Sunday Commentary: Target – Did Davis Voters Make a Mistake?

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The Davis city staff is proposing to eliminate leasable square footage limitations on the Target site as they look to eliminate the few remaining vacancies in the pads.  Given the discussion, it seems reasonable to revisit the whole issue of Target from the 2006 election.

In June of 2006, the council voted to approve zoning changes that would allow Target to come to town, but Target was such a divisive issue that the council agreed to put the matter to a vote of the people.  It would narrowly pass by just under 700 votes and the narrow passage has been attributed to students who were often frustrated at the lack of basic shopping options in the city.

There was a wide array of reasons for the opposition to Target – the general opposition to big box, concern that it would undermine existing retail, and general land use concerns from adjacent residents (the precincts immediately adjacent to Target voted against it).

On the other hand, there were two primary reasons for support of bringing Target to Davis. First, already mentioned was the lack of shopping opportunities in the city which led to sales tax leakage.  And second, the need for additional sales tax revenue.

So how has Target performed in the 14 years?

I suppose it depends on whom you ask.  The city analysis, not surprisingly, is favorable.

In the staff report, they note: “In 2006, the city was concerned that the shopping center could have a negative impact on the economic viability of the downtown.

“Studies were prepared that showed there was little likelihood of urban decay, which has held true,” they write.  “After 10 years of operation in the city, staff believes it can be empirically deduced that the tenants in the shopping center are not relocating from the downtown area, nor are they causing closure and mass vacancy in the downtown area.”

They quote from the 2017 State of the City Report: “The retail market in the city and Davis Core Area is much tighter than the county’s more balanced market. This is evidenced by relatively positive net absorption, vacancy rates of 3.7 and 3.2 percent, compared to the countywide rate of 5.3 percent, and increasing rental rates.”

That’s certainly one view.

I have not found any definitive studies, but there is an article from several years ago written by Tom Sakash of the Davis Enterprise.  He quoted a study by a research team from the Institute of Transportation Studies at UC Davis that found “the downtown has not seen a substantial reduction in shopping frequency since Target opened in 2009 on the east side of the city.

“The biggest changes we saw were for shopping outside of Davis. That declined,” said Susan Handy, the UCD professor of environmental policy and planning who oversaw the study. “Shopping at stores outside of downtown declined after Target opened (as well), but for shopping downtown, we did not see very much change.”

What they found was that Davis residents had previously been leaving town to do their shopping at big-box stores, and “the Target store in Davis now kept that lost sales tax revenue in town.”

That in turn prevented Target from leading to a massive loss of retail business in Davis.  Basically, the hope was that Target would start to alter patterns of people driving out of town, which was already occurring, rather than diverting business from the downtown.

At the time, Professor Handy said that “overall we think Target was not drawing a lot of traffic away from downtown.”

It does make some sense that, if you already had an existing commercial pattern where the lack of available retail created one behavior, adding a new option might alter that without harming existing businesses.  The city also only added one big box, which perhaps prevented some of the worst impacts of big-box retail from hitting the city.

The question I have asked repeatedly is whether the city of Davis bet on the wrong thing.  After all, what we have seen over the last decade has been the continuation of a trend that some have called a retail apocalypse.  We have seen large numbers of “brick and mortar” retail stories close – including some long-standing brands.

By one account more than 12,000 physical stores have been closed due to a variety of reasons – over-expansion of malls, rising rents, and changes in spending habits.

Surviving so far have been discount superstores like Walmart and Target.  The question is whether these stores are going to go the way of their predecessors and whether in ten years Davis will come to regret making the decision they did – even if in the short term it appears that Target has worked in Davis without some of the negative drawbacks.

For that I look at the work of Zuora CEO and Founder Tien Tzuo.  In general, he believes that the notion of the retail apocalypse is overstated.

However, Mr. Tzuo is bearish on Walmart and, by extension, Target.  The big problem, he argues, is the difference between Walmart and Amazon – and, not how you might think it, between e-commerce and brick and mortar.

The problem, he argues, is that for Walmart, and again by extension Target, a customer is just a stranger, a number.

He writes: “What was the last thing you bought at Walmart? Walmart certainly can’t tell you. Got any receipts handy? Once you walk past the cash register at Walmart, you’re gone.”

The problem: “Walmart is still essentially a product company…  It knows how to buy and sell products. That worked fine for a long time. It doesn’t anymore.”

He argues that the difference between Amazon and Walmart is that Amazon “knows its customers.”

But Mr. Tzuo also believes that newer companies are emerging which are starting to open stores and find ways to be profitable.  He argues that “it’s really hard to operate as a standalone e-commerce vendor.”

He argues it is not online versus physical, but rather “between data-driven, app-centric, flexible and omnichannel retailing on the one hand, and old and stale retailing on the other.”

In that sense, it seems the future may be bleak for the Targets and Walmarts of the world.  But perhaps they can adapt.

In previous articles we note that Davis lags behind regional cities in per capita retail, but it also lags behind comparable college towns as well.

One reason we have pushed high tech innovation as a future anchor point is that it utilizes the city’s advantages in terms of its proximity to a world class university.  That still seems to make a lot of sense.  But what would also make a lot of sense would be for the city to start studying retail trends and figure out how to take advantage of the new and emerging retail market, rather than simply relying on old and what seems likely to be a dying industry.

If Tien Tzuo is right, out will be dinosaurs like Target and Walmart (unless they can adapt), and in will be tech-savvy companies like Warby Parker.

—David M. Greenwald reporting


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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88 thoughts on “Sunday Commentary: Target – Did Davis Voters Make a Mistake?”

  1. Robert Canning

    I find the notion that Amazon “knows” me to be problematic. I would assert that what they know are my preferences, not me.

