Rooftops
Demographics


Rooftops makes total sense and I knew about that one. Demographics don't make sense to me. It's not cheap to live downtown. Generally if you can afford to live there you can afford to shop at TJs.

As much as I would love to have a Trader Joes near me in DT there simply aren't enough households down here, especially households with the type of income/tastes to shop at a place like TJs. Its getting close, just not yet. 63rd/Western is not a bad drive for most people living downtown. And given the fact that this there first store in this market, they probably want to play it safe.

Nichols Hills Plaza lies in the middle of a "golden corridor" of affluent households anchored by downtown and upscale in-town neighborhoods like Heritage Hills and Crown Heights to the south, Nichols Hills in the middle, and Quail Creek and South Edmond to the north. So being located there they can kinda catch everyone.

Rooftops
Demographics


So unimaginative.

From Steve's chat:

11:21 Comment From Gary T: What's the latest on Trader Joe's?

11:22 Steve Lackmeyer: I'll be shocked if a deal isn't done in the next few months.

http://images3.wikia.nocookie.net/__cb20131005024260/survival303/images/d/d2/Itshappening.gif

Forward Foods on Western closed down recently, but doesn't change the point that it is close to several other grocers much like it.

They don't worry about that. As I've mentioned before, there is both a WF and and TJ within walking distance of where my brother lives in LA.

So unimaginative.

But profitable and smart.

Rooftops makes total sense and I knew about that one. Demographics don't make sense to me. It's not cheap to live downtown. Generally if you can afford to live there you can afford to shop at TJs.

It's not just the rooftops/demographics of the couple thousand who live downtown (admittedly desirable though minuscule) it's the number/incomes of people who live prescribed radii from wherever you push your thumbtack into the map. In the case of Nichols Hills, Edmond, Norman, even Moore/South OKC, you can drive for miles in any direction and find relatively concentrated wealth, or at least middle class incomes.

If you draw concentric circles around downtown - Heritage Hills and a few pockets notwithstanding - you'll discover lots and lots of poverty or near-poverty, or worse, empty, undeveloped or primarily industrial space. Hey, I don't want it to be that way. I live downtown myself. Those are just the facts, for the time being at least.

Regarding the "unimaginative" comment, I'd like to point out that I am one of a very few people to open a retail operation in downtown Oklahoma City in the past 40 years. The ONLY such person who posts on this board, I think (though there might be a recently-added shopkeep from AA or Midtown on here these days; I don't recall). I opened a retail store (not a bar, not a club, not a restaurant, not a gas station/convenience store) in Bricktown, and it is still in operation nearly seven years later. Only two others have ever succeeded in doing this, and one of them is Johnny Morris and Bass Pro Shops.

The reason we succeeded (if you want to call it success), was that we listened to the market and tried to give it what it was already asking for. In the case of Bricktown it was thousands and thousands of people, already walking around every week, asking where they could buy Oklahoma stuff. We didn't try to force a concept into a market that wasn't ready for it. Unimaginative yes, but at least the store is still open. The much-rumored CVS will be doing something very similar; moving into a market that is (now) ready for it.

In the case of a Trader Joes or [insert name], sure, there are a few thousand people within a one-mile radius begging them (or someone like them) to come downtown, but there are TENS OF THOUSANDS within a few miles of other locations who would support it in those places instead. You do the math.

If you want upscale national retailers to join the fray in downtown, you're going to have to convince them to deviate from a longstanding, proven model for such organizations. You're going to have to:


Convince them to do business in OKC to begin with (getting better but still no easy task)
Convince them to skip proven areas with reasonable densities of wealth nearby in favor of an unproven area with effectively a few thousand high-earners
Make them willing to give extra weight to nearby interstate traffic and regional rather than neighborhood draw (Bass Pro did this)
Convince them to factor transient (hotel, visitor, event) folks into their "people" numbers (not easy)
Convince them to consider/cater to the tens of thousands who work in downtown, OUHSC, etc. (again easier said than done)
Provide them with ASTOUNDING sales tax numbers from downtown and nearby ZIP codes (a great reason to RIGHT NOW support the emerging locally-owned retailers already downtown)

or, finally...


Subsidize, a la Bass Pro


Your best bet is to grow an undeniably-successful locally-based retail cluster such as the one forming in AA while continuing residential infill, and eventually it will make spreadsheet sense for them to locate downtown. Until then, they will ALWAYS choose places like NH, Edmond, Norman, etc., first ESPECIALLY when initially entering the market.

The exception could be a true destination retailer like an Urban Outfitters or a Crate and Barrel, who already locate in places considering some of the numbered criteria above. They will want to go where there is already a high volume of foot and visitor traffic plus regional draw, so would probably (if landed today) end up in a new-construction project in or near Bricktown.

Sorry to be unimaginative; I just live in the real world.

But profitable and smart.Don't you think it would be more profitable to research cities that are growing and enter the market before others? Predicting future demographics and such...

It's not just the rooftops/demographics of the couple thousand who live downtown (admittedly desirable though minuscule) it's the number/incomes of people who live prescribed radii from wherever you push your thumbtack into the map. In the case of Nichols Hills, Edmond, Norman, even Moore/South OKC, you can drive for miles in any direction and find relatively concentrated wealth, or at least middle class incomes.

