Downtown can't compete with Wal-Mart, and shouldn't

Kennedy Lawson Smith, 39, has traveled what she describes as "a long and complicated path "from her undergraduate days at Bryn Mawr, where she majored in classical archaeology, to her present post of director of the National Main Street Project.

Disillusioned with archaeology and seeking "something more community-oriented," Smith got involved in the late 1970s in a downtown revitalization initiative in Charlottesville, VA, where she had attended graduate school. Charlottesville, she notes, is "a lot like Burlington, though without the lake."

Following her "cataclysmic experience" with the Charlottesville program, Smith began closely studying the economics of American downtowns. She was soon hired by the Main Street Project and has been its director for the past six years.

Smith came to Burlington in March as a consultant to help devise economic strategies for the business district of Vermont's largest city. Through funds provided by developer Bobby Miller, Smith shared with Burlington stakeholders the expertise she has acquired by taking part in revitalization efforts in 1,200 downtowns. She was interviewed March 21 by Kevin J Kelley.

VBM: Tell us a bit about the National Main Street Project.

SMITH: It's part of the National Trust for Historic Preservation, which was chattered by Congress in 1949 to foster an appreciation for America's legacy. The Main Street Project itself was created in 1980 out of concern for the problems that were causing downtowns to go into decline. The Trust got involved partly because so many historic commercial buildings across the country were at risk.

From a three-year demonstration project conducted in the late 1970s, it became clear that commercial overbuilding was a key reason why downtowns were in trouble. For example, in 1960, there was about 4 square feet of retail space for every person in America; by 1995, the figure has become 19.3 square feet per capita. That's an almost five-fold increase in retail space, even though actual retail purchasing power grew only about 20 percent during the same period.

VBM: So the Main Street Project focuses on this issue of commercial overbuilding?

SMITH: Yes, because it's linked directly to the deterioration of downtowns. Ideally, landlords should have several different sources of rental income from downtown buildings in order for them to get the income needed to maintain their properties. If all a building has is retail tenants, you're in a very dangerous situation when the stores start closing because they can' compete in an overcrowded environment.

The tricky thing is trying to figure out what combination of uses will work best for a particular community. For a long time, the typical remedy was to make physical improvements in downtowns, driven by the availability of urban renewal money. But we found that this alone isn't sufficient to stabilize downtowns.

VBM: What does work?

SMITH: We identified four broad areas that need to be addressed in order for a revitalization process to succeed. We call it the Main Street four-point approach, which is basically just codified common sense.

The first factor is design, which covers all physical aspects of downtown, ranging from signage, to window displays, to parking, to transportation.

Second is organization. This refers to collaborative partnerships involving a wide range of public and private groups and individuals concerned with downtown development. Mobilizing volunteers is an important pan of this effort.

Next, there's marketing. It's exactly what you would think: devising ways of letting the public know the unique things downtown has to offer.

Number four, economic restructuring. This means figuring out how to strengthen the existing economic base of a downtown while also diversifying the uses of its buildings.

The biggest thing, though, is to realize that all four factors are inter-related--that the process won't be fully effective unless each is part of the overall strategy.

VBM: How exactly does the Main Street Project go about implementing this four-point approach?

SMITH: We've done it in 1,200 downtowns around the country. We often rely on the network of state Main Street programs, which are similar to the national project. About 40 states have established their own programs to work on their specific needs. Vermont is just beginning to establish a state Main Street program.

The idea is to develop a core of people at the state level who are just as knowledgeable about downtowns as we are. One of their key functions is to try to influence state policies with the aim of improving the climate for downtowns.

In addition, the National Main Street Project has a huge data base that puts downtowns in touch with one another so they can learn what has worked in a particular place. We also produce lots of training materials and publications. We hold a convention each year and sponsor an annual awards program, too.

VBM: You're based in Washington, DC. Does the project have much interaction with the federal government?

SMITH: Right now we're working with the General Services Administration on reviving an Executive Order that was originally issued by Jimmy Carter. It says that federal agencies must give precedence to downtown sites when they're relocating or establishing a new local office. There are exceptions, of course, such as an agricultural office that needs to be in a rural area.

The Executive Order was basically left unenforced throughout the Reagan and Bush administrations. The Clinton administration is taking a new look at it, and we're helping in that review.

VBM: How is the Main Street Project funded?

SMITH: It's a nonprofit, nongovernmental organization. Our money comes mainly from fees paid by the communities we consult with. We also get revenues from publication sales and from membership fees as well as from fundraising programs.

VBM: You don't get any federal funds?

SMITH: We get zero dollars from the federal government.

VBM: What are your impressions of Burlington's downtown? Some local people think it's in trouble because of the growing threat from suburban malls.

SMITH: I was in Burlington mainly to help pull together ideas that had been developed locally. I was astonished at how easily the group I met with was able to come to a consensus on their priorities for downtown. It was a level of cooperation I don't often see.