    Another point I find interesting is that brick-and-mortar stores (Walmart is the example here) don’t know me the way Amazon does. Not all but some retail outlets collect a good bit of data about their customers and use that via targeted mailings. I’m thinking REI and a few others. I never shop online with REI but they know a bit about me from my I -store purchases.

  2. Bill Marshall

    Funny title… question would be better worded, “if the same voters voted again, would they vote the same way?”…

    A couple of times, months after Target opened, over-heard folk commenting to each other along the lines of , “I voted against it, but shop here a lot…”   Funny…

  3. Mark West

    “The Davis city staff is proposing to eliminate leasable square footage limitations on the Target site as they look to eliminate the few remaining vacancies in the pads.”

    The City should be removing these limitations all over town. The idea that we are capable of accurately predicting what types and sizes of businesses will be successful in a location is one that has materially harmed the City in the past by reducing business-related tax revenues. While individuals are more than welcome to opine on their preferred business types, the City should simply be saying ‘yes please.’ The more options the better.

    “In that sense, it seems the future may be bleak for the Targets and Walmarts of the world.  But perhaps they can adapt.”

    Target’s future might be bleak so you posit that we should never have allowed it to open? If the Davis store is typical in terms of sales per square foot (as reported in the Target annual report) it is generating somewhere in the ballpark of $500,000 in sales tax annually. That is on top of the property taxes generated by the land and the buildings and the unsecured property inside. Even if Target eventually goes broke and closes, the taxes generated while it was open are revenues that the City would not have otherwise received, and there would still be buildings available to be repurposed. The retail market is going to continue to evolve and will likely look much different in twenty years than it does today. So what? People will still need to acquire goods and services even if the suppliers change over time. From the City’s perspective, it is best to provide the space for business to function, then get out of the way so that we may enjoy the results of that evolution. It is beyond silly to believe that should be picking the winners and the losers in advance.

  4. Rik Keller

    It is really unclear what the “mistake” is that the article is positing. That brick-and-mortar retail is declining, Target will someday die in the future, and therefore a decade’s worth of sales tax revenues so far didn’t really happen for the City?

    1. Ron Oertel

      Rik:  My “interpretation” of the article is that David might be suggesting that the Target site (as well as the unoccupied portions of the adjacent pads) might be one of the locations that he is advocating for “innovation-center” type businesses, to eventually occupy.  (Or, perhaps somewhere closer to the University, such as University Mall.)

      Of course, this interpretation is based upon that assumption that David believes that developers aren’t really interested in a peripheral housing development on prime farmland beyond city limits, to “accompany” an innovation center.

      The interpretation also requires a belief that there’s actually market demand for innovation center space, to begin with. (And, not just another housing development.)

      1. Don Shor

        My “interpretation” of the article is that David might be suggesting that the Target site (as well as the unoccupied portions of the adjacent pads) might be one of the locations that he is advocating for “innovation-center” type businesses, to eventually occupy.

        Not at all. The owners of Second Street Crossing are, once again, asking for a modification of the development agreement they signed when the project was approved. There were specific limitations then on the types and sizes of stores that could occupy the adjacent pads. They sought to get the development agreement changed in 2012, to allow different types and sizes of stores there, and they’re trying again to further remove the provisions of the development agreement.
        When they got the council to change the development agreement in 2012, there were 84 retail members of the DDBA (now called Davis Downtown). Now there are 66 retail members. I don’t have a count of the restaurant members then, but now there are 96. Downtown Davis has, over the last decade-plus since Target was approved, become more of a food and entertainment destination, and the retail options are eroding.
        I would be curious what position, if any, Davis Downtown or the Chamber are taking on this. They took the lead in crafting the original development agreement, if I recall, in order to protect some of their retail members.

        1. Ron Oertel

          Don:  My comment was made partly in-jest, as I don’t think David realized how it could be interpreted.

          Regardless, I’d suggest you read David’s article again, in which he (once again) advocates for “high-tech innovation”, while downplaying the future of retail.  So naturally, one question that might be asked is why not allow conversion of under-utilized sites, or ones that might eventually be available for such usage, vs. allowing yet another peripheral freeway-oriented development on prime farmland (which would likely include even more housing, I suspect).

          Much of what you’re referring to was already covered in the Enterprise:

          https://www.davisenterprise.com/local-news/second-street-crossing-seeks-to-fill-vacant-stores/

           

           

           

          1. David Greenwald Post author

            “I’d suggest you read David’s article again, in which he (once again) advocates for “high-tech innovation”, while downplaying the future of retail.”

            Actually I downplay the future of big box while arguing at the same time that the retail apocalypse is overstated.

        2. Bill Marshall

          They took the lead in crafting the original development agreement, if I recall, in order to protect some of their retail members.

          Not quite, but kernel of truth… as to land use restrictions, including SF’s, nature of uses, they did have a lot of input with the City side of the DA development process… but they were not formally “at the table”…

          What would be more accurate, is to note their influence in the development of the zoning approvals (upon which the DA was/is based).  As wereother elements of the community.

          That said, I share your curiousity…

          From my personal experience, Second Street Crossing did not change our Downtown shopping behavior… it did cut down on our trips to Woodland Target, big time… 5 min bike ride vs 15 minute car trip.

          One of the Downtown Davis businesses, Strelitzia (sp?), actually moved from Downtown to Second Street Crossing… and they seem to be thriving there…

        3. Ron Oertel

          David:  Here’s some selected quotes from your article:

          “One reason we have pushed high tech innovation as a future anchor point is that it utilizes the city’s advantages in terms of its proximity to a world class university. 

          “In that sense, it seems the future may be bleak for the Targets and Walmarts of the world.”

          The title of your article itself asks if voters made a “mistake” (while also ignoring the fact that the council made the initial decision to approve the zoning change which allowed Target).