If you draw concentric circles around downtown - Heritage Hills and a few pockets notwithstanding - you'll discover lots and lots of poverty or near-poverty, or worse, empty, undeveloped or primarily industrial space. Hey, I don't want it to be that way. I live downtown myself. Those are just the facts, for the time being at least.

Regarding the "unimaginative" comment, I'd like to point out that I am one of a very few people to open a retail operation in downtown Oklahoma City in the past 40 years. The ONLY such person who posts on this board, I think (though there might be a recently-added shopkeep from AA or Midtown on here these days; I don't recall). I opened a retail store (not a bar, not a club, not a restaurant, not a gas station/convenience store) in Bricktown, and it is still in operation nearly seven years later. Only two others have ever succeeded in doing this, and one of them is Johnny Morris and Bass Pro Shops.

The reason we succeeded (if you want to call it success), was that we listened to the market and tried to give it what it was already asking for. In the case of Bricktown it was thousands and thousands of people, already walking around every week, asking where they could buy Oklahoma stuff. We didn't try to force a concept into a market that wasn't ready for it. Unimaginative yes, but at least the store is still open. The much-rumored CVS will be doing something very similar; moving into a market that is (now) ready for it.

In the case of a Trader Joes or [insert name], sure, there are a few thousand people within a one-mile radius begging them (or someone like them) to come downtown, but there are TENS OF THOUSANDS within a few miles of other locations who would support it in those places instead. You do the math.

If you want upscale national retailers to join the fray in downtown, you're going to have to convince them to deviate from a longstanding, proven model for such organizations. You're going to have to:


Convince them to do business in OKC to begin with (getting better but still no easy task)
Convince them to skip proven areas with reasonable densities of wealth nearby in favor of an unproven area with effectively a few thousand high-earners
Make them willing to give extra weight to nearby interstate traffic and regional rather than neighborhood draw (Bass Pro did this)
Convince them to factor transient (hotel, visitor, event) folks into their "people" numbers (not easy)
Convince them to consider/cater to the tens of thousands who work in downtown, OUHSC, etc. (again easier said than done)
Provide them with ASTOUNDING sales tax numbers from downtown and nearby ZIP codes (a great reason to RIGHT NOW support the emerging locally-owned retailers already downtown)

or, finally...


Subsidize, a la Bass Pro


Your best bet is to grow an undeniably-successful locally-based retail cluster such as the one forming in AA while continuing residential infill, and eventually it will make spreadsheet sense for them to locate downtown. Until then, they will ALWAYS choose places like NH, Edmond, Norman, etc., first ESPECIALLY when initially entering the market.

The exception could be a true destination retailer like an Urban Outfitters or a Crate and Barrel, who already locate in places considering some of the numbered criteria above. They will want to go where there is already a high volume of foot and visitor traffic plus regional draw, so would probably (if landed today) end up in a new-construction project in or near Bricktown.

Sorry to be unimaginative; I just live in the real world.

Well, it is unimaginative, and you know very well a TJ would probably work, but I was just joking. Thanks for the extra explanation, though.

:)

Don't you think it would be more profitable to research cities that are growing and enter the market before others? Predicting future demographics and such...

Yes. That's how it works in real cities. You want to be "ahead" as much as possible and select up and coming nabes. Not discounting Urbanized's incredibly detailed explanation, of course.

Why in the world would they potentially locate directly next to Whole Foods in Nichols Hill's Plaza??? That just seems crazy to me and particularly unimaginative.

Why in the world would they potentially locate directly next to Whole Foods in Nichols Hill's Plaza??? That just seems crazy to me and particularly unimaginative.

Because they think it's the best location? They seem to know a little bit about what they are doing.

Maybe so. Just disappointing. At least to me. And it is unimaginative.

Corporate America has replaced most of its management teams with accountants and bean counters. They seek efficiency through numbers, they seek profits through formulas. Long gone are the management teams who use both numbers from the right hand and their gut instincts on the left hand.

Risk is a carefully controlled tool, they are accountable to investors who want a return tomorrow, not 5 years from now. Thus, they only go for the safe option guaranteed by a formula to be profitable.

Sums up just about every industry and its line of thinking except the oil industry.

Why in the world would they potentially locate directly next to Whole Foods in Nichols Hill's Plaza??? That just seems crazy to me and particularly unimaginative.

They ,ay have the same philosophy as Walgreens and CVS. They are almost always across the street from each other

Great post, Urbanized.

In addition to Urbanized's great perspective, you need to look at this from a corporations point of view.

I was a commercial real estate broker specializing in retail properties in OKC for seven years. In fact, I was the first to bring Walgreens to the market and worked with a bunch of other chain stores.

In all cases, these are big business with well established guidelines for expansion. They all look very hard at demographics in a 1-, 3- and 5-mile radius and employ people who do nothing but scout sites and negotiate real estate deals.

When you have the entire United States (and in some cases, the entire world) in which to expand, you set priorities based on what has proven to be successful. And the real estate people are absolutely not going to try and force through an iffy location that doesn't hold up demographically. Why would they?? They don't get a bonus if a store is a success; that is merely what is expected. But if they go out on a limb for a location that under-performs, they will get the butts fired and their boss(es) probably as well.

