, and it wouldn’t even have required city council approval, much less a citywide vote.
Jim Watson: “One big reason City Council pushed Target is tax revenues (800k – 1 mill).”
This store would have to outperform the average Target store by a significant margin to provide anywhere near that kind of sales tax revenue.
The average Target store grossed $38.6 million in 2008; same-store sales have dropped in 2009. Sales of groceries account for about 37% of Target’s revenues now, and much of that is non-taxable.
This Target is limited in the square footage they can use for groceries, but they are going to market that heavily as it is considered the major growth area for both Target and WalMart. Note the flyers they are already sending around are mostly promoting their grocery products. So their taxable revenues will be continuing to decline as a percentage of their gross sales. The more groceries they sell, the less sales tax they generate.
We have a local tax of 1%, and a voter-added tax of 0.5%. Sales of $38.6 million, adjusted for, say, 25% non-taxable, would yield about $435,000 in sales tax. Any estimate of a higher amount assumes that this store will out-perform the average Target. Looking at how over-built the local retail market is (retail vacancies along Hwy 80 are very high, particularly as you get toward Dixon and Vacaville), and looking at the proximity of other big box stores, I personally doubt that this store will outperform the average. I will be surprised if it meets the average, due to the odd location and the heavy competition from Woodland and West Sacramento big box.
As a rule of thumb, local retailers expect to lose about 30% of their business when big-box comes to town. So of that $435K, some percentage will be at the expense of local retailers.
[quote]Yes downtown Davis shops don’t offer many standard items. Why? They can’t compete w/ folks like Target.[/quote]That’s been true for 25 years, maybe longer*. Downtown Davis used to have a lot of general merchanisers (like Winger’s, Five & Dime stores, a Montgomery-Ward and a Sears outlet, etc.) But for Davis Lumber (Ace), all of downtown Davis has transformed into specialty retailers, cafes, restaurants, theaters, office users, and so on. As such, [i]most of the businesses in downtown[/i] today won’t be too badly affected by Target. (I think the homestore of Davis Ace will. However, if that happens, they will have to adjust their product lines, which is the very nature of a dynamic business environment.) [quote] Bogey’s Books is a case in point. They’re gone because of Border’s. Interesting slightly wacko business goes away but now we can get more books for less money.[/quote] I don’t know if Border’s was actually the reason Bogey’s shut down. (I’ll take your word for it if you know that to be the case, Jim.) However, it doesn’t seem to me that Border’s has any built-in competitive advantages over the independent bookstores. What makes Border’s so attractive to me (and probably to many other customers) is its large, attractive store and cafe. Had a local merchant had the foresight when Davis Commons was proposed, he or she could have opened a bookstore/music store in that very nice location and done everything Border’s is doing. [quote] What if the town helped local business provide some of the basics by reducing costs or actively promoting downtown shopping w/ street closures and other innovations? How about more bike racks (gasp) to encourage use? [/quote] This year, the City of Davis will pour $5 million into Unitrans. (A lot of that goes to buying new buses. The annual operating budget for Unitrans is just $4 million. In the last decade we’ve put $23.4 million into Unitrans.) Yet almost none of the Unitrans bus lines goes through downtown. Unitrans has 2 terminals, both on campus. Maybe 90% of the neighborhoods in Davis cannot get direct bus service to the downtown. If our City Council really cared about helping downtown merchants, they would demand that EVERY Unitrans bus route goes through the heart of downtown on 3rd Street**. But our Council does not appear to care.
*Davis shoppers for general merchandise have for 25 years been shopping in Woodland, Vacaville, Sacto, etc. Target in Davis will redirect some of that business back to Davis.
**If you care to read more about this, check out my September 30 Davis Enterprise column ([url]http://4.bp.blogspot.com/_-iCrgpX1jNM/SuiP7a6wBnI/AAAAAAAAAN4/jyTTux2_vnk/s1600-h/Unitrans+downtown.jpg[/url]) on the subject. I have since heard from a half dozen merchants and a major downtown property owner and they all told me my idea is a good one. They were shocked to find out how much the City pays for Unitrans. Even one member of the Council I spoke with thought that the students were covering most of the costs. But that is just not the case.