          1. David Greenwald Post author

            Yes but as you point out, those are selected quotes.

            And in fact, you neglect the conclusion (right after your selected quote): “That still seems to make a lot of sense. But what would also make a lot of sense would be for the city to start studying retail trends and figure out how to take advantage of the new and emerging retail market, rather than simply relying on old and what seems likely to be a dying industry. If Tien Tzuo is right, out will be dinosaurs like Target and Walmart (unless they can adapt), and in will be tech-savvy companies like Warby Parker.”

        4. Ron Oertel

          Seems to me that market forces will eventually determine what happens.  Whether it’s a company like Warby Parker, or perhaps other “tech-savvy” (or “innovation-center”) type businesses.

          Not sure why the city would need to take any action whatsoever, other than to allow zoning changes – if needed. (However, perhaps this also demonstrates that regardless of what is promised, changes will occur.)

          As Don noted, there are now fewer Davis Downtown members, which I assume might translate into fewer retail establishments. Perhaps replaced by an increase in restaurants, as he also noted.

          1. Don Shor

            As Don noted, there are now fewer Davis Downtown members, which I assume might translate into fewer retail establishments.

            That is exactly what it means, since membership in Davis Downtown is mandatory (it’s a tax district) and so it is an accurate count of the number of retail businesses within that tax assessment district if their website directory is up to date. I just happen to have those 2012 figures from a previous conversation, and unfortunately didn’t note at the time how many food businesses there were. If anyone in Davis Downtown has historical data on that, feel free to post it, or to send it to me at donshor@gmail.com. I’m pretty certain the downtown has had a declining number of retailers over the last decade or so. The number of food establishments has obviously increased, but I don’t know by how much.

        5. Mark West

          “One of the Downtown Davis businesses, Strelitzia (sp?), actually moved from Downtown to Second Street Crossing… and they seem to be thriving there…”

          They moved in across the street, not actually in the complex. City Staff tried their best to put them out of business as a consequence, demanding $10’s of thousands in penalties for moving into a non-retail space. Another example of the stupidity of our zoning restrictions.

      2. Rik Keller

        Ron O.: your interpretation is as good as any. Even though Greenwald has commented several times, he still can’t seem to articulate what is the actual “mistake” that Davis voters might have made in the first place

        And then, as you noted, he tries to work in something about how we need a research park because big box retail is dying. (Even though research parks are a concept from the 1950s, are dying themselves, and have actually worked in very few areas.

         

        1. Ron Oertel

          Please, Rik – we prefer the term “innovation center”, to research park (or business park).  😉

          Actually, referring to any of these things as a “park” is an insult to actual parks.  Perhaps “business park(ing)” lot is more accurate.  (Actually, I-80 itself might already meet that definition.)

          But yeah, David certainly seems to be a “booster”, regarding this type of development.

  5. Ron Oertel

    From article: “What they found was that Davis residents had previously been leaving town to do their shopping at big-box stores, and “the Target store in Davis now kept that lost sales tax revenue in town.”

    I suspect that statistics from the “Costco Highway” would tell a different story, if it was actually measured. A Target store in that same mall, as well.

    (A clever nickname – from Bob Dunning I believe.)

    1. Bill Marshall

      COSTCO and Target have very different market shares/”targets”… COSTCO/Woodland captured Davis/Woodland market from folk who were going to Price Club, Sam’s Club, etc.

      The folk going to any of those were not finding what they wanted, at the price they wanted, from DT Davis… we were/are among them.

      If Costco located in Davis, we’d not do 2 ‘Costco runs’ a month to Costco/Woodland.

      Now, if we could only resurrect Mervyns, and locate a store here, we’d be ‘happy campers’…

      1. Ron Glick

        “Vacaville.”

        “And likely attracts very few Davis shoppers.”

        The above response about Vacaville seems a little detached from the reality.

        People from Davis shop in Vacaville, Woodland, West Sac and Sacramento for all sorts of things. We go to Home Depot, Best Buy, Michaels, Big Lots and El Mercado Superior in Woodland, Ikea in West Sac, Apple in Sac and often buy clothes at the outlets in Vacaville. Before there was Target in Davis we went to the Woodland Target.

        One time, years ago, we were buying a computer in Vacaville and saw others we knew from Davis there doing the same. When we registered our address for the warranty at check out the cashier commented that she too lived in Davis. I wondered then about the stupidity  of Davis’ anti-growth policies that had the unintended consequence of all these people traveling so many miles to shop and work not to mention the tax leakage from these purchases not happening in Davis.

         

         

      2. David Greenwald

        Ironically computers are one of the few things you can get in town at competitive prices, my last few machines I had custom built locally at a very competitive price.

      3. Ron Glick

        Note I said “Years ago we bought a computer in Vacaville.”  Of course markets change, the store we bought from no longer is in business. Focusing on the particular item misses the point that denying that many people in Davis shop out of Davis for products not available because of policy decisions made in Davis is absurd as are the policy decisions that make Davis a retail desert.

      4. Ron Oertel

        I see that my original response has been deleted, so I’ll try rewording it.

        Price Club merged with Costco in 1993.  Target (in Davis) was approved in 2006.

        I suspect that very few Davis residents shop at Sam’s Club in Vacaville, or ever did.

        Costco competes directly with any other store that sells similar products, including Target.

  6. Ron Glick

    This is one of the stupidest most incoherent articles David has ever written.

    Let me summarize and cut to the chase. The mall wants to change store size requirements to fill the leasable space and the city claims there has been and will continue to be no economic impact on downtown.

    Should the mall owners be allowed to do this? Of course because right sizing businesses is part of a healthy competitive market that benefits consumers.

    Should staff make an obviously absurd claim that Target hasn’t impacted downtown? Obviously no. Ask any retail business in downtown if they worry about Target as a competitor and they will likely say yes.

