Urban planning community | #theplannerlife

  • Making the Connection Between HGTV and Downtown Revitalization

    By Michael Stumpf

    Give HGTV some credit. They did not invent the home improvement show, but they have built it into an enormously popular entertainment venue, reaching 89 million households and capturing over 800,000 nightly prime time viewers. It has been called one of the most widely copied formats on the television landscape, giving rise to such shows as Trading Spaces and Extreme Makeover on other channels.

    HGTV’s goal is “to provide ideas, information, and inspiration” for decorating and home improvement. And its viewers have been inspired. Between 1995 and 2005, sales of furniture have grown by 75%, outstripping the 67% rate of overall retail sales. Sales of home furnishings – items from carpets and linens to lamps and kitchenware – have grown by 97%. People are spending more time at home and spending more to decorate their homes.

    Home furnishings is one of only a few retail categories not dominated by a relatively small number of firms, and also exhibiting growth in overall store counts. The fifty largest home furnishings retailers capture 29.3% of all sales in the category. While this may seem like a lot, in 14 of 24 categories, just eight retail firms capture more than 30% of all sales. At the same time, home furnishings stores had the fifth-highest change in store counts from 1997 to 2002, adding about 300 new stores per year.

    So what does all of this have to do with downtown revitalization? Downtowns have certainly reaped some of the benefits of these trends. In places as diverse as Appleton, Wisconsin and Idaho Springs, Colorado, home furnishings and related businesses line the downtown main street, where shoppers may find home décor, tableware, ornate staircases, art, custom kitchens, interior design services, and more. In the retail industry, new shopping centers adopting this leasing strategy – placing shops with a specific targeted customer next to each other – are known as lifestyle centers. By understanding the strengths of these centers and the motivations of lifestyle shoppers, cities may help to create a competitive advantage for their business districts.

    The typical HGTV viewer is between 35 and 64 years old. Seventy percent of them are women. These demographics parallel those of the typical lifestyle consumer. On average, these consumers shop more often, visit more stores than average during their shopping trips, and spend more than the typical shopper. Best of all for downtowns, a significant number of these consumers do not like visiting malls. They value the experience they get in shopping unique venues. For this same reason, online sales have not had much impact on in-store home furnishings sales.

    Downtowns can cater to these preferences by creating an attractive environment and providing both convenience and safety. It is definitely an upscale market and appearances should reflect that. Quality dining options can help to extend the shopping trip. Entertainment should be geared to adults. Informational and “hands-on” interior design, art, cooking, and related workshops can be an ideal compliment to the sidewalk sales, craft fairs, and other community events often held in downtowns.

    Most people will recognize names such as Pottery Barn, Crate & Barrel, and Restoration Hardware. Chains like these make up the bulk of all home furnishings stores. While they will locate in larger and distinctive downtowns and neighborhood business districts, their usual choice is a mall or lifestyle center. The more likely candidate for a downtown location is an independent retailer or small regional chain.

    About a quarter of all home furnishings stores are either sole proprietorships or partnerships. Averaging about $350,000 in annual sales, sole proprietorships most likely resemble a store which would be found in the downtown of a small- or medium-sized city. Two-thirds of these stores earn a profit, averaging 13.1% of sales. While the cost of goods sold is the largest expense they may have, these stores are most sensitive to lease costs. Rent consumes an average of 28.6% of potential profits, the seventh-highest percentage of any industry.

    The lower rents usually found in central business districts are a strong incentive for home furnishings businesses to choose a downtown location. Knowing this sensitivity, cities can establish marketing campaigns and target incentive programs to attract home furnishings retailers by addressing this key cost sector. Retail incubators, rent reduction programs, and renovation loan programs are some possible tools for cities to consider.

    Trends change. Will the slowdown in residential real estate impact the industry? Recent home buyers spend more than anyone – over $3,000 – on home related purchases within the first year in a new home. Or will higher interest rates cause people to spend more to remodel and expand their existing homes? Bob Vila has been on television for over two decades, Martha Stewart recently signed a deal to put her merchandise in Macy’s, and Ty Pennington will be marketing products for Sears. For now, it appears that home furnishings will continue to be one of the hottest prospects for downtowns.

    Michael Stumpf, AICP, CEcD, is a Senior Community Planner / Project Manager with R.A. Smith & Associates, Inc., based in Brookfield, Wisconsin.
    (http://www.rasmith.com) © Michael Stumpf 2006. Cyburbia retains compilation copyright for this web site.