[i]Personally I am sorry that the Target building is one of the first things you see when coming from Sacramento. It certainly doesn’t look “small town” or “innovative”.[/i]
Future growth is a different question, but Davis is a small city, not a small town. UC Davis has a big responsibility to educate Californians and non-Californians, which now number 30,000 students. Thus, there is no practical way for Davis to be or even to look like a small town in the same sense that Winters is a small town. If the city tried too hard to look like something that it isn’t, the inevitable result would be a lot of retail blight and a lot of commuting from out of town. In fact, Davis already has more than enough of both.
[i]How about more bike racks (gasp) to encourage use?[/i]
Now that would be a great idea. Everyone knows that downtown Davis has too much traffic and not enough car parking. There is an assumption in the gaps in people’s thinking that we have already tipped our hat to bicycles. But this is nonsense. Bicycles are our strength, and there are still ways to build on that strength. It would still be useful to have better bicycle parking, in particular more of the new lightning bolt racks, in various places downtown. Whenever a bike rack fills up, which certainly does happen, it is a missed opportunity to reduce car traffic at low cost and bring in more business.
For instance, one of the truly ridiculous contrasts between Target and Ace Hardware is that Target has better bike parking. Ace is a local store that supposedly understands Davis, that supposedly lives and breathes Davis, and that regularly runs out of car parking. Despite all that, its bike parking isn’t very good.
Don, do agree. There really are better solutions. Target placement and size is 100% bottom line driven (for them and the City).
Jeff, agree about the value and appeal of higher quality retailers. It’s also more profitable for the City. I’d support an “Underwear Nugget”. Nugget supports the community in many ways. Maybe Target does and I don’t know about it. Haven’t seen kids in front of Target selling cookies or promoting schools.
By the way, Don Shor: I had a 10-minute conversation with the manager of B&L (I’m not sure if he owns it, too), and asked him his thoughts on Target, as far as how much it will affect his business. Bottom line: not much, he believes. He said that it will affect sales in certain lines — like children’s bikes. However, he thinks insofar as Target sells some poorly made bikes that will need repairs, and Target offers no service, the bike shops in Davis will increase business in that regard. He said the arrival of Target and K-Mart in Woodland helped increase the amount of service business at a bike store there many years ago.
I’ve been getting my bike serviced lately at the Davis Bike Exchange. (I cannot recommend that business highly enough.) I forgot to ask Rich (the owner/bike mechanic) about Target. However, I can’t imagine it will affect him one way or another.
With all this discussion about competition with downtown businesses, I would just add that Target also is going to draw business away from the neighborhood shopping centers which are not in the downtown. A lot of us aren’t downtown retailers.
Don, can you provide some examples? After waiting patiently for 4 years to get a replacement grocery store in west Davis, I cannot wrap my mind around this idea that we should support neighborhood shopping because people want it, but then prevent other peripheral stores because it will pull them away. It doesn’t make any sense.
“The City of Davis does not have the means to subsidize stores to continually operate a business that is not profitable. It has a limited ability to support these behaviors through redevelopment funding, but it is not sustainable, rational, fiscally responsible, or even socially popular.”
The city actually has a lot of money in the redevelopment agency that could be used to help fund start up and other local business opportunities. Not talking about subsidizing existing businesses or non-profitable ones.
I would also suggest that on a regional basis this ought to become a priority to help develop and fund start ups for local business.
[i]The city actually has a lot of money in the redevelopment agency that could be used to help fund start up and other local business opportunities.[/i]
Yeah, but it sounds like DACHA is going to need it.
(Sour joke, sorry.)
I don’t agree much with that list, but there are things I missed. Bikes and sporting goods are pretty legitimate.
Nobody who shops at the small toy store downtown is likely to shop at target. Nobody who spends $80 on jeans at Pinkadot is going to drive across town to Target.
Books competes with… Borders? I thought they were the bad guys? Wrong year? Most of services mentioned people are already leaving town for (Best Buy, Costco) or are already buying from the same type of large chain stores being demonized (Petco, Borders).
As for the location, I don’t think I’ve ever seen a target that’s near 35,000 sq. ft., it’s a red herring argument for something far out of the norm. I would also argue that without Target moving in, that Superfund site could have rotted for a decade.
I don’t see this as any more pervasive than when Borders, Petco, or Safeway moved in. If anything, it’s less so due to the location and less direct competition to other stores (ie. Borders totally killed Bogeys due to strong direct competition).