    The real complaint here should be the way staff regularly over reaches in its attempts to rationalize the proposals it brings to council.

    1. David Greenwald Post author

      “Should staff make an obviously absurd claim that Target hasn’t impacted downtown? Obviously no. Ask any retail business in downtown if they worry about Target as a competitor and they will likely say yes.”

      I don’t know where I come down on this particular issue but I’m not sure that asking a retail business if they worry about Target is the definitive point here or even an objective one.

        1. David Greenwald Post author

          I agree its not immaterial, I just don’t think we have data for Davis that supports that point even though I believe you are right, every retailer in similar markets fears Target.

  7. Ron Oertel

    Me  “And likely attracts very few Davis shoppers.” (in reference to Sam’s Club).

    Ron G.:  “The above response about Vacaville seems a little detached from the reality.”

    I’m going to expand my original comment, by claiming that almost NO ONE from Davis regularly shops at Sam’s Club in Vacaville.

    1. Don Shor

      I’m going to expand my original comment, by claiming that almost NO ONE from Davis regularly shops at Sam’s Club in Vacaville.

      Being neither provable nor falsifiable, this is just an opinion without evidence.

      1. Ron Oertel

        The unsupported (and illogical) “opinion” originated with another commenter – not me (or the “other” Ron), by claiming that Costco in Woodland had an impact on shoppers who formerly went to Sam’s Club in Vacaville. And made similar comments regarding Price Club, which also made no sense (since it had ceased to exist long ago).

        Some of the related comments have since been deleted.

  8. Don Shor

    Surveys show that people generally travel no more than 10 – 20 miles for things they purchase frequently, and about 20 miles for less frequently purchased items. The big discount stores like CostCo and Sam’s Club function on a principle of consumers being willing to travel greater distances to buy things in larger volume, at lower prices, as less frequent shopping trips. About 30% of the public generally is highly motivated by price; most are actually more motivated by quality, convenience, selection, and simple affection (Tom Peter’s term) for the stores they choose.

    Those who are primarily motivated by price are also shown to be more willing to change their shopping patterns than are other shoppers. They are most likely to go to a new store because it has lower prices. Groupon specifically targets this audience.The majority of consumers are not as willing to do that.

    In the absence of a big box discount store in the Davis/Woodland area, it is likely that a fair number of consumers were driving to West Sac or Vacaville for that shopping option. The opening of CostCo in Woodland likely drew many or most of them from those other cities. Some such shoppers certainly reside in the 95616 and 95618 zip codes.

    Target is not a big box discounter, it is a big box general merchandiser. That is, they are not primarily known for discount prices, they are primarily known for having a wide range of merchandise conveniently in one place (“one stop shopping”). They compete with small retailers across many categories, and they clearly had an impact on smaller Davis businesses that compete in those categories. I don’t really know why anyone would try to argue with that.

    Obviously Target had an impact on downtown Davis retailers, and we can see the smaller number of shops and the loss of certain ones as likely a result of that competition, at least in part. I wish city staff and others would stop trying to pretend Target didn’t have an impact. The trend is away from retail and toward food establishments, and it’s silly to suggest that the development of a new peripheral retailer with a much larger footprint than any other store in town wouldn’t be a factor in that.

    I don’t honestly care at this point whether they adhere to the remaining shreds of the development agreement, but would prefer that people not sugarcoat the impact of these large retailers on the land use and shopping patterns in any given community.

    1. Ron Oertel

      I’d like to hear from ANYONE (even “anecdotally”), who used to regularly drive to Sam’s Club in Vacaville, but now goes to Costco in Woodland instead.  (Let alone the defunct “Price Club”, which merged with Costco in 1993.)

      Stores “compete” with any other store that sells similar products.  Costco competes with Target, Nugget, local gas stations, etc.

       

      1. Don Shor

        The Venn Diagram of ‘people who are willing to comment on the Vanguard’ and ‘people who used to regularly drive to Sam’s Club in Vacaville, but now goes to Costco in Woodland instead’ probably shows very little overlap.

          1. Don Shor

            It’s not even clear to me that Sam’s Club and Costco users would be the same universe anyway.

            I can’t imagine why you would say that. They compete in the same retail channel, for much the same demographic, using the same business model. They were actually founded at the same time, interestingly, and WalMart considers Sam’s Club to be in direct competition with CostCo. You can find numerous articles online directly comparing them. Overall I’d say CostCo is winning the competition, but Sam’s Club does enjoy the deeper resources of the WalMart parent company.

          2. David Greenwald Post author

            Rare time, I agree with Ron, but my sense has always been there is a large difference in the targeted members for CostCo v. Sam’s CLub.

        1. Ron Oertel

          “It’s not even clear to me that Sam’s Club and Costco users would be the same universe anyway.”

          Thank you.  They are very different shoppers to begin with, I understand.

          Probably even in Vacaville, which has both stores.

           

      2. Don Shor

        I’d like to hear from ANYONE (even “anecdotally”), who used to regularly drive to Sam’s Club in Vacaville, but now goes to Costco

        I have now been contacted by one individual who “used to regularly drive to Sam’s Club in Vacaville, but now goes to Costco.”

    2. Richard McCann

      Don

      You claim that Target has a significant impact on downtown businesses. I honestly cannot think for a single business downtown that had directly competed with Target that has and had been in existence before 2005. Several businesses closed as a result of the Great Recession, but again I don’t see a link to Target. Target does not offer the specialty clothing that has been in the downtown that it might compete with, and there have not been general furniture and merchandise in the downtown for at least a couple of decades. As the slogan went during that campaign, “I can’t buy underwear anywhere in Davis.” If you have seen impacts, you need to be more specific.

