Retail on North Main

This study is one component of an effort by Organized Northeasterners and Clay Hill and North End community group (ONE/CHANE) to improve the Northeast and Clay Arsenal neighborhoods by strengthening the local economy. ONE/CHANE, in partnership with CIGNA Inc., the Environmental Protection Agency, FANNIE MAE, the Hartford Housing Authority, Hartford Redevelopment Agency, Hartford Tenants Rights Federation, the Hutensky Group, the Local Initiatives Support Corporation (LISC), and the South Arsenal Neighborhood Development Corporation, is seeking to promote long-term, sustainable economic growth in these two neighborhoods by increasing the availability of goods, services, and employment opportunities in the area. Specifically, ONE/CHANE is proposing a new retail center in north Hartford. The center would provide goods and services in the community which residents otherwise must purchase outside of the community.

The retail center, to be located on the corner of Pavilion and Main Streets, will be anchored by a large supermarket and drugstore, and is expected to include a variety of auxiliary goods and services such as a hardware store, a bank, a "sitdown" restaurant, a video rental establishment, an oil change facility, an eyeglass outlet, a card and gift store, a Laundromat, a hair salon, an electronics store, fast food, ice cream/yogurt, and a bakery. The focus of the merchants in the center will be convenience to the market population rather than comparison shopping. (Convenience shopping is shopping for relatively low-cost items for which there is not enough price difference between stores to warrant driving from one store to another to get the best price. Examples include eggs, oatmeal, and bananas. Comparison shopping, on the other hand, refers to purchasing more expensive items for which comparison of prices between stores is reasonable because of significant cost difference. Examples include cars, furniture, and jewelry.) The proposed site is approximately 1.3 acres in size. The supermarket is expected to be over 30,000 square feet; the size of the other retail space will depend on space availability.

ONE/CHANE contracted with the Green Group of Troy, Michigan in 1996 to examine the feasibility of developing a retail center in the North Main Street area of Hartford. The Green Group's task was to develop a feasibility study with reference to market competition, accessibility, and site characteristics. The study concluded that with reference to market competition, accessibility, and site characteristics, the project is feasible as planned. This report is an effort to determine the demand side of the equation; that is, the spending capacity of residents in the primary trade area. For the purpose of this report, the primary trade area is composed of the Northeast and Clay Arsenal neighborhoods.

Methodology -- CREN examined the trade area in terms of sources and amount of income which, when used in conjunction with the United States Bureau of Labor Statistics spending projections, can be used to predict spending potential for specific products and services. In addition, CREN performed a survey of local businesses to understand their customer base and hiring patterns. Research began in February 1997. Information for this report was gathered from the 1990 Census, Claritas\UDS Data Services, the Green Group's original findings, the United States Bureau of Labor

Statistics, and CREN's business survey. (CREN also contacted the United States Post Office to determine if transience in the area would effect the market. That results of that investigation were inconclusive and will not be reported here.)

In order for retailers to be successful, it is necessary for their primary trade area to have enough people with sufficient income who will purchase the available products and services. An assessment of purchasing power and demand for the proposed products and services in the projected retail center was performed. The demographic/economic situation of the trade area was analyzed in conjunction with the United States Bureau of Labor Statistic's tables, which are used to predict the consumer spending capacity for the businesses planned for the center. In addition, the market findings of Claritas Data Services of the area in a 1.5 mile ring around the proposed site are included.

Trade Area Boundaries -- As mentioned, the trade area for the retail center is the Northeast and Clay Arsenal neighborhoods. The trade area is bounded by Hartford's downtown in the south, the Connecticut River to the east, Upper Albany neighborhood and Keney Park to the west, and Windsor to the north. Major east-west thoroughfares (Tower Avenue, Westland Street, and Albany Avenue) and one north-south thoroughfare (Main Street) allow for relatively easy access from secondary markets in the Blue Hills neighborhood, the Upper Albany neighborhood, and the town of Windsor. While this assessment concentrates on the primary market, the secondary market can be expected to contribute to the success of the center (see page 6, Map of Market Area).