I suppose only time will tell; meanwhile Target will remain the flavor of the month/year for ruining Davis.
DPD: Jim’s comments on subsidy talked about helping keep a business running over time that essentially has a non-working business model, in the place of a store like Target. Therefore, it would be a continual, permanent subsidy which the redevelopment agency cannot reasonably do even if it had the extra funds.
Greg: Joking aside, you do have a point there. That said, I would like to see the city and region get serious about economic development of this sort. I know the city is talking about green technology firms, but that’s not a lot of sales tax revenue, it would be just as helpful to the city if not more to develop our own retail. The amount of money and multiplier effect would be much greater than with a Target moving into town.
[quote]We have a local tax of 1%, and a voter-added tax of 0.5%. Sales of $38.6 million, adjusted for, say, 25% non-taxable, would yield about $435,000 in sales tax. Any estimate of a higher amount assumes that this store will out-perform the average Target. [/quote]The City of Davis estimated prior to the Measure K vote that it would generate $635,000 a year in new sales tax receipts.
There are a few good reasons why it should be higher than an average Target:
1. Davis is wealthier than an average community in the U.S. Davis customers will thus likely buy more of the expensive items, like TVs and other appliances, Target sells;
2. The Davis store is huge. I would guess it is larger than an average Target; and
3. There are no other big boxes or even medium boxes in Davis. As such, Target should do more business per square foot here than an average store would which shares its customers with K-Mart, Wal-Mart, Sears, JC Penney, etc.
My guess is that most of the business the Davis Target does will be re-directed from two sources:
1. Davis shoppers who are currently buying the same types of goods out of town; and
2. Non-Davis shoppers who are passing through and stop along the freeway, who also are currently shopping out of town.
The rest of the Target business which will be re-directed, as Don Shor has said, will come from neighborhood shopping centers, principally (I would think) from the East Covell Longs and the South Davis Rite-Aid. I doubt too many people from my neighborhood will shop at the Davis Target for items they can get at the West Covell Longs. Those items tend to be convenience purchases, not big ticket items.
[quote]I know the city is talking about green technology firms, but that’s not a lot of sales tax revenue, [u]it would be just as helpful to the city[/u] if not more to develop our own retail.[/quote] From the City of Davis perspective, it is actually much more lucrative to attract technology firms. They pay far more in property taxes than they cost in services. (You should talk with Sue Greenwald about this.) [quote]The amount of money and multiplier effect would be much greater than with a Target moving into town. [/quote] Let’s see your proof of that. If your argument is that Target is a Minnesota company, so the profits are taken out of town, then yours is a very leaky argument, one which (sorry for the pun) does not hold water. It’s just (with all due respect) a bogus notion. Keep in mind first that Target is largely re-directing profits that are going to other national and international companies selling similar products in other towns. Moreover, if Davis residents save $1.00 on a tube of toothpaste by redirecting purchases from stores like CVS (erstwhile Longs), those customers will have more money to spend at Davis owned-and-operated businesses like Redwood Barn, Steve’s Place Pizza*, Sudwerk, etc.
*I don’t know if Steve still lives in Davis. He and his many red-headed kids used to be my neighbors.
The rest of the Target business which will be re-directed, as Don Shor has said, will come from neighborhood shopping centers, principally (I would think) from the East Covell Longs and the South Davis Rite-Aid. I doubt too many people from my neighborhood will shop at the Davis Target for items they can get at the West Covell Longs. Those items tend to be convenience purchases, not big ticket items.
Thanks Rich, unless Don has other examples, that answers my question.
Note that we have moved to protecting little mom & pop independents downtown, to protecting other large chain stores that are on the periphery.
Note also that East and South Davis population has increased quite a bit since Longs East came to town. If it fails it will be less because Target came in amd more because it is not a very attractive place to do business in.
Don,
I don’t do much gardening, so I’m ignorant, here.
Is/was the garden section of the E. Covell Long’s (CVS) any threat to your business? Is that different from the potential threat of a Target garden section?
Jeff: “Don, can you provide some examples? After waiting patiently for 4 years to get a replacement grocery store in west Davis, I cannot wrap my mind around this idea that we should support neighborhood shopping because people want it, but then prevent other peripheral stores because it will pull them away. It doesn’t make any sense.”