The people making real estate decisions for Trader Joe's, Costco, CVS, H&M, and all the others aren't entrepreneurs trying to out-fox the competition and find hidden markets. And they certainly don't give a rat's rear about a particular city. They are there to follow tried-and-true guidelines, which often means opening the 15th store in DFW and knowing they could open 5 or 10 more in the same area with predictable results. And they will often set up shop right next to their competition because they can easily find out their sales numbers and can thus extrapolate their own with great accuracy.

I once had a Burger King franchisee tell me: Find me a location next to a well-performing McDonald's and we'll do 75% of their business. I guarantee you Costco/Sam's, Walgreens/CVS and other direct competitors follow this strategy all the time, and why not? Very few sure bets in the business world so they often trade the possibility of a home run for the sureness of guaranteed revenue.


Usually, only once a successful market is fully saturated do they start looking for the next market. And I assure you, 98% of their decision process is based on population and incomes within concentric circles. And by that standard, downtowns are almost always the last location to go in, if they go in at all.

Another example of how restaurant and retail real estate reps are complete sheep, back in the 80's I worked a great deal with the rep from Taco Bell.

We were marketing a great property right on an I-40 & Meridian on/off ramp and she wouldn't even look at it: "People don't eat tacos in the car".

This was before they started updating all their locations with drive-thrus... And of course, that is now the majority of their business and like every other fast food place, they love highly visible sites with great freeway access.

But it goes to show these people aren't there to implement their own ideas or take any sort of risk whatsoever. They are following strict guidelines dictated from afar, and the final purchase/lease decisions are made by people who never even come to town, let alone see a specific property. It's really just a math problem and they already know the answer they want.

Why in the world would they potentially locate directly next to Whole Foods in Nichols Hill's Plaza??? That just seems crazy to me and particularly unimaginative.
Why did all the furniture stores locate by each other before Mathis Brothers owned most of them? Sometimes being by your competition helps.


They ,ay have the same philosophy as Walgreens and CVS. They are almost always across the street from each other
I find that to be a uniquely OKC thing, in Austin and here in Denver they tend to be a mile or so apart from each other. Some of that had to do with the developers but ultimately it came down to the demographics as Pete states and the desire to be in certain areas.


In addition to Urbanized's great perspective, you need to look at this from a corporations point of view.

I was a commercial real estate broker specializing in retail properties in OKC for seven years. In fact, I was the first to bring Walgreens to the market and worked with a bunch of other chain stores.

In all cases, these are big business with well established guidelines for expansion. They all look very hard at demographics in a 1-, 3- and 5-mile radius and employ people who do nothing but scout sites and negotiate real estate deals.

When you have the entire United States (and in some cases, the entire world) in which to expand, you set priorities based on what has proven to be successful. And the real estate people are absolutely not going to try and force through an iffy location that doesn't hold up demographically. Why would they?? They don't get a bonus if a store is a success; that is merely what is expected. But if they go out on a limb for a location that under-performs, they will get the butts fired and their boss(es) probably as well.

The people making real estate decisions for Trader Joe's, Costco, CVS, H&M, and all the others aren't entrepreneurs trying to out-fox the competition and find hidden markets. And they certainly don't give a rat's rear about a particular city. They are there to follow tried-and-true guidelines, which often means opening the 15th store in DFW and knowing they could open 5 or 10 more in the same area with predictable results. And they will often set up shop right next to their competition because they can easily find out their sales numbers and can thus extrapolate their own with great accuracy.

I once had a Burger King franchisee tell me: Find me a location next to a well-performing McDonald's and we'll do 75% of their business. I guarantee you Costco/Sam's, Walgreens/CVS and other direct competitors follow this strategy all the time, and why not? Very few sure bets in the business world so they often trade the possibility of a home run for the sureness of guaranteed revenue.


Usually, only once a successful market is fully saturated do they start looking for the next market. And I assure you, 98% of their decision process is based on population and incomes within concentric circles. And by that standard, downtowns are almost always the last location to go in, if they go in at all.
Going through the Walgreen's architects conference at their HQ was an eye opener for me as to why they locate where they do, it does all come down to numbers.

For those who remember Sirloin Stockade think of all their old locations and look around at what was in the area, there was almost always a McDonald's within sight of a Sirloin Stockade. Their thinking was someone who frequents McDonald's back then would be interested in a steak at other times and if they remembered seeing one it would help them attract that customer. It was also because of the demographic studies that McDonald's put into their locations back then when there weren't near as many stores. Why pay for a demographic study when McDonald's paid for one.

Yes, several of these chains (like McDonald's) are famous for their research and analytics. Competitors merely piggy-back off them all the time.

And as I mentioned, it's surprisingly easy to get a pretty good idea of what a retailer or restaurant is doing in terms of revenues. And once you know that, you pretty much know how much your particular business will do very nearby.


Similarly, I used to be a consultant for Paramount Pictures and it's the same type of philosophy for movie sequels. They can almost guarantee making at least 75% of the revenues as the previous movie, not matter how good or bad it may be. It's why there are so darn many sequels and sit-com spinoffs; a complete new movie or show is a very expensive crapshoot.

And it's the same when it comes to adapting comic books, old TV shows or even novels.... The built-in name recognition is money in the bank in the entertainment biz.


All this is not only important from a revenue-generation perspective, but also the ability to get financing. You can go in with some sort of basis for your projections which results in a much great likelihood of getting a loan or investors.

This discussion is nauseating. No wonder so many areas of OKC look like a dump and we spend hours and hours here begging for modest improvements in planning.