This has to do, I'm sure, with the fact that the city has a long history of downtown revitalization programs.

I got the sense that this is a time of transition for Burlington. Everybody seemed a little afraid about downtown becoming too upscale.

I recommended that there be a comprehensive market analysis of where commercial opportunities lie for downtown Burlington. After that's done, decisions will have to be made about what sectors the city wants to see grow.

My general impression is that Burlington's in great shape. Many of the communities we work with have downtown vacancy rates of 70 or 80 percent. Compared to that, you're doing wonderfully well.

VBM: But many downtown merchants are very worried about the coming of Wal-Mart in Williston and other big suburban mall projects.

SMITH: They have good reason to be worried. There's just not enough retail money in the Burlington area to support all existing businesses--let alone them plus Wal-Mart. The Burlington region has 34 square feet of retail space per person; the national average, remember, is a bit more than 19 square feet, which is already quite high. The Burlington ratio is really excessive.

The biggest need is for the entire area to work collaboratively. Burlington shouldn't be competing with Williston or Essex because all the towns are going to lose in that sort of competition. It's a zero-sum game when one town starts luring businesses from another. In the end, the whole area loses.

VBM: But what should Burlington do on its own to maintain a strong downtown?

SMITH: It can continue to attract customers for the more specialized products. There's still enough demand for these niche businesses, though every downtown is going to have to accept some diminishing of retail activity.

The group I met with in Burlington was quite interested in developing new housing of all income ranges in the downtown area. That's a great idea for several reasons. One, it deters crime because there are more people on the streets. It also opens up new opportunities because there's round-the-clock activity.

Burlington already has a captive market of 9,000 downtown workers. They provide a lot of economic activity during business hours. Think what might be possible other times of the day if there were significant numbers living downtown.

VBM: We also hear a lot of talk about the importance of linking downtown with the waterfront.

SMITH: It's a blessing for Burlington to have such a fantastic waterfront. It's a unique attraction and asset. I think more and more attention will be paid to it because the traditional downtown is now strong and in a much better position than it was, say, 20 years ago. You can afford to put some focus on the waterfront.

VBM: Aren't there things that Burlington should be doing to compete with the new suburban outlets? You don't seem to favor this sort of approach.

SMITH: I don't think it's possible for a downtown to out-compete its suburbs. Downtown has to concentrate on what it does best and not try to be like the suburbs.

There are three kinds of retailing: convenience--the gas station delis, for example; comparison--where people consider different prices and quality, as with clothing; and destination--which is the type of store you go to, no matter where it's located, because it's so special or has such great service.

The suburban malls specialize in comparison retailing. They make it very hard or downtown to compete in this realm because they may have 50 or 60 stores selling essentially the same things, only at different prices and levels of quality. Downtown might try to make itself attractive to discounters, but it makes no sense to go directly up against the malls when the market for comparison retailing is already saturated.

VBM: Do you think that the malls themselves may be in trouble because of this saturation and overbuilding of retail space?

SMITH: I see downtowns getting healthier, discounters thriving, and malls suffering. We're already witnessing these problems, as in the case of Kmart. I think there's going to be some significant fallout in this sector during the coming decade.

VBM: So you're confident your formula can work for downtowns. Can you cite a couple of examples of major successes?

SMITH: First, the 1,200 downtowns we've worked with over the last 15 years --which are mainly in small-size cities, by the way--have generated a total of $5 billion in new investments. We've leveraged $27.88 in other monies for every dollar initially invested in these downtown projects. According to HUD, that makes the Main Street Project the most successful economic development program in the United States.

One example we're especially proud of is Bonaparte, IA, a city of only 450 people. They raised $100,000 in two weeks by selling shares in an investment corporation the city established. The money went to rehabilitate a w downtown buildings and to help create a grocery store. It was a huge success.

There's also the case of Holland, MI, which is a good example of thinking smarter. The city was about to replace all the sidewalks in its downtown and at the same time the municipal power plant was looking to install new pipes to expand its capacity. The two projects were coordinated, and it was decided to route the new pipes under the sidewalks. Now Holland has automatically ice-free sidewalks.

VBM: Burlington can learn from experiences like those.

SMITH: What's really interesting is how bigger cities in general are starting to learn from the innovations of smaller downtowns. We launched a program in Boston a couple of years ago, For example. Ten neighborhoods are taking part now, and it's going to be expanded soon.

Burlington is facing some challenges, or sure, and, yes, it can learn from other places. But, man, compared to most communities in this country, Burlington is years ahead. It's biggest challenge now, I think, is not to become complacent.

Copyright Lake Iroquois Publishing, Inc. d/b/a Vermont Business Magazine Apr 01, 1996
Provided by ProQuest Information and Learning Company. All rights Reserved