As you know, the design of any shopping center involves anchor stores and small retailers and food vendors. Each successful neighborhood center has a grocery store and at least one large-ish chain retailer, except for the center where the Co-op is.
While I’m sure that developers like Petrovich would be happy to rent to locally-owned businesses as anchors, they don’t tend to market the centers in a way that encourages that; it is far easier to just go with a chain retailer. So you have Safeway/Office Max in South Davis, Nugget/CVS(Longs) in East Davis, Safeway/PetCo/Big5 in West Davis. The neighborhood centers that have struggled don’t have the anchors. The fortunes of the smaller retailers rise and fall with the success of the anchors, whether they are chains or otherwise.
Target will compete with the grocery stores in East Davis to the greatest extent their limited square footage allows. They are already advertising their grocery component heavily. Note that grocery sales are what have kept WalMart in the black through this recession, and are what have kept Target from showing even worse quarterly losses than they would have otherwise. Other than Davis Ace, Target will compete most directly with all of those specialty chain retailers: Big 5, CVS, Rite-Aid, OfficeMax. Should any of those close, the viability of that shopping center is in jeopardy. Just loo at the ongoing problems with University Mall.
So while it is ironic that it is chain stores that keep the neighborhood centers viable, it is important to note that every one of those chains followed the rules: they built stores that were within the city size limits, located in areas already zoned for them, and have become integral to the success of the neighborhood shopping model.
Justin:
“Nobody who shops at the small toy store downtown is likely to shop at target.”
Yes they will. The point is that the traffic will be drawn away from the downtown as shoppers do (for example) their holiday shopping at Target.
“As for the location, I don’t think I’ve ever seen a target that’s near 35,000 sq. ft., it’s a red herring argument for something far out of the norm…”
Target builds “urban” stores: [url]http://en.wikipedia.org/wiki/Target_Corporation#Urban_stores[/url]. They just don’t generally do that in suburban locations. But if they really wanted a store in Davis, and were willing to follow the rules all the other retailers follow, they could have done so.
Rich, I don’t know what assumptions the city (or the consultants; I think that sales tax figure was generated by the independent analysts) used in their sales tax calculations. The per-sq-ft figure I cited includes all Target stores, an increasing number of which are superstores. This one is limited in the grocery footage, which means a higher sq ft of taxable sales. But the location is odd, and big box retailers generally prefer to locate near one another. There are so many variables that really it is all just a bunch of educated guesses.
wdf: “Is/was the garden section of the E. Covell Long’s (CVS) any threat to your business? Is that different from the potential threat of a Target garden section?”
LOL, no, not the way they ran it, and given the way Target has stocked their garden section so far I’m not real concerned about the plant portion of my sales. I expect some loss of house plant sales, perhaps a bit in other categories. They could have an impact on my sales of soil amendments. More likely Target will affect the sales of green goods at CVS and RiteAid, and possibly Ace, more than they will affect me.
Given that it is all guaranteed sale (pay-at-scan) at Target, as at all the big box stores nowadays, it really doesn’t matter to them what sells and what dies. That tends to have a detrimental effect on the quality of their displays and merchandise. Also, it does have an effect on the quality of what you buy: [url]http://thegoldengecko.com/blog/?p=791[/url]
[i]I know the city is talking about green technology firms, but that’s not a lot of sales tax revenue[/i]
It doesn’t sound like very informed talk, so far. Davis won’t get a serious research park by flying a wish list up a flagpole. What it would get is more of what it has: Buildings with mostly empty offices and a few massage therapists and similar. Making a real research park requires good networking, in particular good cooperation with the university, and taking all comers.
[i]it would be just as helpful to the city if not more to develop our own retail.[/i]
Maybe. You can think of downtown Davis as almost an outdoor mall. As such, it’s actually not in such bad shape. It needs more parking; but then, too little parking is actually the opposite problem of too few stores. It is true that a lot of the retail outside of downtown isn’t working very well. Maybe Davis would do better to re-engineer the arrangement. There are a lot of stores and store shells that are located on 1234 Obscure Street. Davis could benefit from drawing some of these stores together — although again, parking needs a better solution first.
Well, bicycles are far from a complete solution to the traffic and parking problems downtown. Even so, I can’t help but think that downtown has not done all that it can with bike parking.
(Also, I just tested the comment expiration bug again. It’s still there.)
