Should Cities Try to Keep Out Big Chains?

Chain stores. A lot of people hate them because they often muscle out local businesses that give a neighborhood character (the excellent film Twilight Becomes Night documents this painful loss in New York City).

But clearly a lot of people vote with their pocketbooks by spending money in chains. And the question of the effects of chains on a given neighborhood is complicated, especially when a recession is creating more vacant storefronts every day. Today, Streetsblog Network member Saint Louis Urban Workshop asks how — and whether — communities should limit chains:

3470183543_43264ae294.jpgPhoto by …-Wink-… via Flickr.

Should business districts limit the number of national chains that
can open? Are local stores and restaurants at a disadvantage? Over the
past several years a group named Our Town
has successfully pushed for limits on new chain stores in San
Francisco. As a result, today all chain store applications must be
presented to the San Francisco Planning Commission and submitted for
public review.

Now longtime Bloomington, Indiana, Mayor Mark
Kruzan appears ready to limit chain stores from his idyllic southern
Indiana college town…

Of course there’s a flip side to this issue as
well. Local retailers, boutiques and independent restaurants likely
cannot serve all residents. It’s wonderful to have $25 parmesan cheese
available in the city, but what about those who want Provel? This is
especially true with clothing. The recent rumor of an Old Navy opening
in downtown St. Louis would be a welcome trend in this way.

The issue isn’t simple. We enjoy our St. Louis Bread
Company, but now it’s a corporate behemoth. Once upon a time the
California Pizza Kitchen was the model of a neighborhood start-up.
Would you welcome a Peet’s, but not a Starbucks? The Foot Locker and
Blockbuster stores in the Delmar Loop just recently closed and their
departure is being lamented by some who enjoyed their convenience and
those who simply had become used to them.

So where do you
stand on anti-chain store efforts?…Is it enough to limit signage or require a
particular design? Is the issue aesthetic? And what about franchises
owned by locals?

Good questions. Should municipalities try to regulate chains, or let the market have its way? It’s a been a topic of debate since the 1920s. Your thoughts?

More from around the network: The Transport Politic asks how Los Angeles is going to manage its transit ambitions. Kaid Benfield on NRDC Switchboard looks at retrofitting suburban cul-de-sacs with trails for better connectivity. And Austin on Two Wheels notes the advent of the city’s first sharrows.

  • I am for whatever is best for the consumer.

    Competition is always best for the consumer. Insulating businesses from competition does not.

    Competition results in lower prices, greater choices and better services. Insulating a business from competition leads to taking the customer for granted and neglected product lines.

    But established businesses like keeping other merchants away from their customers, and politicians like their campaign contributions!

    Any business that needs to rely on the coercive exercise of government power to keep them in business ought not survive.

  • Boris

    ChipSeal,

    Those who believe the Iraq War was about oil would say that any oil-dependent, international corporation like Wal-Mart is surely relying on coercive government power to survive, and much more so than the average mom-and-pop shop. Chain stores are inherently more powerful because of economies of scale, which are sometimes possible only with government intervention.

  • I agree with the general sentiment of Chipseal. However, I think we also need to be cognizant of how government also subsidizes larger companies, both directly and indirectly. We shouldn’t ban chain stores from areas, but at the same time, we need to consider how larger stores and companies receive preferential tax treatment and also many times have public infrastructure built for their needs. Everyone would have to agree that building giant highways and parking requirements are an indirect subsidy to big box stores to the detriment of local, downtown-based businesses. At the very least, we need to develop systems where smaller companies are not at any major disadvantage other than those that naturally come with their lack of economies of scale and expertise.

    We also have to remember that Wal-Mart has not really succeeded in true downtown settings (yes, there are examples, but mostly not). The infrastructure of a true downtown is mostly incompatible with the large-purchase-which-you-take-to-your-large-SUV-in-free-parking-lot shopping/business model.

    Yes, places like Starbucks and Old Navy will come into downtowns. It is the responsibility of individual business owners to differentiate their store from the national chains. The local stores that successfully differentiate their products and services and develop the right market niche will be successful.

    – Keith

  • J:Lai

    I see this as primarily a zoning issue. there may be reasons why you think buying from wal-mart is wrong, but the municipality should not be legislating morality.

    Big box anything (stores, housing projects, whatever) creates a street-level environment that is less conducive to pedestrians than smaller (“mom and pop”) retail. I think it is reasonable that each borough should have certain zones where it is permissible to operate big-box retail, in order to provide the option to the consumers who want it while avoiding sterile and unfriendly streets in the majority of locations.