It's also patently absurd that conventional wisdom is that an area of the city that is soon to be home to literally thousands of new residents paying premium housing costs is not a good location for a small urban grocery store chain to locate.

I understand the holiness of spreadsheet logic, but this is sad and says so much about what is wrong with America. Catch22's post about the bean counters occupying every industry is spot on.

^

Generally speaking in big corporations, there is a lot of risk and very little reward for those who try and do things outside the mainstream.

And that's almost all big businesses, not just retail.

^

Generally speaking in big corporations, there is a lot of risk and very little reward for those who try and do things outside the mainstream.

And that's almost all big businesses, not just retail.

I understand. And to my point, one of the things that is ruining this country is every business turning into publicly traded mega-corporations. It's absurd that thousands of professional, affluent residents will be wondering if the spreadsheet shows them to be profitable enough to shop at a grocery store.

This discussion is nauseating. No wonder so many areas of OKC look like a dump and we spend hours and hours hear begging for modest improvements in planning.

It's also patently absurd that conventional wisdom is that an area of the city that is soon to be home to literally thousands of new residents paying premium housing costs is not a good location for a small urban grocery store chain to locate.

I understand the holiness of spreadsheet logic, but this is sad and says so much about what is wrong with America. Catch22's post about the bean counters occupying every industry is spot on.

Agreed.

This is why OKC, as a whole, is somewhat of a retail desert depending on who you ask and where you compare it to. To those that oppose having exclusively upscale neighborhoods in the city, without a great concentration of wealth, OKC will never have the retail that it could/should have simply because of the way locations are selected. The OKC Chamber of Commerce can try to sell them all they want based off of projected growth, disposable income, and commute patterns that differ here from most other cities, but without incentives (Whole Foods, Bass Pro), there is no convincing most retailers to locate in an area that doesn't meet a specific criteria on paper. It's not right, it's not logical, but its the way it works and is a fact of life.

This discussion is nauseating. No wonder so many areas of OKC look like a dump and we spend hours and hours here begging for modest improvements in planning.

It's also patently absurd that conventional wisdom is that an area of the city that is soon to be home to literally thousands of new residents paying premium housing costs is not a good location for a small urban grocery store chain to locate.

I understand the holiness of spreadsheet logic, but this is sad and says so much about what is wrong with America. Catch22's post about the bean counters occupying every industry is spot on.
Trade Joe's isn't an "urban grocery store chain", it is a grocery store chain with some urban locations. The "urban" location here in Denver is not in downtown, it is in the Capitol Hill neighborhood. The only other one that is close to downtown is further east on the former CU Medical School Campus at 8th & Colorado which is a few miles east of downtown. All the rest of the locations under construction are very suburban. The same thing in Austin, the only urban location is in the Seaholm development that is more than a year away from opening, the rest are all suburban. Whole Foods probably wouldn't be in Downtown Austin if it wasn't their HQ.

No one really stated that Downtown OKC wouldn't be a good location, it's just that most understand the logic businesses use whether we like it or not. I do think that not everything can be quantified on a spreadsheet but to paraphrase what Pete stated, corporate minions rarely go out on their own because it threatens their continued employment.

I understand. And to my point, one of the things that is ruining this country is every business turning into publicly traded mega-corporations. It's absurd that thousands of professional, affluent residents will be wondering if the spreadsheet shows them to be profitable enough to shop at a grocery store.

Yet, we have awesome little gems like Native Roots that go begging for business while everyone stampedes to Walmart.

People bemoan the loss of mom & pop and smaller stores yet if all those complainers (don't mean you, guru) actually patronized these local businesses, there would be tons more.


And I get the irony of making this point on a thread where we are all foaming at the mouth to get this particular national chain. :)

Yet, we have awesome little gems like Native Roots that go begging for business while everyone stampedes to Walmart.

People bemoan the lost of mom & pop and smaller stores yet if all those complainers (don't mean you, guru) actually patronized these local businesses, there would be tons more.


And I get the irony of making this point on a thread where we are all foaming at the mouth to get this particular national chain. :)

Agreed. Many people don't put their money where their mouth is when it comes to supporting the local guy. This Southpark episode about Wal-Mart is definitely worth a watch to anyone who hasn't seen it. It deals with this very thing.

This is a fascinating discussion, really. I enjoyed hearing about Sirloin Stockade and Taco Bell. The SS story confirmed something I already knew about other businesses forgoing some real estate research in favor of piggybacking McDonalds, with a new wrinkle; that they actually saw the location as a type of passive advertising.

But in both cases I see a glimmer of hope for downtown. Especially in the Taco Bell story. That story illustrates a paradigm shift, and reminds me of a personal experience.

When I was maybe 18 or 19 I worked at Builders Square (RIP) and my dad encouraged me to interview with a friend of his who was general manager for the soon-to-open Lowe's near NW 10th and MacArthur. Wait...don't remember that one? Probably not, because it only lasted a very short while. Anyway, the GM wanted to hire me, and pointed out that Lowe's was (at the time...maybe still?) the largest home improvement center company in the world. I was unimpressed. Because...it was an old-school lumberyard with a hardware store slapped on the front, much like Payless Cashways (RIP), if you remember them.

