As seen in the July issue of CALED’s The Bulletin

California cities, faced with a greater revenue-generating challenge than other states due to the inability to raise property taxes, must rise to the challenge by finding other avenues for income. Many cities are finding success by focusing part of their efforts on retail growth. A robust retail economy adds much-needed tax revenue, provides jobs and allows residents to shop close to home.

In recent history, a growing number of California communities have faced financial despair. In the late 1990’s, Gardena, Calif., officials found themselves on the brink of bankruptcy. Their budget was several millions of dollars in deficit, a first-time homebuyer program had failed and they had multiple bonds with interest rates on the rise. The City Council and the City management team created a plan to pay down their debt, cut budgets and tighten their belts to stop spending money.

As part of their strategy, Gardena’s Economic Development team began to look at their retail sector in a new light. The team realized that “leakage” was a big problem, but had no idea to what extent. The City hadn’t found its retail “niche.” Yvonne Mallory, Economic Development Manager for the City, took the position that the city really needed to understand what exactly the Gardena consumers were buying and where they were shopping. A scientific market analysis had never been performed, so Yvonne went to the City Council to obtain approval of a market analysis by Buxton. After some intense meetings and discussions, the Council took a leap of faith and approved the study.

The Buxton study pinpointed a particular trade area and provided a list of retailers and restaurants that would be a good match based on the purchasing behaviors and spending habits of Gardena residents. The City decided to focus its efforts on restaurants, and from the list, selected 20 restaurants to target.

Realizing that a key to their success was getting “face-time” with developers and retailers, city officials decided to attend the International Council of Shopping Centers (ISCS) annual convention in Las Vegas. But before they headed to Nevada, Yvonne attended a retreat with other community leaders at the Texas ranch of Tom Buxton, founder and CEO of Buxton. Yvonne said, “I had the best time of my life, both professionally and personally…I learned exactly what to do at ICSC. I attribute 85% of my great experience at ICSC to Buxton.”

A number of California cities that aren’t waiting for the economic ball to drop. They’re taking matters into their own hands by ensuring the success of retail development in their communities. Retail success is certainly not an overnight cure. It takes specific demographic/psychographic knowledge about one’s trade area, along with the savvy to put that knowledge to use.

Sometimes, however, the Buxton cure is fairly quick. For instance, Brentwood, located in the East San Francisco Bay Area, got much-needed market information from Buxton about an upscale development already in the works. The Buxton data was provided to the developer of The Streets of Brentwood shopping center, who used the information to recruit the right mix of retailers for the trade area. As a result, the first phase of the development was leased a year-and-a-half before its scheduled opening.

Another example of a California city that jumped into the driver’s seat in terms of retail development is Dinuba. City leaders were tired of seeing their 20,000 residents driving elsewhere to shop and dine. They plugged their retail leakage with Buxton’s help. Using their CommunityID assessment, they have added 19 retailers and businesses to their community, including Panda Express, Starbuck’s, Jamba Juice and Sally Beauty.

Don’t wait for troubled economic times to put the brakes on your city’s prosperity. Consider pursuing appropriate, targeted retail development as a key to your community’s good financial health.

View the September 2008 Buxton Report