  • Colby

    In response to ChipSeal – I agree that competition sorts out a lot of issues, but we can’t confuse low prices with the true cost. Many things we can get cheaper at WalMart, but those prices don’t reflect the true cost of the goods – e.g. how much of those dollars leave the local economy (or leave the country), environmental costs etc. It may be cheap to buy now, but somewhere down the road we pay.

    I also agree with J:lai that much of this issue with chain stores is asthetic and neighborhood character.

    Definitely not a black/white issue and has to be thought about differently for every community.

  • Regulating chains is just more of non-euclidean solutions. Tons of blogs have tons of these useless diversions.

    Look at the elephant in the room. The auto-system is heavily subsidized. Without this subsidy, the big-boxes would lose their attraction and the town center would revive.

    Transit fares are an auto-system subsidy. They do not exist to gather revenue. They exist to discourage usage. Make public transit free.

  • There is a fundamental economic issue involved:

    Big box stores charge lower prices to the consumer, but they create greater external costs (greater environmental and social costs, such as more automobile trips and less cohesive communities).

    Consumers decide where to shop based on the cost to the consumer, and they generally ignore external costs.

    Therefore, big box stores will displace local stores even if their total costs (counting external costs as well as the cost of merchandise) are greater than the total costs of local stores.

  • J:Lai

    Charles Siegel: true, although, I fear, trivial.

    Intuitively, it seems that big box retails creates more negative externalities than smaller retail. I believe this is true myself. But I would be at a loss a to how to measure the relative amounts (it could differ widely depending on the precise location and type of retail, as well as what smaller alternatives exist.)

    Imposing greater costs on the ownership and use of private cars would be unlikely to have a significant impact on consumer demand for big vs. small retail, as the actual cost of driving to the store is tiny.

    That is why I think this is an issue best dealt with via planning and zoning – that is how communities should express their preference for the type of land use they want – and it should be at as local a level as possible.

  • Why should on go to a different city and find the very same (chain) stores that you have in your city? Ditto for going to a different shopping district or mall. You want to see different stores.

    Same as going to Russia and finding a McDonald’s there.

    Sorry, I want something different.

  • A lot of people actually like to have a little something familiar in a strange city. If you’re an American in Moscow for a week, it can be stressful to deal with Russian food and restaurants for every meal. I don’t see anything wrong with going to a chain once in a while. The problem is when you get miles and miles of McDonald’s, Applebees, Chili’s, KFC, Starbucks, Burger King, Applebees, Chevy’s, Chik Fil-A, Panera, McDonald’s, TGI Friday’s…

  • Larry Littlefield

    Back in the day, it was proven — by studies of opponents — that people were driving to the suburbs to shop at these national chains, instead of shopping locally. Why is it that they shouldn’t locate in the city, where city residents can have the jobs and tax revenues?

    The local merchants wanted new buildings for local stores restricted. They claimed they wanted the national chains on their local streets, to attract customers there. National chains started showing up on local commercial streets. Then local merchants complained about being priced out. Then the total amount of retail space expanded, and vacancy went up. Local landlords complained about city policy, instead of cutting their rents, and local merchants blamed bike lanes.

    The local merchant is the one that’s easiest to get to.

  • This seems like more of an urban design issue to me. There’s no reason big box stores can’t be built in a more urban form. Cities should change zoning codes to force them to build to the sidewalk instead of set behind a giant parking lot. The stores could have underground parking, rooftop parking, or parking behind the building. They could also be forced to put in windows instead of blank walls. They could have apartments above the stores. The buildings could include multiple doorways so it could be reused by smaller businesses in case the big box store ever closed (Circuit City, Linens N Things, etc…). This isn’t that complicated, it just requires better design.

  • I suspect that cities lose some of their comparative advantage when they give big box stores unfettered access. Distinct local culture and commerce can be an attraction to tourist, knowledge-based workers and businesses, and prospective residents.

    Richard Florida has written about how important diversity, street art and culture are to high paid knowledge workers, that these workers gravitate to cities like San Francisco and Austin for their vibrant “scenes”. Rebecca Ryan’s book Live First, Work Second talks about how Gen Y workers seek a cool city to live in first, then figure out how support themselves once they get there. Big Box stores are not part of what makes a city cool.

    From the perspective of a city, letting big box stores in may be a stupid move financially. The more you look like other cities, then the less reason residents, businesses, tourists have to come or stay there. Unless, that is, you give big incentives or tax breaks. This can add to what already is a race to the bottom among cities who compete for relocating businesses.

    From the perspective of Florida and Ryan, the smarter strategy may be to foster diversity, a rich local culture, and livability so that folks have a reason to come and stay. The issue isn’t so much about big box stores or not or free market or not. It’s about cultivating distinctiveness so cities can compete in the global market for tourists, workers and businesses.

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