Are Mom and Pop Shops Disappearing in D.C.?

The recent spate of announced openings of new retail stores, including many high-end retailers at City Center and hip eye glass retailer Warby Parker, will no doubt help fill a void in the District’s retail landscape. These new stores will attract tourists on vacation shopping sprees and retain spending (and tax revenue) that might otherwise have occurred outside the District. At the same time, the proliferation of branded stores has changed the retail landscape in the District and in the nation. It is apparent to any casual observer that Mom and Pop stores are declining.

In this post we measure this changing retail landscape by looking at data on retail store size from the U.S. Census. There are seven categories, ranging from small Mom and Pop stores with 1 to 4 employees- to large big box retailers with more than 250 employees.

Here’s what the data looks like.

1

  • There has been a sharp decline in Mom and Pop and family run stores in D.C. The pace of decline has outpaced the nation.
  • At the opposite end of the spectrum, there has been a 50 percent increase for both stores with 100 to 249 employees and for stores with 250 or more employees. This far outpaces the comparable figures for the nation at 9 and 20 percent, respectively.
  • It is important to note that small stores with fewer than 20 employees still comprise the vast majority, more than 85 percent of all retail stores, but their numbers are declining.
  • To some extent D.C. may also be catching up to the nation in terms of numbers of large big box retailers whose presence had been relatively scarce here.

Here’s a sample of the type of stores that are disappearing in D.C. and the stores who are taking their place.

2

Butchers (meat stores), Auto dealers and Book Stores are all disappearing. Pet, Furniture, Cosmetics and Convenience stores are increasing in D.C. This trend is bound to generate varying opinions among readers. As revenue forecasters we are asked to predict what the future will look like. My prediction is that there will soon be a saturation point and consumers will want a more varied retail landscape.

What exactly is the data?

The data is from the U.S. Census Bureau: County Business Patterns.

Bob Zuraski contributed to this post

3 thoughts on “Are Mom and Pop Shops Disappearing in D.C.?

  1. There are many reasons for this. First, the new space that has been and is being developed in the city is generally developed by large firms who are most experienced renting to “credit tenants,” that is, chains or units of large firms. It is the new space that is experiencing the greatest growth in retail tenancy.

    Second, the riots decimated DC’s soft infrastructure for the support of independent retail overnight. The businesses were destroyed and so were the industry support organizations. We don’t have the kind of independent organizations, comparable to the Retail Merchants Assn. of Virginia (formerly Retail Merchants of Richmond) or the Illinois Retail Merchants Assn. Most retail district commercial groups are weak, and BIDs don’t have much of an infrastructure for the support of independent retailers (the Main St. model works better for this).

    Third, it happens that for about 10 years I have been making the point that the fact that the commercial real estate market in the central business district is comprised of national and international actors has led to a broad repricing of commercial real estate throughout the city, even if the commercial districts in which they are located are decidedly local in terms of the ownership base as well as the retail businesses.

    I used to testify about it, until I became resigned to the reality that either the Council didn’t really care, that they didn’t understand the more measured and nuanced approach I suggested, or it didn’t jibe with desires to help “long time DC owned businesses” when the problem was more broad.

    http://urbanplacesandspaces.blogspot.com/2013/05/revisiting-issue-of-neighborhood.html

    The entry also links to a number of my past writings on the issue.

    Basically, commercial districts that are distressed or transitioning have retail rents that are probably at least double what they should be in terms of what a thriving retail business can afford. These are spaces that don’t appeal to chains. Because the pricing is at a point that makes success very difficult, the businesses fail. Although now as the city is growing in population and business operators are becoming more experienced (e.g., group operators like Paul Ruppert in Petworth or Joe Englert on H St. NE and elsewhere), they are succeeding despite the barriers.

    But generally, asking price for rents in lower tier DC commercial districts are significantly higher than thriving independent commercial districts in cities like Philadelphia (South Street), Baltimore (Hampden), and Richmond (Carytown).

    However, note that one element resulting in overpricing of neighborhood commercial real estate is the ability to build denser properties and to add residential. But those qualities aren’t relevant to the property’s current value as a place from which to conduct a retail business.

    Also note that recent changes to the Retail TIF program make it easier to support the development of independent retail and restaurants compared to earlier iterations of the program.

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  2. Can we get the absolute numbers, not just percentages? There were only 1 or 2 automobile dealers here to begin with, so to say there was an 82% decline sounds much more dramatic of a change than it really was.

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