Right retail niche is the key to success

The “Main Street” program was popular in the 1990s in Australia and America, as a focus for revitalising suburban centres into dining, club, and retail scenes.

It turned areas from a commercial abyss – such Leichhardt’s Norton Street and Parramatta’s Church Street precints in Sydney – into shopping malls that drove many a CBD district, with their restaurants, special events and festivals.

They lured visitors – and even turned some into residents.

But it’s the third side of this revitalisation triangle – retail – that often proves the toughest to build, local real estate and community-development observers say. What works in one town doesn’t necessarily work in another. And what used to work doesn’t necessarily work now.

Getting the right niche business in is critical.

Farmers’ markets nowadays are proving popular in many parts of Australia.

In the US, on East Passyunk Avenue in South Philadelphia, a restaurant renaissance has “changed the dynamics” of neighbourhood retail, resulting in a commercial vacancy rate of just about four per cent, said Sam Sherman, executive director of the Passyunk Avenue Revitalisation Corp.

“The older retail shops catered to the day trade, but the new shops are focusing on the ‘working couple demo'” who come either for dinner or drinks when they leave work, Sherman said. The new retailers stay open in the evenings, to capture the growing after-dark crowd.

The retail spaces there are not big, he said – 1,000 square metres or less – but they draw “high-quality shops”.

“They don’t need much because they aren’t going up against chains, and they know how to do social media, so the internet is as important as a physical presence,” he said.

Investment-grade retail is driven by traffic counts and household incomes, said Spencer Yablon, regional manager and vice president for real estate investment services firm Marcus Millichap in Philadelphia.

The big names locate where parking is plentiful and free, where available space is unlimited, and where other retailers already have succeeded, Yablon said.

“The national retailers can’t step outside this box,” he said.

It’s often difficult for those responsible for nurturing business districts to figure out what else consumers might be looking for, said Danielle Redden, executive director of Lansdowne Future, the Philadelphia region’s economic-development arm.

To find out, her organisation surveyed some of the thousands of area residents who frequent Lansdowne’s downtown farmers’ market each Saturday.

A possibility the survey revealed: “some arts and crafts-based” businesses, Redden said. “The crafters who have booths at the farmers’ market do really well, so that kind of retailer might work well”.

To encourage niche retail, it has to be easy for such businesses to set up shop, and for rents to be affordable. The “niche” part of the equation is the products or services these retailers offer, and each store typically depends on the others to generate traffic.

Often, niche means unique, such as an English dart supplier, Bulls Eye Darts in Tacony, Philadelphia.

“It is the only one of its kind in the region, and combined with low rent, it becomes a destination that will draw other businesses,” said Alex Balloon, Tacony’s commercial-corridor manager.