      There is a bigger issue here as well. It has been foolish to zone commercial out of the residential areas so strictly in an attempt to drive business downtown. Where retail is more closely integrated into the community, it is better able to survive. Just go the to Bay Area where commercial and residential are neighbors in the core cities and customers can walk to shop. Davis should be opening up its zoning to allow more small commercial distributed around town.

      1. Don Shor

        I honestly cannot think for a single business downtown that had directly competed with Target that has and had been in existence before 2005…. If you have seen impacts, you need to be more specific.

        Alphabet Moon.

        1. Richard McCann

          Alphabet Moon’s product line was more high end and most of its inventory was not offered at Target. (We were regulars for many years.) It also was absorbed by the expansion of the Avid Reader children’s extension which offers many of the same products. Internet commerce was the real source of demise for Alphabet Moon. That’s like saying that the women’s clothing stores downtown that cater to higher income fashion conscious buyers are competitors of Target–they clearly are not.

  9. Ron Oertel

    David:  “It’s not even clear to me that Sam’s Club and Costco users would be the same universe anyway.”

     

    Don:  “I can’t imagine why you would say that.”

    A quick search hasn’t turned up any statistics (perhaps they are not publicly available)?  However, I have seen statements such as this:

    “They never really found their identity. Initially, they definitely went for the lower-income demographic that was closer to the traditional Wal-Mart customer, rather than the higher-income demographic that Costco caters to.” 

    https://www.fool.com/investing/2018/01/20/how-costco-is-eating-sams-clubs-lunch.aspx

    Regardless, you can probably “guess” which one would be viewed as a “better fit” by/for many Davis residents.

  10. Dianne C Tobias

    -when Target was being discussed I remember a stipulation that they keep their food items to a certain %floor space. Anyone else remember that? What was it, have they, who enforces?

    -Isn’t there a correlation between downsizing of Ace especially in housewares and Target?

    1. Don Shor

      -when Target was being discussed I remember a stipulation that they keep their food items to a certain %floor space. Anyone else remember that? What was it, have they, who enforces?

      10%. It’s unenforceable.

      Isn’t there a correlation between downsizing of Ace especially in housewares and Target?

      I would think so.

    2. Bill Marshall

      Isn’t there a correlation between downsizing of Ace especially in housewares and Target?

      I would think so.

      People are trying to over-simplify things… natural human response…

      “Correlation” is not “causation”… in the housewares area of Davis Ace, they had high end breadmakers, etc., at high-end prices… ask Jennifer if, in retrospect, that was the root cause of problems they had.  I’d trust her, now that the business has been sold, in particular, to ask her and Doby…

      My point is that there are many variables involved in a lot of this… for there ‘regular’ items,they were priced higher than what was available at Longs (now CVS), and elsewhere in the community.

      Davis ACE’s strengths were in “lumber and hardware”… DUH!  Plus “garden”… note that seems still strong at ACE (there and Redwood Barn are the two we go to), whereas Longs/CVS and Target’s Davis forays into ‘garden’, are distant memories…

      Mace Ranch ‘was promised’ a Neighborhood Retail site, and local grocery store.   “Mace Market” had milk and some other things, but primarily liquor/tobacco/sundries… that’s gone.  The promised site is now medium+ density residential.  Albertson’s is gone… its site is now DollarTree and Grocery Outlet.

      I doubt few, except the immediate neighborhood folk make a trip to Target for the primary purpose of buying groceries… strongly suspect much of Target’s grocery sales are “by-pass” trips, where they go to Target for one purpose, but decide to get groceries while there, saving themselves a separate trip… a good thing… fewer trips on the roadways, less emissions.

      It is not simple cause and effect folks… lots of variables…

       

    1. Bill Marshall

      Craig…

      I’m anti-big box on principle

      Genuine, honest question… what principle?

      I recall attending the public meetings where students/young adults supported Target as an employer, with much better wages/benefits than say, Taco Bell, Jack-in the-Box, KFC, any other local opportunities, etc.

      I never have had a ‘principle’ problem with ‘big-box’, or hole-in-the wall ‘tony’ merchants (who often over-charge because they’re ‘cute’, or anti-estab., etc. [“It’s for the Downtown/local business”]) or anywhere in between.  I choose merchants based on what I want/need, what is available, location, and price… just an anecdotal observation, not 100% sure I even represent my own household, much less anyone else).

      Again, meant as a friendly question, what ‘principle’ makes you ‘anti-big box’?  However you respond Craig, I’ll not try to refute.

       

      1. Richard McCann

        Big box stores are often associated with adverse local economic effects, including the hollowing out of other local retail businesses. Walmart’s marketing strategy in particular appeared to be to come in and drive away other businesses with aggressive pricing, and then exerting market power when few competitors are left. https://journalistsresource.org/studies/government/municipal/impact-big-box-retailers-employment-wages-crime-health/

  11. Ron Oertel

    Just a reminder that there was once a commercially-designated, large site on the south side of Mace Ranch park, which is now covered in dense housing (as I predicted it would be, well-before it occurred).

    I also heard/recall that the city turned down an offer for mitigation land (to be included in the adjacent park), for other “consideration”. That portion of the land is also now included in the same housing development.

    But, there’s a “shortage” of commercial space – as claimed by some!

      1. Richard McCann

        Walkable retail works in only two settings (but very successfully) – as a pedestrian mall integrated with commercial office and entertainment space (downtown has most of these characteristics), and small scale businesses integrated closely with surrounding residential. Once it is segregated in a manner that requires driving to it, the purpose is completely gone.

      2. Bill Marshall

        There was a site zoned for “Neighborhood Retail” (no “walkable” in the designation)… at the westerly corner of Fifth and Alhambra… which is very close to being in the geographic center of Mace Ranch Park.  Not clear if you meant “Mace Ranch Park”, the development as a whole, or Mace Ranch “park”, the recreational/habitat area.