Even though they were BIG, something just didn't seem right. And that is because, as young and dumb as I was, I had seen what turned out to be the future of that industry, which was big boxes like Home Depot and (now) Lowes. I even told him as much, which in retrospect I'm sure pissed him off greatly. He laughed it off, like whistling past the graveyard. But the fact of the matter is as a 19-or-whatever-year-old I had recognized a trend in that business that apparently Lowe's senior management hadn't, or at least was unwilling to respond to. In the end, that store (and all of their stores in the market) failed, and Lowe's left the metro. When they returned years later...they were a big box.

My point is that, just like Pete's Taco Bell story, those companies had to recognize and adapt to a paradigm shift in their industry, driven by consumers. Now, in those cases the shift was driven in large part by increased vehicle-dependence and suburbanization.

However, in the 25 years since there has been perceptible movement by a significant population segment in the other direction, which only seems to be gaining momentum. In some cases retailers have been recognizing and responding to the urban trend by - although perhaps not outright rejecting the site selection model - coming out with parallel product designed to appeal to emerging urban markets and obviously adopting some other criteria for site selection. Maybe that paradigm shift will ultimately allow/force a retailer to consider non-traditional (urban) locations, including downtown OKC.

^

And think about the huge list of retailers and restaurants that weren't able to adapt just in the last 10-15 years and are now history.

However, change is still driven at the top; almost zero larger organizations have any sort of legitimate bottom-up planning process. I've worked for a bunch that claimed that, but it was just all BS to placate the rank and file.

The truth is, the young and young-minded often see trends long before the 60 year-old white men in the board room. Unless a good number of those dudes are truly visionary, those big businesses are destined for multiple ill-fated reinventions because the decision makers have little connection to the customer and the ever-changing wider world.

At least now, some big companies are actually run by the progressive-minded; usually the founders who started off at the top in the first place.

^

And think about the huge list of retailers and restaurants that weren't able to adapt just in the last 10-15 years and are now history.

However, change is still driven at the top; almost zero larger organizations have any sort of legitimate bottom-up planning process. I've worked for a bunch that claimed that, but it was just all BS to placate the rank and file.

The truth is, the young and young-minded often see trends long before the 60 year-old white men in the board room. Unless a good number of those dudes are truly visionary, those big businesses are destined for multiple ill-fated reinventions because the decision makers have little connection to the customer and the ever-changing wider world.

At least now, some big companies are actually run by the progressive-minded; usually the founders who started off at the top in the first place.
The companies that usually stagnate are the ones that no longer have the founders running them and in most cases no family who were around during the building of the company running things. They go from an entrepreneurial style of management to business school grad type of management.

The key is not only seeing emerging trends but also timing them right. For instance, many of the dot-coms in the late 1990s were about 10 years too early to the game. People weren't ready to fully jump onto the ecommerce bandwagon at that time so they went under. Likewise Microsoft (still a strong company) came too late to the game with the Zune and it failed. It looks like the Surface might suffer a similar fate. It will be the same with retail that moves downtown. If it's destination retail it could do well even today, but if its neighborhood retail, it will be all about when there is enough business to keep it afloat.

Yes. That's how it works in real cities. You want to be "ahead" as much as possible and select up and coming nabes. Not discounting Urbanized's incredibly detailed explanation, of course.Agreed

The key is not only seeing emerging trends but also timing them right. For instance, many of the dot-coms in the late 1990s were about 10 years too early to the game. People weren't ready to fully jump onto the ecommerce bandwagon at that time so they went under. Likewise Microsoft (still a strong company) came too late to the game with the Zune and it failed. It looks like the Surface might suffer a similar fate. It will be the same with retail that moves downtown. If it's destination retail it could do well even today, but if its neighborhood retail, it will be all about when there is enough business to keep it afloat.

Good post. As for the dotcoms, the problem was not that people weren't ready to embrace e-commerce. It was that so many of the companies immediately went public (so founders could cash in). Many of the failing dotcoms failed because they couldn't meet Wall Street profit projections -- when they actually would have been profitable as private companies.

Good post. As for the dotcoms, the problem was not that people weren't ready to embrace e-commerce. It was that so many of the companies immediately went public (so founders could cash in). Many of the failing dotcoms failed because they couldn't meet Wall Street profit projections -- when they actually would have been profitable as private companies.

Strongly disagree. About why the companies failed

Urbanized,
My son worked at Builder's Square and I also remember the Lowes on MacArthur. And living in the Edmond area, I spent a few bucks at Payless Cashways as well. I thought I was the only one that knew about those places.
C. T.
When I was maybe 18 or 19 I worked at Builders Square (RIP) and my dad encouraged me to interview with a friend of his who was general manager for the soon-to-open Lowe's near NW 10th and MacArthur. Wait...don't remember that one? Probably not, because it only lasted a very short while. Anyway, the GM wanted to hire me, and pointed out that Lowe's was (at the time...maybe still?) the largest home improvement center company in the world. I was unimpressed. Because...it was an old-school lumberyard with a hardware store slapped on the front, much like Payless Cashways (RIP), if you remember them.

Strongly disagree. About why the companies failed

Shocker. Well, you're wrong.

Urbanized,
My son worked at Builder's Square and I also remember the Lowes on MacArthur. And living in the Edmond area, I spent a few bucks at Payless Cashways as well. I thought I was the only one that knew about those places.
C. T.

Haha I think I might know your son, if he has the same last name. One of my very good friends at the time, if so. I've even been to your house, jumping on a trampoline straight into the swimming pool..? Electric windmill out back? He and I worked together in more than one place, actually. I've seen your name before and wondered if there was a relation.

