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VOL. 118 | NO. 175 | Monday, September 27, 2004

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By Andy Meek

Large Retailers Look Within City Limits


The Daily News

As customer demographics shift, large retail operations once known for dominating suburban markets are becoming a more familiar sight in urban areas.

And retail industry professionals said the trends impact should become increasingly visible locally: Home Depot, the world's largest home improvement retailer and the second-largest retailer in the United States, is one of the most recent examples. The company is finishing construction of a new store in Midtown Memphis on Avalon Street.

Urban market. And Home Depot isnt alone. Danny Buring, a broker with The Shopping Center Group Inc., said about a half dozen other big-box retailers currently in Memphis suburban markets are considering such moves.

And Center City Commission president Jeff Sanford said at a CCC meeting last week that a retail operation such as a grocery store or small shopping center is becoming increasingly desirable Downtown.

Buring said the trend is being driven largely by population figures that show there are about a quarter of a million consumers inside the Interstate 240 loop, representing about 20 percent of the entire Memphis Metropolitan Statistical Area.

Growth strategy. For large retailers, targeting urban areas is part of a growth strategy, said Dr. John Gnuschke, director of the Sparks Bureau of Business and Economic Research at the University of Memphis.

And its a strategy that benefits the heart of the city, where weve kind of languished for big-box retailers, he said.

The trend also benefits urban consumers, for whom the presence of a large retailer often comes as welcome news. Ken Hall, vice president of communications and marketing for the Memphis Regional Chamber, praised the new Home Depot on Avalon for the convenience of its location.

As a consumer, Im thrilled to death, he said. This is something that fits an inner-city space with inner-city needs and is a well-thought out strategy.

Room to grow. As an example of large retailers extending their growth plans into urban areas, Gnuschke cited Wal-Mart, which he said once was concentrated primarily in rural areas and never had a core city strategy. Once retailers such as Wal-Mart exhaust their possibilities in suburban markets, he said, they realize the need to look elsewhere for room to grow.

Clearly, more retailers like Home Depot are recognizing that, Gnuschke said.

Moves by large retailers into urban areas can sometimes become a tricky proposition, though. Buring said the problem for big-box stores such as Home Depot and Wal-Mart, which is building a new store at Holmes Road and Shelby Drive, has always been that there is a finite amount of usable real estate in densely populated urban areas.

Thats always been the problem, and it always will be, he said.

Finding a niche. Retailers also look for different amenities in an area. A grocery store might be most interested in an areas population density, Buring said, but retailers eyeing space inside a development such as Saddle Creek in Germantown might be most interested in the income level of surrounding residents.

Hall added that people often complain that big-box retailers put mom-and-pop stores out of business, though he said thats not always the case. Hall said large retailers are typically good corporate citizens, and smaller stores will always have their niche.

And those negative perceptions are beginning to change, particularly regarding companies who previously ventured only into the suburbs because, according to Buring, it just seemed easier to do.

I always describe things in terms of the path of least resistance, he said. If you want to open up a certain number of stores a year, running to suburbia and finding a site with a for sale sign on it seems a lot easier.

I think a number of those big boxes out in suburbia, though, would love to be in town right now to serve the density.

Low-hanging fruit. Jason Polley, senior marketing director for The Weston Cos., said companies usually open locations in suburban markets to pick the low-hanging fruit first before looking toward possible urban sites.

In the suburbs, there is available land to develop and build that doesnt require a whole lot of assemblage, as opposed to in the inner city, where you might have to tie up 10 to 15 parcels to create the acreage you need, he said.

And that fact could be especially attractive to a company looking to open a new store quickly.

I think part of it, also, is that youve got a person who works for a big-box retailer that has a responsibility to open certain number of stores especially for public companies, if theyve got to get into a market and open a certain number of stores, theyre going to look at areas where growth is first and where theyve got available land to build on, Polley said. And then theyll start looking at areas that are a little tougher to get into.

Adding convenience. Buring said the desire by retailers such as Home Depot to move deeper into the city isnt going away anytime soon. Hall, in particular, said he hopes Home Depots move invites more to come along, as well.

And speaking as a consumer, he added that, Nothing would make me happier than to see a Target in Midtown next to that Home Depot.


PROPERTY SALES 23 23 1,365
MORTGAGES 21 21 1,068
BUILDING PERMITS 117 117 3,173