Tag Archives: customers

Why Are Mom and Pop Stores So Scarce?

By Dom Nozzi

May 17, 2017

A friend of mine recently complained that the city we live in (Boulder CO) is “planning ANOTHER bank for the Pearl St. Mall! When is enough enough,” she asked?

She went on to claim that there are “15 empty store fronts but that is because of landlord greed.”

“When,” she wondered, “will the city decide that we need to encourage mom and pop stores over banks and large chains that have no vested interest in the city?”

The City of Boulder, I explained to her, is not planning to add another bank to the Mall. A bank president is planning to do that.

Banks, I said, are common in such low-density places (such as American pedestrian malls) that are unable to attract a large number of customers, as are jewelers. If you were a landlord along the Mall, I told my friend, I suspect that you would be aggressively seeking the rents sought by the existing landlords, as I believe you share the same values as those landlords: making money rather than losing money. And I suspect you would not consider yourself “greedy” for wanting to avoid losing money.

Throughout its history, and up to this very moment, Boulder (like a great many cities in America) has desired mom and pop stores along the Mall. But there is almost nothing a city can do to encourage such stores for two primary reasons: (1) The rent is very high along the Mall, which makes it financially impossible for a mom and pop store to afford to be there; and (2) The density of residential and commercial development in the vicinity of the Mall is far too low to attract enough customers to make it feasible for a mom and pop store to survive.

Mom and pop stores only occur when rents are relatively low, when there are a high number of customers living and working in the vicinity (such as in Brussels, Antwerp, Bern, Siena, and many other compact cities), or both.

The Law of Large Numbers, when applied to cities, shows that as a city grows its population, and does so relatively compactly, worker productivity increases, innovation increases, mom and pop stores grow in number, cultural diversity grows, and the range of restaurants and grocery store items grows. The Law partly is driven by synergy. UntitledSynergy occurs when larger numbers of people congregate and work together, and the whole becomes greater than the sum of its parts. Low densities, by isolating creatives, destroys diversity, innovation, smaller scales and the number of choices available.

Boulder is an interesting case because it shows both effects: a very low density, yet relatively high levels of innovation due to the large number of brilliant and creative people who have settled in Boulder — largely due to the high quality of life. If Boulder became much more compact and dense, I believe levels of innovation, diversity, productivity, mom and pop stores, and productivity would grow substantially (the city would also be far more walkable and bikeable).

Boulder’s decades of NIMBYS fighting tooth and nail to lower densities (and the very high quality of life) in the city are the primary reason why mom and pop stores are rare on the Mall and big chains/banks/jewelers are common.

When is enough NIMBYism enough?

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Filed under Economics, Politics, Urban Design