“Each successful neighborhood center has a grocery store and at least one large-ish chain retailer, except for the center where the Co-op is.”
I should amend this. I suppose it depends on how you view Radio Shack. And I’ll bet Target will have a pretty big impact on them!
Jeff: “Note that we have moved to protecting little mom & pop independents downtown, to protecting other large chain stores that are on the periphery.”
Jeff, two main points of the Measure K debate were that zoning is a general plan process, part of an overall strategy of maintaining healthy retail, and that store size limits are a key component of that strategy. Dick Dorf asked me in one of the debates, “so the problem is the size?” to which I replied, “the problem is the size and the location, not that it is Target per se.”
Don: [i]No, I’m guessing James Anthony is more your style.[/i]
Somehow I didn’t know that it existed. I agree that it’s a noble try. The prices aren’t very good, but they tried. The selection isn’t very good, but again, they tried. As for prices, $40 for a shirt is about where I lose interest completely. Some of the T-shirts are $24, but…limited and mostly drab selection. However, it looks very good if I want to rent a tuxedo.
A store like really can’t compete with Target for me, nor for that matter with catalog/on-line shopping. Besides the prices and the limited selection, shopping a lot this way means connecting a lot of dots. Say that we need bath towels, and some men’s shirts, and some backpacks. Then just for those three things, we’re already running all over downtown. I like a store like Target not because I like to shop, but because I don’t like to shop.
Rich: [i]The Davis store is huge.[/i]
Target stores mainly come in two sizes, 125K square feet and 175K square feet. Believe it or not, the Davis store is the smaller size, which is to say, the same size as most Target stores.
But it is true that Target now has a lock on big-box shopping in an affluent city of 65,000. Our routine of driving to Woodland for random stuff is mostly out the window now.
Rich: “By the way, Don Shor: I had a 10-minute conversation with the manager of B&L (I’m not sure if he owns it, too), and asked him his thoughts on Target…”
B&L owner Beth Annon-Lovering, and her husband Tom Lovering (former owner of Cantina del Cabo) were the only two downtown business owners I am aware of who supported Target. Tom went so far as to host their victory celebration, and actively worked to support Target when he was on the board of DDBA.
Yes, Steve of Steve’s Place still lives here.
[quote]the only two downtown business owners I am aware of who supported Target.[/quote]I didn’t know Tom supported Target. He’s the one I was speaking with. I know some other DDBA members (non-retailers) who told me (a few years back) that they favored Target. However, I don’t think they were active in the debate.
It’s a shame (for the people aged 21-25 who love to drink copious amounts of beer) that Cantina closed. I think that other than The Graduate, Davis lacks a large, college-oriented bar, now. Pat Henderson (of Sacramento), who owns that property and built the new building there and its sister building on F Street, had some reasons for needing to tear down the old garage which housed Cantina. (I can’t recall the specifics, but it had to do with issues underground on her property.) Maybe if the telephone building (at 3rd & C) ever closes, that would be a good site for a new, large college-oriented bar.
Was thinking. You can’t see Target coming west on 80 til after you pass Mace so folks coming that way would wander off Richards and then get lost trying to find 2nd St! Maybe wander around downtown and spend some $!
I suppose it depends on how you view Radio Shack. And I’ll bet Target will have a pretty big impact on them!
Don: Maybe, but I don’t think so. It may make RadioShack pay attention and stock more desirable merchandise that they don’t run out of on a regular basis. Also, they might actually raise the bar in hiring helpful and friendly store employees (although customer service has greatly improved over the last year or two).
I guess the question is how far do we go to protect existing stores from competition from other stores? A follow up question is at what point do existing store owner interests conflict with the interests of the general shopping public? If a Davis merchant succeeds in preventing the development of less expensive alternatives, then he will have less incentive to lower prices or compete with other value-adds like a well-designed store layout with improved selection and service. How is this beneficial to the general population? Wouldn’t we all then just be subsidizing the existing business and ensuring we always pay a bit more, have fewer choices and have a bit less satisfaction in our shopping experience? Certainly we need balance, but the scale tips both ways.
