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Featured Project:
Downtown Traverse City, Michigan

RETAIL MARKET ASSESSMENT
A retail market assessment was completed for Downtown Traverse City, Michigan, by HyettPalma, in association with the Downtown Research and Development Center. Following are the recommendations given to Downtown Traverse City to further enhance retail offerings of the commercial district, consistent with the findings of the retail market assessment.

Retail Enhancement Actions
Based on the findings of this retail market assessment, it is obvious that Downtown Traverse City is unique and, compared to most Downtowns throughout the nation, in very good economic and physical shape. However, while the Downtown is in a healthy economic state at this point, certain additional actions should be taken to ensure the long term stability of the area and ensure its continued economic prosperity in the years to come.

The scale of retail competition within the area is rapidly growing. Based on events surrounding the opening of new retail centers elsewhere throughout the nation, Downtown Traverse City will need to energize its actions during the next one to two years, while closely observing what actually materializes within the marketplace beyond Downtown’s boundaries. Downtown can’t compete head on with most of the other retail powerhouses — particularly the new mall. However, Downtown can be enhanced as a special place — unique as a center of commerce when compared with the area’s other retail districts.

With an expected rate of annual retail sales growth of approximately 2% during the next few years, new purchasing power will be coming to the area slowly to mitigate the impact of the new mall opening. But, it is entirely possible that the new mall will actually compete with the other mall or free standing retail businesses throughout the trade area, with a much greater impact there than on the Downtown. The competition within the marketplace will be for share since the total retail pie will not be growing at a rapid pace.

In any event, Downtown must take aggressive actions and a proactive posture in the marketplace at this time. These actions must work to strengthen the Downtown as a solid center of commerce, operating as a solid economic unit, with a strong orientation toward functioning as the specialty, hometown shopping district of the trade area.

An overview of recommended initiatives follows.

1. Completion of a Business Clustering and Recruitment Strategy
In order to strengthen the retail base of the existing businesses Downtown and seek additional retail businesses to support existing retail uses within the area, a business clustering strategy and business recruitment strategy should be developed for Downtown Traverse City.

Business clustering is an economic development tool long used by suburban shopping malls. It involves grouping together a certain mix of businesses in ways that enable them to benefit from each other’s sales, customers and markets. The success of America’s shopping malls has proven that an appropriate mix of businesses, clustered strategically, has the effect of increasing the market which the shopping mall can draw and, therefore, the potential market of each business within the mall.

Possibly the best example of this concept is what has become known in shopping malls as the "food court." Here, a variety of food establishments are clustered side by side without interruption by any other type of business. Rather than placing these food businesses in competition with each other, and dividing the potential market among them, their clustering has the effect of increasing the size of the market each establishment could hope to draw on its own. The reason this multiplier effect occurs is twofold. First, the food court offers convenience to customers. Therefore, knowing they can find a broad selection in a single location, customers will come to the food court in larger numbers, and more often, than to an individual, destination-point restaurant. Second, once at the food court, the customer might purchase food from more than one vendor. Both of these factors — increased number of customers and multiple purchases by those customers — result in leveraged sales for the clustered businesses.

When developing a new commercial center, businesses can normally be clustered with relative ease since the new commercial space is most often controlled by one owner or agent. Businesses can be positioned in accordance with a leasing plan designed to maximize the market opportunities for all businesses by clustering stores which enhance each other’s sales or markets. The clustering strengthens the entire operation.

In older commercial centers — like Downtown Traverse City — it normally takes a considerable amount of time and effort to create a cluster, or clusters, of stores. Ownership is scattered among many different individuals and building space is controlled by numerous leasing/management agents. Lease terms are generally spread over many years, which lengthens the time required to reposition businesses even if control of building space is gained.

In either case — newly developed commercial centers or older commercial centers — attention to the clustering of appropriate businesses will increase the center’s chances for economic success.
For business clustering to be successful in leveraging sales, two factors are critical. First, the appropriate type, or mix, of businesses is essential. Businesses that are clustered together must either be those that serve, or have the potential to serve, the same or overlapping segments of the market or businesses that allow various segments of the market to comparison shop for particular types of goods or services. In other words, the mix of businesses must bring about either an increase in purchases by existing commercial center customers, an increase in the number of customers shopping at the stores in the commercial center or both.