        I also heard/recall that the city turned down an offer for mitigation land (to be included in the adjacent park), for other “consideration”. That portion of the land is also now included in the same housing development.

        When the residential was proposed for the formerly zoned retail site, there were some who wanted land as a buffer for the ‘burrowing owl’ area (which the burrowing owls have long “abandoned”), by the then developers of the ‘retail site’ (who were not part of MRI).  The value of the land for public purposes (de minimus), compared to the proposed cost to the City for acquisition/improvement (direct, and in waiver of development fees otherwise due), never really had any “legs”.  Not an “offer” that should have been seriously considered.

        1. Ron Oertel

          Bill:  “. . . no “walkable” in the designation”

          Gee, what would we do without your “clarifications”?

          There was no need to even “challenge” me regarding the location of the site, to begin with.

          Bill: “The value of the land for public purposes (de minimus) . . .”

          Well, that’s one opinion.

    1. Bill Marshall

      there was once a commercially-designated, large site on the south side of Mace Ranch park,

      And that would be where?

      Location?  Size (you say ‘large’)?  For now, an honest question… but I suggest you be prepared to support your “facts”… if they are untrue, you will be challenged, surely.

      1. Ron Oertel

        I suspect that you know as well as I do, where it was (bordering Fifth Street and Mace Ranch Park). Had that site been included in the park instead, it would have opened up access to the park all along Fifth Street, resulting in a much better and larger park.

        How “large” of a site is needed for “neighborhood retail”?

        “Strange”, how no site is off-limits for rezoning to housing, though. Music to developers’ ears.

        1. Ron Oertel

          I have a question regarding this, as well.

          If the site was determined to be not viable for neighborhood retail, was there anything in the specific plan which stated that it should then be included in the park?

        2. Ron Oertel

          By the way, there was one council member in particular (who is often “disparaged” on here), who was receptive to inclusion of the site in the park.  Unfortunately, he was no longer on the council, by the time the decision was made.

          Another council member was downright hostile, when I brought it up.  (Something I’ll never forget, as I did nothing to incur it. At that time, I wasn’t experienced in dealing with hostility, purely resulting from differing views, it seemed. (The Vanguard has since helped me see things “differently”, regarding that.) That is, it’s provided a lot more experience.

        3. Bill Marshall

          To your question,

          If the site was determined to be not viable for neighborhood retail, was there anything in the specific plan which stated that it should then be included in the park?

          The answer is, no

          … and given GF monies available for maintenance of the parks/greenbelts, etc., we have, that is a good thing… unless you wanted to pay more in parcel taxes…

          And your question shows a lack of understanding of planning, development exactions, real estate development financing, etc.

        4. Ron Oertel

          Bill:  “The answer is, no…”

          How do you know whether or not there were changes to the specific plan, over the years?  Do you have access to all versions?

          Bill:  “And your question shows a lack of understanding of planning, development exactions, real estate development financing, etc.”

          Actually, your response shows this.  It also provides an example of this, as usual:

          At that time, I wasn’t experienced in dealing with hostility, purely resulting from differing views, it seemed. (The Vanguard has since helped me see things “differently”, regarding that.) That is, it’s provided a lot more experience”

          If you cannot respond to me without making nasty comments, why don’t you simply refrain from responding?

           

  12. Ron Oertel

    “The second-generation owners of Hibbert Lumber, Davis, Ca., are exploring options for the business as they prepare for retirement in 2019.”

    Now that’s a large property downtown, that I strongly suspect will be redeveloped (with housing). It’s got to be worth a TON of money, as there also isn’t that much structure to remove, compared to other redevelopment properties.

    Ultimately increasing the importance of Davis ACE.

    Good thing that there aren’t any parking or traffic problems downtown, already. 😉

    This is what happens as cities become more dense: more difficult to live in, and fewer options for the things that are actually needed.

    https://www.building-products.com/article/hibbert-owners-weigh-future/

        1. Ron Oertel

          Craig:  The reason is already in my comment.  That is, it’s worth a lot more money to the owners, if it’s rezoned.

          Then, there’s the simultaneous effort to purposefully residentialize and change downtown (to the point of questioning the value of Davis ACE to Davis residents), perhaps as demonstrated by Richard’s comment, below:

          Richard:  “And arguably the use of space for Davis Ace isn’t the best use, which is a question for the DPAC and a follow on economic development effort.”

          Support for peripheral changes – such as the rezoning request at Target, seem to be correlated with the goal of purposefully “changing” downtown. (For the worse, in my opinion.)

        2. Craig Ross

          You say that like it’s a fact.  They would have to re-develop the property which adds costs through demolition and rebuilding and then build something more.  As you can see with the BAE projections, such projections either do not pan out or marginally do.  Whereas the current property has a profitable business.  Thus, it is far from clear that it is worth more if it is re-zoned.

        3. Mark West

          “Thus, it is far from clear that it is worth more if it is re-zoned.”

          Worth more to whom? There is little incentive for the current owners to redevelop the property as the City’s current exactions for development make that prospect financially untenable. There is no doubt however that the property would be ‘worth’ more to the City if it were to be redeveloped (even more so if the land was sold as well) due to the updated cost basis for property tax purposes. The existing buildings and ownership predate Prop 13 so the tax bases are decades old at this point.

        4. Bill Marshall

          Mark… your 4:17 post…

          Unless things have changed, redeveloped property, as to impact fees, have fees re-computed, based on proposed use, and credited with fees already paid for the same property (‘runs with the land’)… no refunds, though.

        5. Mark West

          Bill –

          New buildings are worth more than old and the tax basis is on the new construction. No change to the underlying land value unless there is a change in ownership. The redevelopment will net new revenues for the City either way.