The cost of goods purchased at a store like Target has been driven down by manufacturing efficiency and cheap foreign labor to the point that shopper time and service considerations strongly factor into the value equation for shoppers with means. People that can afford it will pay a higher price for a high-end shopping experience. Here is how the Davis merchants can better combat the likes of Target: have the association provide training and workshops for best-practice customer service. Host a blog that allows store managers to exchange ideas and help each other with problems. Pay a bit higher wage than Target and leverage the better talent that can be hired with it. Implement a mystery-shopping service to help evaluate and tweak the execution. Stealth-advertise that the Davis merchants provide top-level customer service. Someone mentioned that downtown Davis is like an open mall. I agree with that, and like most malls, a bad shopping experience in one store can cause a general dislike of the entire mall. Small downtown merchants cannot beat a store like Target on price, and apparently they cannot always count on the voters blocking the development, so they better find other ways to compete.
In terms of city help, any and all downtown beautification and shopper-friendly infrastructure changes should be on the planning table.
Those are all excellent suggestions, Jeff. I hope someone from DDBA is reading.
“I guess the question is how far do we go to protect existing stores from competition from other stores?”
I guess I’d turn that around by urging that you look at the impact big-box peripheral development has had on surrounding communities.
I guess I’d turn that around by urging that you look at the impact big-box peripheral development has had on surrounding communities.
Yes, but that works only comparing community apples to community apples. However, this comes down to the common challenge of finding balance after debating the extremes. Somewhere in the middle there is a solution that provides the optimum shopper utility for the least amount of damage to existing merchants and the corresponding damage to the neighborhoods they serve.
You know, the position of the Davis merchants reminds me a little bit of the health insurance industry in that taking the hard stance of protectionism for too long results in being seen as selfish and/or greedy. At some point it is a better strategy to recognize the game has changed and begin to participate in new solutions instead of continuing to defend the status quo.
“Somewhere in the middle there is a solution that provides the optimum shopper utility for the least amount of damage to existing merchants…”
Limiting store size is the simplest way to level the playing field. That is why so many communities have done that.
I haven’t gone into the new Target because I went into the one in Woodland once and they had almost NOTHING I wanted to actually buy. They are masters as displaying run of the mill crap and making it look interesting, but the quality of the stuff they sell is low and it’s really not much of a temptation. Not only that, they screwed up the frontage road going into town so now I can’t drive 60 mph along Second street anymore. A big nothing event if you ask me.
[quote]Limiting store size is the simplest way to level the playing field. That is why so many communities have done that. [/quote]When Target in Davis was first proposed, and I saw they were looking at building a 137,000 s.f. store, I thought that was a negotiating point*. In other words, I presumed they had hoped to get an 80,000 or 90,000 s.f. store and figured they could get that only by starting at a much higher number. Thus, I was surprised that no one on our city council ever really tried to negotiate with Target. It seemed like the members of the council approached the debate with one of two feelings. Either A) the more the merrier. We could use a giant store in Davis. Come on in!; or B) I’m voting no, no matter what they propose, because my ideology opposes any retail outside of the downtown or the neighborhood shopping centers for reasons X, Y and Z.
I’m not saying, by the way, that it would make much difference, in terms of its impact on existing Davis retailers, having an 80,000 s.f. store or a 137,000 s.f. Target store. I’m simply saying that since our ordinance previously allowed about 40,000 s.f. (or whatever the South Davis Safeway and E. Covell Nugget are), the jump to 137,000 s.f. surprised me for its audacity.
While I always thought Target coming to Davis would mostly be good, I am still perplexed by why the city council failed to ask for more concessions, even if its size was not one anyone wanted to touch. Because we are a relatively wealthy community (for this region) and because no other big boxes are here, it seemed to me Davis had a lot of bargaining power going in. (Add to that, the zoning needed to be changed on the site they chose.) I think, for example, the council never should have approved a 12 acre asphalt parking lot which never will have good shade. If we had bargaining power, why not require a solar shaded parking lot like Google and Sierra Nevada have constructed? Or maybe a multi-story parking garage on 2 acres and plant the other 10 acres in native trees, shrubs and grasses?
*I concede in hindsight that I didn’t know how large new Target stores were elsewhere.
[img]http://www.sierranevada.com/about/images/solar.jpg[/img]
Rich I agree.
I was very disappointed that neither CC or staff at their direction negotiated a smaller store. I voted no but would have been tempted if we had been able to get a more ‘Davis’ store by standing firm or just standing. I heard at the time it was 6x larger than any Davis building to date.
