Chains vs. Independents

By Ed Moosbrugger

July 14 -- Santa Monica officials are trying to make sure that the Third Street Promenade has the right mix of ingredients for continued success, and for some, that doesn’t include adding more “formula” businesses (otherwise known as chain stores).

The naysayers to more corporate chain outlets say the uniqueness of the Promenade is being lost because independents are being forced out by high rents. They want controls on new chain stores, perhaps requiring special permits.

Opponents of controls say the market should decide what goes in and that there are still plenty of opportunities for independents Downtown. City officials are studying the issue.

There’s no doubt that chain stores are more dominant on the Promenade than they were before the pedestrian street (formerly known as the Santa Monica Mall) was revitalized starting in the late 1980s. But back then, many of those independents were marginal businesses on month-to-month leases surviving only thanks to the rock bottom rents on the downtrodden street.

Indeed, the mix of chains and independents on the Promenade has fluctuated over the years.

Before Banana Republic, Barnes & Noble and Pottery Barn, there were, to name a few, J.C. Penney, Newberry’s, Woolworth, Harris & Frank, Motherhood Maternity Shops, House of Fabrics, Hartfields, Mode o’ Day, Singer Sewing Center, Lerner Shops, Leed’s, Kress – all gone now.

Some chains deserted the Santa Monica Mall (now the Promenade) because of competition from new regional shopping centers, and it was difficult getting chains interested in Downtown Santa Monica again.

City officials helped set the stage for revitalization when they decided to concentrate new movie theaters Downtown. Once the Promenade began to attract entertainment and food operations, the missing piece was strong retail operations.

The Bayside District set that as a priority to bring balance to Downtown.
A 1989 quote from Thomas H. Carroll, then executive director of the Bayside District Corp., made that point: “Our objective for 1990 will be to attract retail. The retail is really a very important component.”

Now some City officials seem to feel that the Promenade has been too successful in attracting retailers, particularly chains.

Maybe some of the objection to “formula” businesses is really more a distaste for the chains coming in. Many of the chains opening stores on the Promenade cater primarily to teenagers and younger adults drawn by the concentration of movie theaters, which attract young people. The Promenade also has become more upscale.

Trying to control chain stores can be fraught with difficulties, such as deciding which chains are “formula” businesses, how many stores a company must have to be considered a chain and which chains are and aren’t acceptable.

Would Urban Outfitters, which helped spur a revival of retailing on the Promenade when it opened in 1992, or its corporate sister store Anthropologie, have been excluded if there were rules limiting chain stores?

Would Barnes & Noble and Borders, which some consider an important part of the mix for people drawn Downtown to take in a movie, eat out and then browse for books, be blocked?

Would the Apple Computer store, an important new source of sales tax revenue for Santa Monica, be shunned?

Who is to decide? And how are they to decide?

A comment in a special advertising section on California travel in a recent issue of Sunset magazine offers a reminder of what the appeal of the Promenade is. In a section on West L.A. driving getaways, its only reference to Santa Monica was: “Third Street Promenade is a favorite hangout, offering a mix of dining, shopping and street performers.” Perhaps that’s the most important mix of all.

SANTA MONICA HOTELS continue a solid recovery this year, with the occupancy rate rising 10.1 percent and the average room rate increasing 6.4 percent in April, compared with a year earlier.

Local hotels posted an occupancy rate of 83.4 percent in April, the second highest among 16 submarkets in Los Angeles Country tracked by PKF Consulting.
For the first four months of 2004, Santa Monica’s occupancy rate rose 7.6 percent to 79.9 percent while its average room rate increased 6 percent, according to PKF.

EARLY SIGNS point to a strong American Film Market in Santa Monica when the trade show returns from November 3 to 10.

“We’ve had tremendous response from AFM exhibitors. Our new alliance with AFI will make the upcoming AFM bigger and better than ever,” said Jonathan Wolf, executive vice president of AFMA and managing director of AFM, in a prepared statement.

AFI Fest (November 4 to 14 in Los Angeles) and AFM have joined forces in marketing, sponsorship and scheduling.