What makes for a successful downtown retail mix

If you are the manager of a private mall, you may have a set formula for determining what stores to go where — and the ability to enforce it through your leasing contracts. Meanwhile, if you are the manager of a business improvement district or a city official, you simply don’t have that level of control. Still, there are some recognized best practices when it comes to recruiting, retaining, and marketing a strong collection of retailers in a public commercial district.

One of the best strategies in urban-core development — one in sharp contrast to the “diversify, diversify, diversify” mantra adopted by so many private developers — is niche retail revitalization. Many Main Street districts are already organically skewed toward one, two, or a few specific categories of merchandise, and by working to grow and promote these existing niches you can avoid a lot of paddling upstream.

Consultant N. David Milder, a downtown revitalization specialist, explains, “A successful downtown niche provides consumers a large selection, including price variation, within a limited range and has the magnetism of a strong regional shopping destination. They are known to regularly draw customers from several towns away.”

Niches can be either consumer-based (e.g., catering specifically to college students, retirees, or ethnic groups) or can be sector-based (e.g., specializing in home furnishings, antiques, or “pamper” products). Market-analysis data can help city planners and business associations to identify both established and potential niches. The key is that there has to be a critical mass (Milder suggests 10 per category at minimum) clustered in an area that is safe, accessible, and attractive — and, ideally, largely open for business past 6 p.m. It’s also important to develop cohesive branding and outreach strategies aimed at niche consumer demographics and psychographics within the region and even beyond.

This is not to say that diversity and variety isn't important in fostering a successful retail mix. Indeed, especially when you have a built-in base of urban residents and office workers, it is essential to balance niches with a broader selection of basic goods. Downtown-development professional Karen P. Cilurso advocates cultivating an ample selection of businesses within three broad typologies: NGS (neighborhood goods and services), GAFO (general merchandise, apparel, furniture, and other), and FB (food and beverage).

NGS would include such businesses as convenience stores, drugstores, florists, and other establishments frequented by people living within a one-mile radius. Under the GAFO category would be clothiers, bookstores, electronics stores, and other general and niche retailers that draw shoppers from a broader radius of 5 miles-plus and up to 50 miles away. On top of these, eateries and non-retail traffic drivers like cultural and civic institutions round out the ideal downtown — one that is predominantly thematic and distinctive while including general merchandise and convenience items. 

When it comes to recruiting retailers, particularly within the GAFO category, many planners and developers wonder about the importance of national anchors versus mom-and-pop shops. Says author Robert Gibbs, “Many well-intended policymakers have discouraged national chains from locating in downtowns which has resulted in an undesirable situation: urban residents must drive to the suburbs or shop online for most of their primary goods.”

However, we also know that an increasing number of shoppers seek out independent businesses, in part to escape the impersonality of big-box and one-click shopping. A recent national study showed that two-thirds of shoppers planned to shop locally at small businesses, citing a desire to support the local economy, discover one-of-a-kind products, and have a more relaxed and enjoyable shopping experience. The recent ascendance of the “experience economy,” in which consumers are passing over cheap goods and fast delivery in favor of curated, personalized, multisensorial shopping “events,” has put many small Main Street businesses in a surprisingly enviable market position. 

Much like the niche versus general merchandise question, the best practice seems to be enhancing a dense cluster of unique, diverse, flavorful boutiques with a few major national anchors that can serve both as neighborhood amenities and regional draws. 

Here in Ithaca, we have a fascinating case study of a community district right in the heart of the city. Centered around the newly redesigned Ithaca Commons pedestrian mall is a vibrant urban district that features some 70 retailers, nearly all of them locally owned and operated.

By most metrics, downtown Ithaca’s retail core is lively and prosperous. Our ground-floor vacancy rate is at its lowest point in several years: under four percent for the entire 22-block business improvement district and under 5 percent on the primary three-block pedestrian mall. Last year, we cut ribbons for seven new retailers along with numerous eateries, offices, and service businesses.

While the options are quite varied, downtown Ithaca is known regionally and nationally for a few niche categories, chief among them arts and crafts, books and music, and gourmet products. 

The first category is anchored by a group of shops specializing in distinctive gifts and housewares handmade by local and domestic artisans. Several of these shops — including 15 Steps, Handwork, and American Crafts by Robbie Dein — have been in business for over 30 years, although these local institutions have been joined in recent years by such stores as Sunny Days, which sells mainly items made in New York state, and Amuse, which sells inexpensive products made by American “cottage industry” crafters.

Downtown Ithaca’s media- and foodie-driven sectors are similarly well-represented by both veteran and startup retailers and, in keeping with Milder’s dictum, provide a broad range of products and price points within their overall categories. Other smaller niches address special interests like including upcycled and recycled products, stringed instruments, and outdoor sporting goods (especially cycling, which is popular here). Many of these stores are already experts in “experiential retail” and provide the antidote to Walmart- and Amazon-style commerce that so many bleary-eyed shoppers now seek.

But what’s missing in downtown Ithaca? The Downtown Ithaca Alliance (DIA) recently commissioned an opportunity gap analysis from the Nielsen Company. Its report showed that there is substantial consumer demand within a walkable one-mile radius of the Ithaca Commons in several GAFO categories, including computers, appliances, and cosmetics. Perhaps the most notable gap, however, is in apparel: despite downtown boasting 12 clothing and accessories stores, including Urban Outfitters (our one and only national chain anchor) we are leaving over $8 million in cash on the table each year.

This raw data is corroborated by qualitative surveys that the DIA has conducted. Local residents, for example, overwhelmingly agree that downtown Ithaca is safe, clean, attractive, walkable, and provides plentiful dining and entertainment options. A smaller majority of respondents, however, indicated that the shopping area meets their typical daily needs. Clearly, downtown Ithaca is fully actualized when it comes to accessibility, beautification, and niche retail revitalization, but there is some room for improvement when it comes to balancing the distinctive and special with the familiar and practical — and a definite opportunity to augment its abundance of unique boutiques with one or two more globally recognized brands.

So what are downtown Ithaca’s plans for optimizing its retail mix? Gary Ferguson, executive director of the DIA since 1999, says, “We are constantly reevaluating what businesses would be most beneficial and complementary to our marketplace. Right now, we are most interested in talking with apparel and footwear businesses. Downtown Ithaca is an eclectic marketplace and our newly redesigned pedestrian mall has been a real attraction for new businesses.”

Evan D. Williams is outreach & communications coordinator for the Downtown Ithaca Alliance, a state-chartered not-for-profit organization charged with the revitalization, development, promotion, and management of downtown Ithaca. Williams, a native Ithacan, lives on the Ithaca Commons above a brand-new apparel store.