Trade Area Spending Potential -- By using Bureau of Labor Statistics poll results of national spending patterns, it is possible to estimate the depth of market demand in an area. Based on the economic capacity of the two neighborhoods, a conservative market estimate for grocery products could be made of over $16 million. The other two retail products for which projections are available, bakery items and radio/video/stereo, find a conservative market of $1.5 million and $2.6 million, respectively (see Table 1) .

Table 1.

Claritas Report -- Claritas Data Services of Ithaca, New York, calculated the potential purchasing patterns of the trade area defined, not by the two neighborhoods which ONE/CHANE serves, but of all the households 1.5 miles from the proposed location of the retail center. Because that study includes both households within the Clay Arsenal and Northeast neighborhoods and potential customers outside the neighborhoods, it provides a helpful look at market demand in a significantly larger potential market (see Table 2).

Customer Base of Local Businesses -- The businesses surveyed estimated that almost two-thirds (64%) of their customer base came from within the trade area (Figure 3). However, depending on the type of business, the percentage of local patronage could be much greater. Those businesses which, like the proposed retail center, focus on shopper convenience rather than comparison shopping or business services, had a much higher percentage of local area patronage. Thus, of those businesses which are similar to the retail center's, the lowest percentage of local customers reported is 65% ( a rental facility); while most of the other convenience businesses reported that their customer base was 75% to 100% local (restaurants, hardware, and liquor). This suggests that area residents tend to purchase goods in their neighborhood when those goods are available and that the proposed retail center can expect to profit from local patronage.

Local Employment in Local Businesses -One measure of the economic impact of the retail center will be the number of local residents that are employed at the businesses in the retail center. Ultimately, the success of the businesses will be enhanced by the strength of the local economy. The results of the survey showed that only 45% of the employees of the businesses surveyed live in the trade area (Figure 4). If ONE/CHANE wants to ensure that the retail center not only makes goods and services available but also supports the local economy, it will need to be proactive in making sure that local residents are given preference for employment.

The creation of a neighborhood shopping center provides an excellent opportunity for implementing the assets-based model of community economic development into the community's overall plan. This model, promoted by John Kretzman and John McKnight at the Center for Urban Affairs and Policy Research at Northwestern University, is based upon focusing attention on the assets within a particular community rather than concentrating solely on its deficits and needs. This shift in attention helps to develop communities from the ground up.

Commerce is an obvious asset in each neighborhood, however most low-income communities typically realize a net outflow of economic resources. Although plenty of dollars change hands in these communities, most of the profits are spent outside of the area as business owners and their employees are frequently not residents of their service area. When efforts are made to grow local economies, dollars can be circulated and recirculated, allowing the benefits of spending to remain within the community. This in turn strengthens the economic capacity of community residents (see illustration, page 9).

This illustration demonstrates the manner in which money circulates through a community, fueling the local economy.

The development of a retail center can have many far-reaching implications for a community. It can be used as a launching pad for strengthening the economic and physical assets of an area. Listed below are several action steps to consider in order to maximize the opportunities presented by a new retail center. This list is by no means exhaustive. It is a starting point.

1 - Local Hiring - As part of the lease agreement for the retail center's tenants, require that a minimum of 25-30% of all jobs be filled by qualified neighborhood residents. This would be especially important to negotiate with the larger businesses such as the supermarket.

2 - Job Training - Work with entities such as the Workforce Development Board and the Hartford School system to create job training programs geared toward the services offered in the retail center. High school students, in particular, could benefit from such training.

3 - Cooperative Franchises - Consider creating worker-owned franchises in the center. Franchises such as oil change operations could be run cooperatively by neighborhood residents. A model for this type of business has been developed by the ICA Group in Boston.

5- Business Survey - Using the survey instrument used for this report, ONE/CHANE could gather additional information by doing a more comprehensive survey of the businesses in the community. This may enable ONE/CHANE to develop connections between businesses, jobs, and job training programs, identify contacts these businesses have to local associations in terms of voluntary participation, and strengthen the connections the businesses have to other local institutions in terms of local purchasing and investment.