Also, when I first moved to OKC (actually Edmond) in 1986 the very first place I worked was that Payless Cashways at 33rd and Broadway. The stark contrast between there and Builders Square informed my understanding that Payless and Lowe's at the time were outdated models. Lowe's adapted, Payless did not, and we see which one survives to this day.

^^^ Cool post!

Risk is a carefully controlled tool, they are accountable to investors who want a return tomorrow, not 5 years from now. Thus, they only go for the safe option guaranteed by a formula to be profitable.

Sums up just about every industry and its line of thinking except the oil industry.

With the exception of Aubrey McClendon, this is exactly the line of thinking in the oil industry as well.

Urbanized,
Guilty as charged!
C. T.
Haha I think I might know your son, if he has the same last name. One of my very good friends at the time, if so. I've even been to your house, jumping on a trampoline straight into the swimming pool..? Electric windmill out back? He and I worked together in more than one place, actually. I've seen your name before and wondered if there was a relation.

Also, when I first moved to OKC (actually Edmond) in 1986 the very first place I worked was that Payless Cashways at 33rd and Broadway. The stark contrast between there and Builders Square informed my understanding that Payless and Lowe's at the time were outdated models. Lowe's adapted, Payless did not, and we see which one survives to this day.

Urbanized,

Thanks for the awesome, detailed posts. Those help. Don't take mine as being disrespectful of your expertise or somehow doubtful of what you're telling me based on your experience (I'm a past customer of your establishments and have sent people your way as well). I'm just trying to understand this stuff and have a long way to go, I realize.

Part of what I'm trying to understand is why a TJ couldn't be successful in north midtown, on the edge of HH/MP, where there are a lot of households immediately adjacent to the north, with many more coming online to the south very soon. Also, while completely unscientific, I hear so many people say "I'd live downtown if there were better grocery options", which is a chicken-and-egg scenario (TJ would go in downtown if it had the rooftops, but the potential for rooftops depends on there being a TJ [or other mid-to-large grocery]). At some point we have to break that cycle right?

C.T., glad to make the association! Tell him hi for me. I think he still sees my dad from time to time. Would love to get together with him and play golf or something. Seriously, one of my very closest friends for a good number of years. We just ended up going different ways, job-wise, and we all know how much of an influence that tends to have on who you spend time with.

Keep in mind Trader Joe's is not a developer of properties... They are tenants, I believe almost exclusively.

So they look for existing buildings or new shopping centers -- and they are usually not free-standing.

They also need a bunch of parking as their stores are almost always crowded.


I could see them going into some of the older Homeland locations, as that is typically about their size of store. A lot of their locations in California are where old grocery stores used to reside.

The Homeland on Classen would be a perfect location for them, even if the go into NH Plaza.

The Homeland on Classen would be a perfect location for them.

I would die with happiness if that ever happened. That HL sucks, sucks, sucks. It is the only grocery store between my office and home but I'll deliberately drive to a store a mile out of my way to avoid it.

TJ's has gone into a ton of former Safeway's here in California, as their old model from the 60's and 70's is about their perfect size. I'm sure part of their business model is to go into these old grocery spaces because they are too small for modern full-service grocers and too big for most everything else.

In fact, the one a mile from my house was an old grocery store that first was converted to a Whole Foods, then WF moved down the street because they now want much larger stores.


And BTW, when I found out TJ's was coming in that spot by me and that WF was moving on, I was excited to the point of embarrassment. And it's proven to be everything I hoped, because most of their locations here are crazy crowded to the point you have to really psych yourself up to deal with it all... But the one by me has great parking and a good layout, which means unless I go at peak times, it's easy just to breeze in and out of there. Now, I shop there at least once a week, often just picking up a few items.

I've never felt so strongly about a retailer before because there is simply nothing else like it and they do an amazing job.

shawnw, appreciate your patronage, though thankfully someone who actually knows what they're doing took over the store operation! We learned a lot through trial and error; school of hard knocks. I do believe I now have a pretty good understanding of the downtown market, though. And of course, our operation bore little resemblance to the well-oiled machines that are national chain retailers, so I am certainly no expert there. But I do understand now why they make decisions the way they do.

I also learned a lot about this over the years from friends/colleagues in the commercial real estate industry. Most notably, when I was director of Automobile Alley and I just could not understand why I couldn't pick up the phone and call places like Restoration Hardware or Crate and Barrel and get them to open a location along Broadway. I mean, we had all of this great building stock, all originally designed for a different type of retail of course, but still great retail space along a major corridor in an emerging downtown. I mean, I knew it was an emerging downtown... Yes, I was a bit naive, but I think that as actually a bit of a benefit when in a position like that. You need to honestly believe that the sky is the limit for the area you represent. I see much of the same belief and emotion on this board 15 and more years later, as the seeds we planted in the nineties are now bearing some serious fruit. Everyone - much as I did then - wants to know why the heck we don't have these things now...NOW!!

