· Several
weeks ago I attended a seminar which featured several speakers, experts, on
various segments of the economy including:
industrial, office, residential and retail. One of the presenters made a statement which has
resonated with me ever since I left that day:
“Economic development is a process not an event…” The reason I think this has remained in my mind
is -there is a lot of truth in this statement…
· In
today’s world of 24/7 news and information, many seek instant results and
economic development is in numerous aspects quite the opposite. Businesses don’t leave or fill vacant
buildings overnight. There are many
nuances and challenges associated with economic development, site
redevelopment or attracting a new tenant to fill a vacant building. I began to think that maybe, however, in this 24/7 world,
economic development in some particular cases is more an event than a process. One example
I thought of is on-line shopping, with a couple clicks of a mouse people can
order almost anything and have the products delivered to their doorstep in (X)
number of days…
· At
this same seminar the speaker who described economic development as a process used
the term “showrooming," which I have seen more references to and read about in
greater detail. “Showrooming” refers to people who go to
bricks and mortar (traditional I’ll call them) stores to find a product they
want to purchase, look at and examine it, however they may not always purchase
the product in the store they first saw it. They may seek to purchase the same item or a
similar product at another store where it’s cheaper or many will go home and find
the product on-line and purchase it.
· I
spoke to a prominent developer recently, who has been in the commercial real
estate and development business for probably close to 40 years and he
reinforced how much on-line shopping is negatively impacting traditional
stores. It’s currently not
a level playing field, particularly relating to the collection of sales tax…. Efforts have been discussed at-length however
and actions proposed to address this issue are being pursued….
· To illustrate
another example of how economic development is continually evolving and businesses
are adapting to better meet the needs of their customers: exclusive on-line
retailers are now seeking to construct brick and mortar stores. Why? My
belief is it is related to this concept of “showrooming” and providing a
shopping experience however I think there is more… Example:
retailers with traditional stores require less warehouse/distribution space (total
square footage) than retailers which sell exclusively on-line…
· Traditional
retail stores which compete with major on-line retailers are also adapting to remain
competitive, how? One example is enhancing customer service through product delivery. Recently I read an article about major
retailers offering lower cost shipping and faster delivery. More retailers will seek to offer same day
delivery and another is pilot testing delivery in (X) number of hours in certain
markets the same day a product is ordered…
· I
also read an article several months ago about a store, located in
another country, where shoppers purchase virtually-displayed items
electronically and when they go to check out the items are already at the
register. This is somewhat counterintuitive to
shoppers seeking a “retail experience” and “showrooming” but again demonstrates
the continual evolution of business and all the dynamics associated with
economic development…
· At
the conference one of the presenters reiterated rather emphatically: bricks and mortar stores are not going away. Why? People want
to look at and actually hold what they are considering purchasing, and many
people seek human and social interaction, something an on-line only retailer
cannot provide… Additionally, there will always be
a certain percentage of people for whatever reason that do not want to purchase
items on-line or conversely limit what they do purchase online…
· According
to Jones, Lang, LaSalle, Chicago ranked 8th in the world for commercial real
estate investment in 2014 ($9.1 billion).
According to Colliers International the industrial vacancy rate was 7.7%
at the end of 2014, the lowest since 2001.
Further, more than 10% of all new leasing can be attributed to
e-commerce, more than double from three years ago according to Prologis
Research. What does this mean for the City of
McHenry?
· We
live in a global economy and in the backyard of a preeminent international
marketplace called Chicago, which acts as an engine for the entire region including
the City of McHenry. As Chicago
goes so do surrounding communities:
more regional distribution centers; additional larger corporations seeking
to locate in a community not just purchase a building or piece of land or
employees of those companies in Chicago seeking a place to live, visit, enjoy
recreation, events, etc. and more opportunities for retail, service and other
businesses to meet this demand….in the City of McHenry...
Coming
in future blog posts:
- What are economic development
clusters and value chains?
- What are SIC, SOC and NAICS
codes and what were/are they used for?
- What factors do non-retail businesses consider when thinking about relocating?
- What are Class A, B and C
spaces?
- Franchising? What is it? What companies offer it and what
challenges are associated with attracting a retailer which operates
exclusively using franchising?
- Future trends in economic development: “market segmentation;“ “pop-up” stores;
“placemaking/third places” and “creating an experience”….
- Challenges associated with
economic development…
I encourage your feedback, comments and suggestions in this
community-wide endeavor!
Douglas P. Martin
Director of Economic Development
City of McHenry
333 S Green Street
McHenry, IL 60050
815.363.2110 (d)
815.363.2173 (f)
815.790.4752 (c)
@McHenryIL