        6. Craig Ross

          Mark: My comment was in response to Ron who said that a re-zone would be a more profitable for the owners.  I don’t believe that to be true.  I do agree with your comment however.

        7. Bill Marshall

          Mark…

          Property tax is property tax… not an “exaction”, as the term is generally used… your main point is valid…  property transfer, or major improvement, or “re-do” all change the tax basis… but compared to ‘exactions’, prop tax is a small %-age, but continues… exactions are bigger, but one time.  One needs to use a spreadsheet to ‘balance the books’, as to significance of either…

          Again, re-development “costs” are not simple… depends on how you amortize them… but you are definitely correct in that re-dev have cost implications well beyond demo-reconstruct costs… and land value is ~ 25 % of total prop tax taxation… @ least for SF… suspect it might be less for non-res.

           

  13. Robert Canning

    It is surprising to me that no one in this discussion has mentioned the incredible rise in online shopping that has occurred in the ten years since Target was approved. My hunch (I’m not sure how to disentangle this) is that online retail has had more of an impact on Davis downtown retail than Target. Has anyone bothered to ask downtown merchants which have had more of an impact: Target or e-commerce? Any guesses?

    1. Bill Marshall

      Has anyone bothered to ask downtown merchants which have had more of an impact: Target or e-commerce?

      Any guesses?

      My informed guess, is “NO”…

      But your main point is “spot on”…

    2. Don Shor

      Between 2007 and 2018, online sales in the U.S. rose from 5.1% of total retail sales to 14.3% of total retail sales.
      When a big box retailer comes to town, consultants tell us that if our inventory significantly overlaps with theirs, we can expect an immediate and sustained 30% loss of sales. The actual total for a particular retailer depends on how closely the product lines overlap. How long that damage continues depends on how flexible a retailer can be with product mix and profit margin.
      Target joined the Chamber of Commerce before they went on the ballot, and were promptly added in something like a dozen different retail categories. They had significant overlap with many existing retailers.
      Competition from online sales has been a steady and increasing factor in the decline of brick and mortar stores, more pronounced in some categories than others.
      Competition from a new, very large general merchandiser is an immediate hit that many retailers can’t readily recover from.

      1. Richard McCann

        “Target joined the Chamber of Commerce before they went on the ballot, and were promptly added in something like a dozen different retail categories. They had significant overlap with many existing retailers.”

        Yes with many retailers, but almost all in peripheral shopping centers. Very few were/are downtown merchants. And cannibalized much of the sales from the Target in North North Davis.

        1. Don Shor

          Yes with many retailers, but almost all in peripheral shopping centers. Very few were/are downtown merchants.

          That’s not true, Richard. They competed directly with the largest retailer in the downtown, Davis Ace. They sell bikes and bike parts. They sell picture frames and other household goods. They directly compete and competed with a number of downtown retailers. I really don’t know why you or anybody else would try to minimize the impact Target had on downtown retailers as well as peripheral merchants.

        2. Richard McCann

          Don

          I disagree in general. Yes, Target competes with Davis Ace, and seemingly Ace has ridden that out quite well. They do not compete with framing (only the cheap frames that are not the base sales for any store downtown), they do not sell anything more than the lowest end bikes (which none of the 4 shops downtown have sold for decades). So yes, I am going to minimize the impact of Target on downtown merchants. You need to be much more specific about direct product line competition, which I still don’t see except in the case of Davis Ace. (And arguably the use of space for Davis Ace isn’t the best use, which is a question for the DPAC and a follow on economic development effort.) The Coop could potentially be in competition, but the clientele and product focus are diametrically opposed.

          On the other hand, I am not minimizing the impact on the peripheral centers–the direct competition is obvious, but those centers don’t really compete  with downtown either in most cases. And we can shift our conversation to those impacts, which I think are much more relevant.  (But I don’t like how zoning has concentrated those commercial centers either.)

          1. Don Shor

            Yes, Target competes with Davis Ace, and seemingly Ace has ridden that out quite well.

            Only the owners of Davis Ace Hardware could tell you the direct impact, but I think the store size reduction is an indicator of some impact.

            They do not compete with framing (only the cheap frames that are not the base sales for any store downtown)

            This is a common misconception. A frame store sells high quality frames. It also sells low-cost framing supplies as well as other art-related items. Target competes across the low price end of the product mix that is present in almost any retailer. Just competing with the “base sales” is not the issue.
            Bike stores sell bike parts, bike helmets, bike lights, bike…. you get the idea.
            About 30% of the sales at our garden center are non-plant items: hard goods, bags of soil, fertilizer, etc. Our concern with Target when they opened wasn’t the impact on plant sales, it was in those peripheral categories. But shortly after they opened, Target Corporation closed all of their garden centers. It caused quite a stir in the industry at the time.

            (And arguably the use of space for Davis Ace isn’t the best use, which is a question for the DPAC and a follow on economic development effort.)

            I’d think the new owners of the site and business might be concerned to hear this view of the property and store they just purchased. I hope it isn’t a prevailing sentiment.

        3. Richard McCann

          Yes, the furniture store part of Ace may have been impacted, but it was never a thriving part of that business. There was too much competition from lots of other sources for the total cost of the items. We regularly moved on to other stores, usually in Woodland, for better selection and deals.

          The target audience of the framing stores in downtown has never been the price conscious. The same is true for the bike stores. The bike accessories selection at Target is pitiful. Most importantly, Target doesn’t have a shop to install those accessories. And again, I haven’t seen any closures due to Target arriving. I though the Paint Chip would be at risk, but it kept on going.

          I think that’s the bottom line point that I’m making–you can list some marginal competition, but it is very difficult to identify downtown stores that actually closed due to a significant degree to the presence of Target.  You’re speculating, and your judgement on speculation is no better than mine. You need to be concrete in what actually happened–I’ve pointed out that we have not seen any direct closures.