The second factor which is critical for successful clustering is the appropriate location of the businesses. Businesses should be located to form a critical mass that is physically compact, that is not interrupted by incompatible uses and that encourages the customers to shop the length/depth of the cluster. For example, a concentration of first-floor office uses should not be located within a specialty retail cluster since that would tend to increase the physical size of the cluster and interrupt the flow of pedestrian traffic along the cluster. In other words, businesses should be located in a way that conforms to the way customers shop and in a way that encourages shoppers to make multiple purchases from several convenient stores located within easy walking distance and view.

The clustering strategy for Downtown Traverse City should be developed in association with the property owners and realtors who represent property owners within the area.

Compactness of use and structure is essential in the physical planning and urban design within the Downtown to create and reinforce a pedestrian-scale shopping core within the area. The clustering concept strongly supports this concept. The core of the Downtown, from the standpoint of business clustering, should provide the greatest assortment of mixed uses, with specialty concentrations of uses placed around the perimeters of the Downtown. This placement strategy will strengthen walkability, synergistic activities and uses, and visual unity throughout the area.

Following the completion of the clustering strategy, a recruitment strategy should be developed for Downtown Traverse City. The strategy should stress the use of the clustering strategy as the placement plan for businesses and result in the creation of a formal working relationship between the property owners, realtors and representatives of the businesses Downtown — including the owners of existing businesses within the Downtown.

2. Continued Infrastructure Improvements
Continued physical improvements are a critical element of efforts to enhance the aesthetic appeal of Downtown Traverse City. Every effort should be made by the City, working in a cooperative effort with the business owners and property owners, to continue the implementation of streetscape, undergrounding of overhead wires, parking facility enhancement, and pedestrian access improvements — particularly those designed to connect parking areas with the main core of retail businesses and enhancing access to and views of the bay and river.

3. Other Critical Actions
Several other critical issues should be considered by business owners, property owners and officials of the City of Traverse City to further enhance the retail businesses in Downtown Traverse City. These include:

• Continued Efforts to Renovate Building Space;
• Continued Efforts to Improve Business Signs Throughout Downtown;
• Better Identification of the Gateways to Downtown Through Increased Landscaping, Signage and Other Quality Urban Design Features In Order to Quickly and Positively Identify when People Are Approaching and Then When They Are Inside the Business District;
• Establishment of a Business Counseling Program to Assist Existing and New Retail and Service Businesses In Their Efforts to Better Understand and Serve the Market and Enhance Business Operations;
• Provision of a Continuous Merchant Training Program Designed to Keep the Business Owners and Their Employees Informed of the Latest Operational, Customer Service, Merchandising, Display and Advertising Practices of the Retail Industry;
• Consideration of Developing a Business Incubator to Foster the Start-Up of New Businesses for Expansion within the Downtown;
• Actions Designed to Encourage a Greater Degree of Target Marketing of Downtown Traverse City As An Economic Unit;
• Consideration of Expanded Evening and Weekend Business Hours to Better Serve the Customer Base;
• Aggressive Targeted Customer Recruitment;
• Testing and Expansion of New Merchandise Lines By Existing Downtown Businesses
• Continuous Review of Local Regulations to Ensure that the Zoning Ordinance Places Maximum Emphasis on the Core of the Downtown — Particularly First Floors — As Retail Business Space;
• Take Aggressive Steps to Ensure that Downtown Traverse City Grows as a Viable Residential Center — Particularly for Single Persons, Childless Couples, Senior Citizens and Those Who Work in the Downtown;
• Encourage Downtown Businesses to Allow Customers to Use Private Business Restroom Facilities;
• Expand the Scope and Intensity of Events and Joint Promotional Activities of the Downtown and, if Feasible, Increase the Budget for Such Activities; and
• Place Maximum Emphasis on Promotion of the Downtown as THE HOMETOWN PLACE TO SHOP.