Retail solution cannot succeed

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By Richard Hannemann

From the Monitor June 13:  Kevin Holsapple, “... Trinity (Place) is to anchor a share of the shopper traffic in our community that currently flees to other communities.  Increased shopper traffic in the downtown can provide increased opportunity for other businesses.”  

Mr. Holsapple’s comment is certainly good advice for Winrock Shopping Center.  But Los Alamos is not a shopping center competing with other shopping centers within the same market for the same consumers, sales and dollars.  Los Alamos is dependent principally on its resident market — long distance commuters don’t purchase enough to offset the off-Hill shopping by Los Alamos residents and it is highly unlikely that people living outside of the county will come to Los Alamos solely for the purpose of shopping. Increased traffic, then, can only come from local shoppers and so we must be very clear as to the causes of consumer flight.

1) People shop elsewhere just as part of going elsewhere. Living in Los Alamos can make people feel cut off from the rest of the world.

2) Los Alamos has one grocery store. That makes residents a “captured market” and people resent feeling like they are prisoners.

3) Many businesses in Los Alamos cannot compete on price and hope to stay in business. Price-conscious shoppers will continue to look elsewhere.

4) Los Alamos does not offer everything anyone might possibly want. If you have to go elsewhere to get anything on your list, you might as well get everything on your list at the same time.

The “solution” Mr. Holsapple has been proposing for the past several years is a shopping center with corporate retailers and restaurants.  This solution cannot succeed.  

It does nothing to address the sense of isolation; people will still leave town just to get out of town. It does not increase variety; turning Los Alamos into a shopping center will not increase the number of businesses offering the same general products — indeed, the likelihood is that there will be an increase in “the only game in town” syndrome thus creating more consumer flight. Nor does it increase the likelihood that the shopper will be able to get everything on their list locally — this is particularly true for consumers who are brand oriented.

Corporate retailers and restaurateurs do offer predictable pricing — what you pay at Target in Santa Fe is pretty much what you would pay at any Target anywhere. There are residents who will not shop at local stores because they believe that prices are inflated by owners who are trying to take advantage of the higher income levels here. The accusation is generally not true, but it is an accusation, which is not as likely to be leveled at a corporate business — unless, like Smith’s, they are the “only game in town.” But corporate businesses are unlikely to come to Los Alamos.

In the same Monitor issue, Marci Rulon writes, “A lender wants to know that a business owner has a clearly defined market that’s big enough to make the business profitable.”  A “market big enough” is based not on the income levels of the market, but the volume of sales a business can do in that market. Can you sell enough units, or enough meals for the income generated to be profitable?  The person who makes $200,000 per year does not buy 10 times the number of shovels as the person earning $20,000 per year. The corporates have very carefully worked out formulas and models to ensure that a business they open will generate enough business to stay in business. Most of these models are based on population size within a 15-minute drive of the business. Los Alamos does not meet their standards and many have already said “no” to Los Alamos.  Not only does Los Alamos have a small market, that market is divided between two smaller markets – Los Alamos and White Rock — a division, which will increase with any development in White Rock. Thus, to capture the largest amount of the county market, a corporate would need to have a location in each town thereby driving up the overall costs of doing business here. Essentially, the White Rock development plans rather ensure that Trinity will be serving principally the Los Alamos town site, reducing the potential market to Trinity by a third.

If the efforts thus far by Mr. Holsapple and the LACDC to entice corporate retail and restaurants to Los Alamos have been less than stellar, the above would be why. Unfortunately, what a segment of the Los Alamos population wants is something they can’t have. No policy maker has had the temerity and honesty to bluntly say so, nor would it do any good: this particular segment has their mind made up, they want what they want and they will not be confused by the facts.  Los Alamos has spent an untold amount of millions thus far in essentially proving that the shopping center thesis is fatally flawed. Unless we rethink the whole thing, we are likely to spend an uncounted several million more on a failed experiment.

Well, maybe we can turn Trinity into a park — with an amphitheater and farmers’ market and other such uses.