Wednesday, March 28, 2007

Red Flag Stores

As a small business owner, I usually notice right away if a new business has opened. So I pay attention to it, watching it, trying to gauge it. Does it make sense? Does it look like they know what they're doing? Is it appropriate for Bend? Have they spent a fortune on opening the store? Are they working it themselves, or do they immediately plug in a manager?

If the store is on my normal routes, I'll check it out every time I pass. And some of these stores get a Red Flag in my mind. The distinguishing characteristic is very simple -- do I see people in the stores on a regular basis? In Red Flag stores, I rarely, if ever, see anyone inside shopping. I rarely, if ever, see anyone going in or coming out of the store. I rarely, if ever, see shopping bags in the hands of customers.

Once or twice, no big deal. Weeks go by, and it becomes alarming. A month or two? They are Red Flagged.

I have never seen a business I've Red Flagged come back and succeed. They can last -- mysteriously -- for a year or two, but they always go out of business. A newer business in the same location has a fresh start.

A couple of examples. There is a small restaurant location on the corner of 4th and Greenwood. Three or four different restaurants went into that space and failed. I would drive by every day, and there would never be anyone in there. For whatever reasons, the current tenant, The Breakfast Club, does seem to have customers and has never been on the Red Flag list, because it actually seems to be doing business. Same thing with Toomies Restaurant, a few doors down from my store, which had four or five tenants before Toomies made that location a success. Not sure why some businesses succeed, and some fail, but not seeing live bodies inside the stores seems to be the telling point.

The alarming thing to me, is that there are no less than 8 or 10 Red Flag businesses within a block of my store right now. I'll be honest and tell you that most of them are high end dress boutique shops. And most are less than 2 years old. I NEVER see anyone in them. After a year or two of paying attention. Worse, almost all of them have managers, a dead giveaway in my opinion that they are money-losers. (The combination of no customers, and having to pay for the person watching the store.) But there are a couple of other types of business that seem to be pretty damn empty. It's possible that they are doing gangbusters business online, or something, but not likely.

Doesn't bode well for downtown. None of the long term neighbors, The Book Barn, Trivial Antiques, Toomies, Kitchen Complements, etc. are Red Flagged. They all have customers, as far as I can see. All the Red Flagged business are new and all are high-end. All have spent a great deal of money on their stores, and all seem to have management. (I maintain that most Mom and Pop businesses have to have owners working at least part of the time to manage costs -- like The Book Barn, Kitchen Complements,...and Pegasus Books, for that matter.... etc.) This appears to be the future of downtown, and the landlords don't seem concerned because there always seems to be another client with more money than sense waiting in line to open downtown.

It happens slowly enough, that most citizens don't really notice that there is nearly a 100% turnover in newer businesses downtown, with the older businesses closing less often but at a steady and alarming rate.

I doubt very much we'll have too many vacancies anytime soon. But I can't help but feel that Downtown Bend would be healthier with real world businesses, with involved owners, rather than some one's pipe dream.

1 comment:

GU Campus Libertarians said...

It seems to me that having a high rent area like downtown cannot work in the long run unless the tenants are established. It seems that people, who can afford the high rent initially, are people who are not going to spend 50 hours a week managing their store, and would rather just plug in a manager - or, they are people who are more interested in having fun, running the store as a hobby, instead of being concerned with business.

That's my initial impression, at least. It could be that having high rent will be a good incentive to manage businesses better, though I think that it ends up pushing good, new businesses out of downtown.