Economy evolves, retailers adapt

The recession and related cutback in consumer spending is compelling Columbia retailers to come up with innovative ideas for increasing sales, particularly downtown, where the downturn has had the deepest impact and the amount of vacant space has spiked.

While some businesses in the typically volatile retail sector have closed recently, including Arsenic Leopard and Manhattan Closet, or plan to close, such as Kayotea Tea Room & Bistro (in January), many are opening, such as MacKenzies restaurant, Artlandish Gallery and Plato’s Closet.

Ironically, the economic slowdown has caused some people, particularly those who are unemployed or underemployed, to quicken plans for starting their own businesses.

“It accelerates some people’s time schedules,” Carrie Gartner, executive director of the Special Business District, said.

To boost sales while keeping costs down, business owners said they’re getting better at communicating with customers.

At Binghams Traditional Clothing for Men on Broadway and Ninth Street, co-owners David and Blake Danuser have turned away from direct mailing and are using more e-mail marketing and even text messaging when customers state that as their preference.

At Ashley Furniture, the owners surveyed customers and found they wanted their furniture delivered faster. So in February they opened their own warehouse to cut delivery time in half.

Some adaptations are more modest. Lollicup on Ninth Street downtown decided to diversify and start selling frozen yogurt custard, for example.

Bluestem, as reported in the July 11 CBT, also made building customer contacts into its e-mail newsletter a top priority.

Binghams co-owner David Danuser said more customers are asking to be contacted via cell phone, particularly those with smart phones. “I think people have embraced technology.”

Danuser recently sent a text message to a customer about a sale on spring clothing, and the man was in the store a few minutes later. “He happened to be walking on Broadway,” Danuser said. “He walked right in and bought two shirts.”

Blake Danuser said sales at Binghams were flat during the first six months of the year. “But it’s starting to pick up,” he said. “It’s getting better each month.”

In the latest report on city sales tax collections, which runs through April, revenue from retail, grocery and department stores, $4.55 million, was 0.2 percent higher than collections during the first four months of 2008. Revenue from restaurants and bars was down 2 percent.

City Manager Bill Watkins’ proposed budget released this month estimates that sales tax revenue in the fiscal year that begins Oct. 1 will be equal to the current fiscal year.

But as the charts on this page show, sales tax revenues in the downtown district are lagging. Gartner pointed out that sales downtown bounced back after the 9/11 terrorist attacks had stymied commerce. But they began dropping in 2005 as retail stores, restaurants and bars built during the building boom opened outside Columbia, such as the Forum Development Group buildings on East Broadway and the shopping centers anchored by new Walmart Supercenters.

Gartner said those suburban shopping centers are part of Transportation Development Districts that are funded by a half-cent sales tax surcharge. The SBD will ask downtown property owners and the City Council later this year for permission to change the organization and the affiliated Central Columbia Association of merchants to a Community Improvement District. The CID could start collecting a half-cent sales tax surcharge and roughly double its annual funding.

“If we could use our funds to do more marketing, that would be helpful,” Gartner said. The organization would also try to persuade developers to build more office and residential space downtown, which would increase the customer base for retailers, she said.

At present, the SBD has about 225 retail spaces and 200 office spaces leased and a vacancy rate of about 9 percent, which is about the same as the rate outside downtown but also about 2 percent higher than in previous years.

“There is more vacancy than I have ever seen,” said Gartner, who has been the district director for nearly a decade. There was a surge of renovations of historic buildings in the past year, she pointed out. “A lot of renovation created a lot of new spaces at the same time that the economy softened,” she said.

Retiring from retail

While the tight economy makes it tougher for retailers to stay in business, owners who recently decided to leave retailing said the critical reason for the change was more personal than commercial.

Kayotea Tea Room & Bistro, which opened downtown on Broadway in 2006, will close in mid-January when the lease expires, owner Kellye Dubinski said.

Lisa Suits’ eclectic store, Arsenic Leopard, closed in July after operating downtown for nearly six years.

Lisa Suits said sales at Arsenic Leopard had actually been “creeping up a bit” in the first half of 2009. But Suits said running the business on North Ninth Street was consuming her life, and her decision to close came after a death in the family and a period of introspection.

“I loved it, but it just really wasn’t enough,” Suits said. “It was just making me crazy. When my mom died, I decided that was it; I can’t do this anymore.” She realized that she couldn’t realistically get the operation “cranked up enough so that I wouldn’t have to be there all of the time.”

Kayotea has been struggling during the economic downturn, and Dubinski said that now that she has a family and a baby to take care of, she doesn’t have the time she needs to dedicate to keep the business profitable.

“Times are tough for downtown businesses right now,” she said. “Everybody is having problems. It’s frustrating business owners. We’ve trimmed all the fat and still…”

Dubinski plans to go back to what she was doing before she opened Kayotea: selling bulk tea. The Merle Norman cosmetics store across the street has agreed to give her shelf space, she said.

With the drop in retail traffic downtown and declining sales at Kayotea, Dubinski said she could no longer afford to pay rent at 912 E. Broadway. “My overhead at this location is very large,” she said of the 2,600-square-foot space. “We struggle every day to keep the doors open. The pressure I’m under now is just insane.”

Dubinski started looking for smaller, less expensive space, and considered moving into the former space of Smokin’ Chick’s BBQ across from The Blue Note on Ninth Street, where the rent was half as high.

“Then it just got down to wanting to do it,” she said. “It takes more time than I’m willing to give right now.”

“I’m sure I’m going to shed tears when I close the business, but when I wake up the next day, I’ll probably do a dance of relief.”

Surveying compels change

About six months after taking over the Ashley Furniture store in East Columbia, the Phillips family, which has been in the furniture business in St. Louis for 40 years, launched an intensive survey of its customers.

The company enticed customers to complete and send in surveys by offering them a chance at winning $1,000 worth of furniture.

“In this economy, when sometimes you’re second guessing whether you’re doing things right, you’ve got to continually communicate with your customers,” co-owner Michael Phillips said. “The best way to answer questions is to ask customers. They’ll tell you what you need to do.”

What they continually heard from customers was that they wanted to get their furniture delivered faster, he said.

The company decided to build a 118,000-square-foot warehouse in St. Louis and use their own distribution center rather than getting furniture from a franchise warehouse.

That allows customers to get their furniture delivered in one to two weeks rather than in about four weeks, Phillips said.

“Now that we can ship out of St. Louis, it allows us to keep our prices really low,” he said.

The first shipment from the St. Louis warehouse to customers in Columbia took place on July 30. The company also is in the process of increasing the inventory at the Columbia store.

After converting its two Phillips Furniture stores to Ashley Furniture in 2005, the family later opened three more Ashley stores in the St. Louis area and the one store in Columbia.