This is interesting: “Community Impact Analysis, Proposed SuperTarget Store, Waconia, Minnesota” (PDF file, dated September 2006). This small town in Minnesota commissioned an independent consultant study to examine community impacts of a proposed store. They did this merely to see how the store would affect the town and local businesses; there is no suggestion that Waconia thought about paying for part of the development.
The report provides some of the kind of independent analysis that many of us think the City of Oak Ridge should do for Crestpointe, particularly since we are being asked to sink a huge amount of public money into the development.
In skimming this report I found some interesting nuggets:
– Apparently the Target Corporation is interested in building SuperTarget stores in lesser markets, contrary to the impression that many of us have gotten from their website. Waconia is much smaller than Oak Ridge, on the fringe of the Minneapolis-St. Paul metro area. If Target Corp. is building an SuperTarget there, they might truly be serious about building one here.
– The analysis indicates that the SuperTarget would increase the geographic extent of Waconia’s retail trade area (potentially benefiting other businesses) by pulling in customers from rural areas and small towns. It would not, however, expand the trade area on the side of town that faces Minneapolis. This is similar to the Oak Ridge situation, in that a new store here would not draw additional customers from the Knoxville side of Oak Ridge. However, a major difference is that Oak Ridge already gets retail trade from a large “hinterland” (places like Oliver Springs, Wartburg, and rural Anderson County). I estimate that Oak Ridge’s current retail trade area extends farther from the city than Waconia’s would after the new store comes in. I don’t believe that there is room for any new store or shopping center here to further expand the geographic boundaries of Oak Ridge’s trade area.
– The analysts estimate total sales for the Waconia SuperTarget at $40 million (in the year 2010). This value, which is based on an analysis of purchasing power in the trade area (unlike the City of Oak Ridge’s analysis, it is not based only on the square-foot area of stores) is noticeably less than the local promotional materials are projecting for the Crestpointe SuperTarget. (However, it appears that there are fewer people in the Waconia trade area than there are in Oak Ridge’s trade area, so maybe a SuperTarget here would have higher sales.)
– The analysts estimate that the new store would capture $12.4 million in sales that are currently going to other Target stores plus $3.3 million in sales currently going to other discount stores. It appears to me that these numbers are not representative of what might happen here, because (1) Waconia currently has no local discount stores and (2) because the Twin Cities metro area is Target’s home town with 47 area stores, many local residents shop at other Target stores in the region. Since there are two major discount stores here already, Crestpointe sales captured from other discount stores would come primarily from local stores.
– The analysts suggested that local merchants should extend their operating hours in order to compete successfully with a store like SuperTarget. (It’s clear to me that extended operating hours are one of the main reasons why big-box chain stores are typically so successful in pulling consumer sales from their locally owned competitors — for example, extended operating hours give Home Depot an important advantage over the traditional building supply stores that operate only during the day Monday through Friday.) Although many Oak Ridge stores extended their hours years ago, I suspect that some Oak Ridge retailers (both local businesses and chain stores) might be able to increase their sales (and our property taxes) with a combination of coordinated retail business promotions and good advice on matters like improved merchandising methods and expanded operating hours.
The analysis predicts that a Waconia downtown department store would close as a result of SuperTarget, but other local community impacts are expected to be fairly modest. This rosy projection is due in large part to factors present in Waconia that are not present here: the lack of existing discount stores in the city, the expectation that SuperTarget would expand the geographic boundaries of the city’s trade area, and the fact that the new store would be close to existing retail.
Consultant reports aren’t the answer to every problem, but if Oak Ridgers are being told that it is vitally necessary to spend $10.5 million on new stores, I think we deserve to be shown an independent analysis like this one to help us make an informed decision.
I agree that a town 1/3rd the size of Oak Ridge that has never had a large retailer would need to have a lot of basic questions answered that we already know since we have a large Wal-Mart and have had a large successful mall at on time.
Reading through this report, there are a lot of common sense answers and a lot of “we won’t know exactly until it happens” that pretty well describe any new retail project. Once the referendum gives the city the authority to officially go ahead with our project, I expect that many of the remaining questions that pertain to us can be addressed more satisfactorily.
“I expect that many of the remaining questions that pertain to us can be addressed more satisfactorily.”
When?
Query and comment by Ellen:
I’m puzzled by Cracker’s comment (sleeping on his statements hasn’t helped me figure out what s/he is talking about). What vital “basic information” do we have as a result of KMart and Wal-Mart being in town?
I agree that the history of the mall here has taught us many things. For example, we have learned from experience that:
(1) it is possible for a shopping center to be too large for the market;
(2) stores that appear to be doing a good business volume may go out of business if their lease prices are higher than they can justify by their business volume;
(3) once a shopping center appears to be “dead,” it is essentially impossible to attract new tenants into the center (unless, perhaps, the center is so thorough modified that it is no longer recognizable as the “dead mall”); and
(4) the fact that an experienced private developer puts money into a project does not provide assurance that the project will be viable.
These bitter lessons from the history of the Crown American mall contribute to many Oak Ridgers concerns about the Crestpointe proposal, and to a desire to have an independent analysis of the project before a decision is made.
Follow-up comment by Cracker:
I’ll try to help. The example you cited was a very small town (pop 9700) that never had a national retail store. Their study was designed to answer fears like, “What will this kind of store do to our community” as much as fill in blanks questions like, “How much will city services cost to support their Super Target”. These are the kinds of things that our experiences have already answered.