I just came back from dinner in Sacramento. My wife was designated driver and so I kinda’ lost track of where we were. We passed the target property and I thought she had made a wrong turn and was lost in North-West Sacramento… what a strange sight with all the lights on in the parking lot!
Then I started thinking about every other community up and down I-80 between Sacramento and the Bay Area, and quickly concluded that the strangeness of that sight in Davis was more about the strangeness of Davis, and less about the strangeness of the Target being located there.
We are strange and we are quirky, and a Target store in a small city of 80,000 is normal. I don’t mind being a little strange and quirky, just as long as we are allowed a bit of normal to go along with it.
We also are not sheep and are smart enough to spread our retail dollars around to merchants that deserve our business. I will give the new Delano’s and Nugget most of my grocery business except for a periodic Costco run for a few giant packs of paper towels and TP, and the large bottle of Bombay Sapphire Gin (you may be interested to know that Harley DeLano said his wife also shops at Costco for “the big things”). I will continue to shop at places like Redwood Barn and Davis Ace Hardware for the things they do well. I will purchase quality goods and not cheap crap that will snap and break. However, when I need five more plastic bins Saturday at 8:00 PM to finish organizing the garage, or need supplies for my son’s homework project that he just remembered Sunday at 7:00 PM… and Davis Ace Hardware/Housewares has rolled up the carpet already, I will shop at Target in Davis instead of Driving to Woodland.
[quote] I will give the new Delano’s and Nugget most of my grocery business[/quote]I was in the Richmond district in San Francisco a few weeks back with my brother, taking a look at the house our grandparents on my dad’s side lived in when I was a kid. (The house shrunk!) Anyhow, right at the corner of Geary and 27th Avenue ([url]http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=geary+street+san+francisco,+ca&sll=38.553559,-121.766521&sspn=0.00839,0.013754&ie=UTF8&hq=&hnear=Geary+St,+San+Francisco,+California&ll=37.7795,-122.487254&spn=0.00212,0.005472&t=h&z=18[/url]) was a DeLano’s Market. Very small, but exceedingly nice. It’s the second one I’ve seen. (The other was in Tiburon.) I really hope the folks who live west of 113 suport it.
I just read that the Delanos closed two stores: one in Novato and one in Tiburon. They blamed the economy mostly, but it Novato there was a little grumbling about competition from the big box stores. I think Delanos in Davis will be a good test of price versus convenience and service.
Just out of curiosity – can anyone give me a list of downtown merchants that do pay what anyone would consider a living wage and benefits?
[quote]It’s a shame (for the people aged 21-25 who love to drink copious amounts of beer) that Cantina closed. I think that other than The Graduate, Davis lacks a large, college-oriented bar, now.[/quote]
I’m young enough to still hit a lot of bars and dancing. Actually, Davis has quite a few:
– G Street
– Froggy’s
– Vito’s
– Agave if it takes off (the new Sogas… skeptical it will do well, but their margaritas are fantastic and cheap)
And lastly, Ketmoree which opened two months ago, and is doing as-much-or-more business as Cantina ever did, very crowded dance club scene at night Thurs-Sun.
Also, I have to laugh at the Radio Shack comment. Really? Why are we suddenly protecting the national chain stores which treat their workers like crap from other chain stores?
Justin, your list just goes to prove my point … I’m out of the demographic and don’t know the bar scene. Thanks for correcting me. 🙂
Sorry, but as someone who was routinely buying items at Target in Woodland because those items CANNOT be purchased downtown, I feel good about finally being able to have my sales tax dollars go to Davis, not Woodland.
What is there to buy downtown? I buy music at Watermelon and frequent some of the restaurants. I will still visit Ace because it’s closer to my house. If they have what I need, I’ll buy it there. If not, I no longer have to drive to Woodland. I don’t understand Davisites claiming to be concerned about the environment, then making thousands of trips a year out of town to go to the Target in Woodland.
The new Target is full of UCD students who finally have jobs to help pay their way through school. I’ve talked to several of them while checking out and they are thrilled to be working. If it’s so awful to work for Target, they wouldn’t be there. Does anyone who works at Pinkadot make a living wage? I highly doubt it. Besides, Mom and Pop stores mostly hire Mom and Pop and their own and friends’ kids.
I’m glad the new Target is here.
We haven’t stepped into a Target in about 3 years and do not plan on going in to one in the future, not even the one in Davis.