But I very much recall conversations with - among others - Nick Preftakes, who was very involved in AA at the time as an investor, a developer and as a board member. He had extensive experience leasing commercial and retail space throughout OKC, and when he arrived in the district I thought "sweet! Here we go. Finally someone who knows what they are doing in this regard and who will go get all of these national retailers I am envisioning in the district." But when I discussed it with him, he was at the same time kind but also firm in saying it wouldn't happen for years in AA. "Why?" I asked. "Because retail follows rooftops." He went on to tell me that it would happen someday, but we would have to be patient, and see much more housing in and around the core. He also told me that the first retailers would likely be locals going with their gut. All these years later, I see how right he was. Not necessarily what I hoped for, but correct nonetheless.

So, not to dampen enthusiasm, I'm only here to temper it a bit. We're not in a sprint. It's more like a marathon. It took half a century to destroy most of what WAS a great downtown. Will it take half a century to bring it back? Not sure, but I don't think so. Let's call MAPS the starting point, though there were individuals working hard for downtown before that. Well, there is 20 years of it already gone by at this point. I do think we're reaching a tipping point though, if we haven't already reached it. I would be surprised at this point of downtown didn't feel mostly if not fully redeemed in another 20, at the rate we're going. Maybe sooner. Which means that grocery store will be here in less time than that. Will it be two years? Five years? Ten? I don't know. But it WILL arrive.

And the points that you make regarding proximity to other great neighborhoods are salient. BUT, I think that the gravitational pull of those neighborhoods also make the case for the first new grocery store being not far from where we already have stores, that is, the Homeland at 18th and Classen, or the stores around 23rd and Penn. Maybe Midtown? Uptown? Who knows. Will that be good enough for those who want one downtown? Again, who knows. But it WILL happen. Just maybe not as quickly as we all here (including the wide-eyed wet-behind-the-ears Urbanized of 15-18 years ago) might want it to. That's the truth. I think we all just need to settle in and enjoy the ride, bumps and all.

So while I was composing all of that malarky, I see where Pete and Cuatro are talking about the very Homeland I referenced. Truly, that is the best location for a grocery store near downtown at present. Great access to Gatewood, Classen Ten Penn, Plaza, HH, Mesta, Military Park, Putnam Heights, Jeff Park, Central Park, Edgemere, Paseo, and Midtown/Downtown. The closest thing to a no-brainer that exists. Which only shows that Homeland has no brains. It's almost a shame that it hasn't already gone the way of the stores west and north of there, so that another operator could come in and be a hero. The only problem is that there is always the chance that nobody does, anytime soon, making the situation even worse.

BTW, TJ's generates more sales per square foot than any other grocer -- almost twice that of Whole Foods.

Just shows you how amazing they are because they do this with much lower prices than Whole Foods.


I've often thought that if I ever moved back to OKC, that Trader Joe's would be the one retailer I'd miss the most. It's truly one of kind, which is a rare thing these days.

So while I was composing all of that malarky, I see where Pete and Cuatro are talking about the very Homeland I referenced. Truly, that is the best location for a grocery store near downtown at present. Great access to Gatewood, Classen Ten Penn, Plaza, HH, Mesta, Military Park, Putnam Heights, Jeff Park, Central Park, Edgemere, Paseo, and Midtown/Downtown. The closest thing to a no-brainer that exists. Which only shows that Homeland has no brains. It's almost a shame that it hasn't already gone the way of the stores west and north of there, so that another operator could come in and be a hero. The only problem is that there is always the chance that nobody does, anytime soon, making the situation even worse.

Yeah in OKC, the most plausible situation if a Homeland (or any grocery) closes is that it will just sit empty. Wal-Mart and Buy for Less already have stores close to there. Crest isn't that far away either. Sprouts would be the most likely candidate but I don't know if they would go to that location. The best option is that Reasor's or some national player buys up Homeland. That is a pie in the sky wish but would transform the grocery market in OKC.

So while I was composing all of that malarky, I see where Pete and Cuatro are talking about the very Homeland I referenced. Truly, that is the best location for a grocery store near downtown at present. Great access to Gatewood, Classen Ten Penn, Plaza, HH, Mesta, Military Park, Putnam Heights, Jeff Park, Central Park, Edgemere, Paseo, and Midtown/Downtown. The closest thing to a no-brainer that exists. Which only shows that Homeland has no brains. It's almost a shame that it hasn't already gone the way of the stores west and north of there, so that another operator could come in and be a hero. The only problem is that there is always the chance that nobody does, anytime soon, making the situation even worse.

Agree it is a great grocery location and I shop there often. I know it's not a great store as Homelands go, but it has most of what I need for daily shopping. However, I wouldn't mind at all if TJ's came in and bought it out...

The lesson IS that more of you on this board that are so convinced of the opportunities need to strike out and create them, It isn't the role the corps play. Go out and put your ideas to the test. THIS will make downtown more special anyway. Lots of local businesses that will take a chance to create something special. Just understand what the risks really are.

Yes, several of these chains (like McDonald's) are famous for their research and analytics. Competitors merely piggy-back off them all the time.

And as I mentioned, it's surprisingly easy to get a pretty good idea of what a retailer or restaurant is doing in terms of revenues. And once you know that, you pretty much know how much your particular business will do very nearby.


Similarly, I used to be a consultant for Paramount Pictures and it's the same type of philosophy for movie sequels. They can almost guarantee making at least 75% of the revenues as the previous movie, not matter how good or bad it may be. It's why there are so darn many sequels and sit-com spinoffs; a complete new movie or show is a very expensive crapshoot.

And it's the same when it comes to adapting comic books, old TV shows or even novels.... The built-in name recognition is money in the bank in the entertainment biz.


