Markets & Retailing

Comparisons of different forms of retailing:

 

Public Markets are thriving due to their vibrant, social & economic attraction. Malls are largely floundering. How many catalogs do you receive in your mailbox today as compared to many years ago? Think about how much more convenient, cheaper and easier it is to shop on line. The truth is that upscale, economically homogeneous Festival Markets have been going bankrupt for three decades – (see below).

Issue

Public Market

Shopping Mall

“Festival Market”*

Annual Growth rate 8-14% 2-3% Mostly bankruptcies
Product mix? Food, weekly necessities Mixed, dry goods, clothes Luxuries, specialties
Customer class & race “Common ground,” diverse Middle class. Often, defacto segregated Upscale. Often, defacto segregated
Regional qualities? Highlighted, showcased Ignored “Disneyfied”
Design character Vibrant. “Controlled chaos” Monotonous. Sanitized Artificial. “Festive”
Rent rate “Affordable” High Very High
Shop Size Smaller Larger Larger
Market owner? Nonprofit or public, rarely private Private Private
Shop owner? Owner/Operator Chain store/ Franchise Chain Store/ Franchise

Many Public Markets were closed as supermarkets moved into American neighborhoods in the latter half of the 20th century.

Today, as Public Markets are returning to the American landscape, many supermarkets attempt to copy concepts that Public Markets pioneered – emphasis on fresh, local, healthful, organic… display in baskets, barrels, crates, etc.

Public Markets are sometimes the ideal solution for many “food desert” neighborhoods that supermarkets have abandoned – or never entered.

Issue

Public Markets

Supermarkets

Ownership? Locally owned Mostly out of state
Support for local farmers? Emphasized No
# of entrepreneurs? Scores-hundreds One
Service orientation Strong None
Business synergy? Yes No
Business Incubator Yes No
Emphasis on quality fresh local food Yes No
Encourages women and minority owners? Yes No
Emphasis on regional and ethnic specialties? Yes No
Profits go where…? Recycles in community Out of state
Creates many jobs? Quality jobs. Labor Intensive Less so – mostly minimum wage jobs
Preserves historic buildings? Often No
Encourages residential development? Yes Rarely
Aids surrounding businesses? Yes Sometimes
Employee wage scale? Generally higher Generally lower
Community building? Yes No
Requires capital support? Yes Sometimes
Ease of development? Complex Simpler – usually

$31/lb cheese “on sale” at the Ferry Terminal Market

Recently, several “Public Markets” have appeared in American cities that are characterized by an exclusive appeal to a homogeneous and upscale customer base. Examples include the Grand Central Market in Manhattan and Ferry Terminal Market in San Francisco. These ‘Markets’ tend to be extremely exclusive and expensive. In the opinion of the author, these are not “Public Markets” and are no more worthy of public subsidy than place like Dean and Deluca and Whole Foods.

Public Markets tend to attract far more customers than Festival Markets. Festival Markets are a concept pioneered by James Rouse and his “Enterprise Development Company”. They consist of an agglomeration of upscale, “specialty retail” chain stores and franchises.

The late James Rouse on the day he received the Presidential Medal of Freedom Award

An example of the relative success of Public Markets may be found in the public reaction to Washington DC’s popular Eastern Market and the contrasting reception to the city’s Old Post Office ‘Festival Market’.

The Eastern Market is a simple building with an even simpler interior.

The Eastern Market is filled with local vendors selling a bounty of regional products – everything from apples to zucchini. The Market is typically overflowing with customers. Not long ago, the US Economic Development Administration offered a $5,000,000 grant to the Eastern Market to refurbish its waning structure. The surrounding community rose up in horror and recommended that the grant be rejected. “Keep the Market as it is” was the nearly universal rallying cry. This of course, is an extreme position. However, the Eastern Market is clearly a success with its millions of annual customers.

In contrast, the Old Post Office Festival Market, the nation’s original Post Office located about ten blocks away, is a relative failure.

The Old Post Office is an architectural marvel. It was refurbished at a cost of $280,000,000 to be a “Festival Market.”

Beautifully designed and executed, professionally well-maintained, it is filled with ‘fine’ shops and chain stores such as Crabtree and Evelyn, Gucci Shoes, and Banana Republic. It is an architectural marvel that is lacking in only one thing – customers.

In fact, the well-respected magazine, “Governing”, had a front page article in 1991 called “After the Festival is Over”. This article detailed the demise and bankruptcy of scores of “Festival Markets” around the country. The article may be found on the “links” section of this website.

These images were taken by the author within 15 minutes of the Eastern Market images. Note the contrasting number of customers between the “Festival” and the Public Market.

Understanding why the Eastern Public Market is a success and why the Old Post Office Festival Market is not, is the key to understanding how to build successful Public Markets.

Both buildings pay attention to architectural design. However, the Eastern Market is planned to show off the products, whereas the Old Post Office primarily shows off the building.

People go to Public Markets for the “experience”. They then stay to shop. At a mall, people typically go because they have to, not because they want to.

Sales at malls have been languishing, due to customers choosing to buy through catalog sales and the internet. During this same period, sales at Public Markets have been snowballing.