          The new owners of Ace may be thinking exactly along my lines. They would be the final decision makers in any case and they would be handsomely compensated–no one can order them to change the use there.

          1. Don Shor

            You’re speculating, and your judgement on speculation is no better than mine.

            Here:

            But Hildebrand, who bought the store nearly 10 years ago after having worked there since it opened in 1993, said Alphabet Moon took two big hits about three years ago: the economy tanked, and Target opened in Davis.

            Had it just been one and not the other, Hildebrand said, the store might have survived. But not both, especially with the ongoing loss of business due to Internet sales.

            “The decline began in 2008 when everything crashed,” she said. “And Target definitely impacted us a lot and continues to do so.

            “Before Target opened, people would go to birthday parties and everything was from us. Now it’s only one or two gifts. And birthday parties were huge for us.”

            Christmas of 2008 saw a 28 percent decline in sales, she said, and it never picked back up.

            “We’ve experienced declining sales for three years,” she said. “It’s been three years of struggling to survive.”

            Moving in 2010 from the old site on F Street to the current spot on Second Street bought some time, thanks to lower rent, but as the holiday season progressed this year, Hildebrand said, “I knew we really couldn’t keep going.”

            https://www.davisenterprise.com/business/alphabet-moon-closes-its-doors/

            The target audience of the framing stores in downtown has never been the price conscious. The same is true for the bike stores.

            You completely missed my point. Every store has many dozens to hundreds of SKU’s. The impact of a mass merchandiser is on many of those SKU’s across a range of price points. What you think you’re seeing as the prime movers and core sales items are not the only things that make money for a retailer.
            Here’s a simple example. I sell pruning shears. I have sold high end ones (Felco) and low-cost ones as well as a good, solid mid-range price model (Red Rooster). I lost all the Felco sales to the internet, because there are retailers there selling them for 5% above cost. Stores like Target would sell the low-cost ones. That leaves me with the mid-range models. Multiply that change across hundreds of SKU’s for a retailer, and you will see impact. How much impact depends on how much the product line overlaps with the mass merchandiser. I can adjust pricing in some cases to make up profit margin, but some retail categories (books, electronics) don’t have that flexibility.

        4. Mark West

          Don Shor: “They competed directly with the largest retailer in the downtown, Davis Ace.”

          I fail to see why this should be a concern for anyone other than the owners of Davis Ace. It certainly should not be a concern for the City, nor should it impact any aspect of city planning. In fact, from the City’s perspective, the best thing that can happen is to have multiple stores competing across all markets allowing the City to capture a larger percentage of the total sales.

          Busy people rarely shop for a single item at a time. Usually, they have a list of several items that are needed at any one time. They then plan their shopping time to acquire as many of those items as possible. If some of those items are not available in town, or if they are available but not the brand or quality that is desired, then shoppers will go elsewhere. If the next town over offers all the items on your list, it is often easier to make the one trip and buy everything on the list. Multiple stores with overlapping product mixes would strengthen the retail market in town by virtue of keeping more of the shopping dollars local and thus increasing the City’s sales tax revenues.

          If you want to know why the downtown retail market is failing it is because we have spent the past few decades focusing on protecting Davis Ace instead of building a vibrant retail market across the entire City.

        5. Mark West

          DS: “I’d think the new owners of the site and business might be concerned to hear this view of the property and store they just purchased.”

          The news story that I read said the business was sold, not the property or buildings.

          “I hope it isn’t a prevailing sentiment”

          I doubt many business people would consider a downtown location as being ideal for this type and size of business. The location of Aggie Ace actually makes considerably more sense, taking the place of the grocery store for instance. Redeveloping the Davis Ace site downtown would then provide considerable new revenues for the City, especially so if the property was sold at the same time. I wish this sentiment was prevalent.

        6. Bill Marshall

          Don… your 2:06 post re:  SKU’s

          Thank you… in that post you explained well about the high end, low end, and middle “niches” for business… particularly for smaller business… which, in itself, is an important niche.  The one I believe thrives on knowledge and service…

      2. Bill Marshall

        How long that damage continues depends on how flexible a retailer can be with product mix and profit margin.

        And knowledgeable folk rather than just salespersons… Cranston Bros (Woodland) was my “go to” place when I knew what I wanted to do, but not sure how.  When Hibbert and D L&H couldn’t help meet my wants/needs. [They usually could, but not always]

        Those businesses who recognize and focus on that type of “niche”, will do OK… Longs/CVS and Target “Garden Centers” failed in Davis… Redwood Barn and ACE got (and get) our business in that area.  Am hoping the new owners of ACE fully realize they need folk who know stuff, rather than salespersons…

  14. Ron Oertel

    Now that I see what’s going on here, I’d suggest that it’s more important to maintain a strong commercial core, vs. being concerned about some peripheral pads that are vacant at this point.

    Especially in a declining retail market.

    Kind of interesting regarding the amount of attention this article has ultimately received – especially since there were initial comments regarding the quality of the article. Perhaps articles don’t necessarily need to be written particularly well to attract attention, if there’s underlying related concerns.

  15. Ron Oertel

    Richard:  “The new owners of Ace may be thinking exactly along my lines. They would be the final decision makers in any case and they would be handsomely compensated–no one can order them to change the use there.”

    They may be, and Hibbert Lumber may experience the same fate.  “Encouraged” by those who want to change/residentialize downtown.  The same folks who seem to be among the strongest supporters of changes to the pads at Target. (At least one of whom went so far as to interfere with Davis ACE’s plans to build a solar-covered parking lot, for its own customers.)

    How that supposedly “helps” Davis residents, downtown businesses (or the town itself) is a different matter.

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