All this is not only important from a revenue-generation perspective, but also the ability to get financing. You can go in with some sort of basis for your projections which results in a much great likelihood of getting a loan or investors.

I was at a real estate conference recently where we had a fascinating keynote speaker from the McDonald's Corporation who said that McDonald's is NOT a hamburger company, but rather the world's largest real estate company that just produces burgers to help their tenants pay the rent.

Just for added emphasis.

BTW, TJ's generates more sales per square foot than any other grocer -- almost twice that of Whole Foods.

Just shows you how amazing they are because they do this with much lower prices than Whole Foods.


I've often thought that if I ever moved back to OKC, that Trader Joe's would be the one retailer I'd miss the most. It's truly one of kind, which is a rare thing these days.

On average $2,000 per square foot, right? I think Target is well-known as the benchmark for phenomenal and they're $300, just to give you an idea.

I was at a real estate conference recently where we had a fascinating keynote speaker from the McDonald's Corporation who said that McDonald's is NOT a hamburger company, but rather the world's largest real estate company that just produces burgers to help their tenants pay the rent.

Just for added emphasis.
IIRC that was a line from Harry Sonneborn in a book about their expansion a long, long time ago.

One of the car companies - GM, I believe - used to describe the importance of their financing unit (GMAC) to profits. To paraphrase, "GM isn't an automobile manufacturer that offers financing, they're a financing institution that makes cars."

IIRC that was a line from Harry Sonneborn in a book about their expansion a long, long time ago.

Ah recycled beats

I've seen that McDonald's quote many times and it seems to be largely misunderstood.

I'm sure what they mean is that well-located real estate is everything to their operation, not that they make money by investing in real estate they own.

Since they virtually never sell a property -- think about how many times they tear down and completely rebuild on the same spot -- they only make money from the restaurants that depend on those good locations.

They are not real estate investors in the classic sense, the one small exception is that corporate may build restaurants and then lease them back to franchisees but I believe that was more back in the early days with Ray Kroc.


And BTW, all fast food places make heavy use of ground leases and build-to-suit arrangements where they don't own the underlying property anyway.

BTW, TJ's generates more sales per square foot than any other grocer -- almost twice that of Whole Foods.

Just shows you how amazing they are because they do this with much lower prices than Whole Foods.


I've often thought that if I ever moved back to OKC, that Trader Joe's would be the one retailer I'd miss the most. It's truly one of kind, which is a rare thing these days.

After its first year of operating, the OKC Whole Foods was named store of the year (according to one of the Concierges who works there). I think we have completely blown the perceptions of the folks (WF corporate and real estate researchers) who were originally so hesitant to open one up here. I heard from a cashier not too long ago that their day before Thanksgiving (or perhaps two days prior) was their biggest sales date since the store opened. To say these alternative options don't do well in OKC is malarkey. We are a market HUNGRY for options outside of the WalMart/Homeland spectrum, and have proven over and again that we'll spend money when those options are available.

I've always seen Oklahoma City as a "reverse market" of sorts. Our demographics on paper might not add up to fit the desired real estate profile, but our CONSUMERS know what they want and they are loyal to the core. They also don't mind driving some significant distance to get what they want, which is antethema to the rooftops theory that most major realty research firms count on for their geographic profiling. Hopefully, those looking to expand our retail horizons here - including Trader Joes - will look to the success of Whole Foods and see that "yes, Virginia, OKC can sustain this type of store front." I, for one, am keeping my fingers crossed.

^

Yes, I've heard many times that that Whole Foods has far surpassed projections and that they deeply regret not having built a larger store at that location. Yet, if not for a ridiculous incentive deal by Aubrey McClendon, they would not have even been in this market at this point.

That neighboring Anthroplogie is out-pacing the one in Utica Square as well; which is amazing given it's stand-alone location.

I've said all along that Trader Joe's would be more popular in OKC than Whole Foods and I'll stick by the prediction knowing that particular WF is blowing out their numbers.

And I bet the same would be true for Costco. Also, the Sprouts/Sunflower stores seem to be killing it as well.


OKC is *hungry* for grocery and retail options, that's for sure.

After its first year of operating, the OKC Whole Foods was named store of the year (according to one of the Concierges who works there). I think we have completely blown the perceptions of the folks (WF corporate and real estate researchers) who were originally so hesitant to open one up here. I heard from a cashier not too long ago that their day before Thanksgiving (or perhaps two days prior) was their biggest sales date since the store opened. To say these alternative options don't do well in OKC is malarkey. We are a market HUNGRY for options outside of the WalMart/Homeland spectrum, and have proven over and again that we'll spend money when those options are available.

I've always seen Oklahoma City as a "reverse market" of sorts. Our demographics on paper might not add up to fit the desired real estate profile, but our CONSUMERS know what they want and they are loyal to the core. They also don't mind driving some significant distance to get what they want, which is antethema to the rooftops theory that most major realty research firms count on for their geographic profiling. Hopefully, those looking to expand our retail horizons here - including Trader Joes - will look to the success of Whole Foods and see that "yes, Virginia, OKC can sustain this type of store front." I, for one, am keeping my fingers crossed.

Yes, Ive heard from knowledgeable people as well that Whole Foods is doing very good business. This seems to be the trend when new to OKC retailers open up their first store, that it exceeds all expectations.