Your point 1. Our studies of retail capacity indicate that we can support about 1.1 million sq ft according to the city council comments on Mar 19. If you want to envision an equivalent size, the Opry Mills Mall in Nashville is about that size with some 200 stores with 20 or so considered anchor sized.
It is clear that we have room for CrestPointe. It is clear that we have demand for this expansion of retail opportunities. It is clear that the public investment is small in comparison with Oak Ridger’s cost due to not having it.
2. Yes retail is cost-aware.
3. There are many centers that have been revived after episodes of bad management without major structural changes. However, our mall will probably be torn down since it is currently assessed at below the land value making that an attractive alternative. What it may be used for is highly debatable due to the widely know deed restrictions. Maybe when Wal-Mart sees the writing on the wall with real compeition from CrestPointe, they will choose to develop it.
4. Quite the contrary, actually. The only information that is reliable for the success of a given set of stores is the propriatary customer buying habits, customer modeling, and competitive performance information that major retailers maintain.
And finally, yes, I agree with you that if Crown America were building CrestPointe, I would be concerned too. But your call for an independent analyis, like the one done for Waconia, in which a consultant summarizes already known information and answers, “Who knows” to the others seems to be of little value unless you are just looking for another delay. Already it will be 2010 before we can expect this retail project to start relieving the pressure on our residential property taxes and answering the citizens’ clear cries for help.
Ellen’s response to Cracker:
All I know about Waconia is what I read on their website and in Wikipedia, but it appears to me that it’s a progressive (and sophisticated) community that is actively pursuing growth, while working to maintain its community character.
Early in 2006 Waconia amended their zoning ordinance to set certain requirements for “Large Retail Projects” (over 50,000 square feet), including:
a. The City determining that the large retail project is compatible with the City’s comprehensive plan.
b. The City determining that traffic associated with the large retail project will not cause off-site public roads, intersections, or interchanges to function below the service level that exists at the time of application. (If there is an issue, the developer must construct and/or pay for the off-site improvements needed to alleviate the problem.)
c. The City determining that the large retail project is compatible with the community. To support such determination, the applicant is required to provide funding to the City to hire a consultant of the City’s choice with appropriate experience to complete and present an independent community impact analysis. The impact analysis must identify and assess the impact of the large retail project, including positive, negative, and indirect impacts. Topics must include:
1. The types of jobs created;
2. The number of full-time and part time jobs created;
3. The amount of local labor to be used in construction;
4. The geographical market of the business to be conducted;
5. Any plans for phased construction;
6. Whether an over-supply of retail space in the City will be created;
7. The impact on commercial vacancy rates in the City and nearby sites;
8. The impact on the diversity of the City’s economic base by projected elimination of smaller businesses;
9. The projected costs arising from increased demand for and required improvements to public services and infrastructure;
10. Projected tax revenues to the City;
11. Projected impact on land values (both residential and commercial) and potential loss or increase in tax revenues to the City as a result
thereof;
12. An estimation of the revenue to be generated that will be retained and re-directed back into the economy of the City compared to other chain stores and locally-owned, independent retailers in the City;
13. The extent to which higher value development on the site will be precluded, if at all;
14. The projected lifespan of building(s); and
15. The applicant’s policies on charitable giving and volunteer participation in the community.
Not all of these items are issues for Oak Ridge, but several of them are topics of contention right now regarding Crestpointe. I have no doubt that the ongoing community discussions of Crestpointe would be more civil and more productive if an independent analysis were available. If such an analysis had been started more than 2 months ago, when some citizens requested it, the report would be available to us by now.
Comment by Cracker:
I agree that some of these would be interesting to explore rather than fighting over the history of the site. The bottom line should be that this project seems to fit our needs for a public investment that still leaves a good return and great benefits for Oak Ridge, and we should be concentrating on seeing that it is done right.
Comment by Netmom:
The key difference I see between this example and Oak Ridge is the huge “leakage” we are suffering with Oak Ridge dollars going to Knoxville. That a large number of Knoxville residents work here (which is probably not the case in Waconia) does provide a significant possibility of their shopping here as well.
As for the folks from the “hinterlands,” they might well enjoy a bit more variety, too. I think our real gain, however, would simply be in keeping local dollars local.
Comment by Nuetical Salesman:
I still find the business trade area for Anderson County to be limited. Leakage is inevitable when you live next to West Knox County. Expecting retail change will only come from more citizens not more store fronts?
Maybe if you had a pair hanging from your hinterlands Netmom, you would see the shopping power of FedEx, UPS, and Yellow Freight.
Variety is in the product, not the store. We shop where we want to. And all studies categorizes Target the same as Wal-Mart, nothing new.
Comment by Nuetical Salesman:
“I think our real gain, however, would simply be in keeping local dollars local. ”
So the billboards in City of Oak Ridge was not good enough? I see your point, but a Target is not good enough for me.
Why are teachers bashed by your website for OPINIONS different from yours? That is a poor decision Netmom. Some habits you just do not break, do you?
Comment by Thomas C. Tucker:Â
Ask any Solway resident (I did live there) about the traffic leaving Oak Ridge and hurrying into west Knox County. These drivers are in a rush, they are not in the mood to stop and shop.
Consider, also, that CrestGONE is out of the way for those working at ORNL (X-10) and even for Y-12. I do agree that some DoE employees would drive past it, though.
Now just think of what those hurried drivers will say if a new traffic light pops up to stop there mad rush home. And then think of the extra fuel burned to restart a vehicle going up hill.