Getting rich off retail?

For the third year in a row, Ventura made a major push to market our community at the annual "Global Real Estate Convention" sponsored by the International Council of Shopping Centers. The event, held at the Las Vegas Convention Center, was attended by more than 50,000 retailers, developers and shopping industry professionals.

Mayor Weir, Deputy Mayor Fulton and Councilmember Summers all participated, along with City staff and leaders of the Ventura Chamber of Commerce. Through a booth and a full schedule of meetings, Ventura made its case to retain and expand our offering of national retailers.

It is an eye-opening opportunity to track retail trends as well as do business. While attendance was down only slightly this year, it may mark the beginning of the end of the era of national retail expansion.

Over the past two decades, consumers have fueled an unprecedented growth of retail offerings. America's once dominant department stores and the malls they spawned have been augmented by "power centers," "lifestyle centers," resurgent downtowns and even newly created downtowns like the one in Brea, California. The result is that Americans have nearly ten times as much store space for every man, woman and child as Europeans. (see chart below.)The total square footage of Walmart stores alone now exceeds the size of Manhattan.

Ventura has continued to do well in retail competition, even in the face of ramped-up competition. We have the second highest per capita sales in Ventura County (Thousand Oaks is number one, with a median household income nearly 50% greater.) But Venturans still complain about limited shopping alternatives. Some yearn for a Walmart, others for a Nordstrom. And nearly everyone is a critic when it comes to the offerings at the Pacific View Mall, complaining about the long-vacant buildings on the north end (and many also griping about getting another Target in town, instead of a store we don't currently have in our community.)

On the immediate horizon the news is mixed. Wood Ranch will be occupying the vacant restaurant on the south end of the Pacific View Mall. The mall owners, Macerich, have been working successfully on retaining and replacing inside tenants as leases expire. They've also lined up major tenants to replace the vacant buildings on the north end (we hope to now proceed with a long-promised joint planning effort on the long-term development of the north end, including moving forward on this first phase.)

We are also working with the Montalvo Sewer District and affected landowners on an extension of Olivas Park Drive to open the way for additional retail development behind our existing Ventura Auto Center. Downtown, while not a huge sales tax generator, continues to make progress as independent retailers and restaurants attract a growing clientele.

On the other hand, Ventura hasn't landed a major electronics retailer, the biggest hole in our local offerings. Best Buy seriously entertained coming to the north end of the mall, but that ran aground on their insistence on signage on the south end of the mall. Was the problem pointy-headed bureaucrats or a small-minded Design Review Committee? No, actually it was the veto of the other majors in the mall who have veto power over signage on their end.

In the longer run, we may be facing a shrinking -- rather than growing -- retail marketplace. Newsweek recently reported that "in the fourth quarter of 2007, the national retail-vacancy rate rose for the 11th straight quarter to 7.5 percent—the highest level since 1996, according to research firm Reis, Inc. With new projects coming online—34 million square feet of retail space will be completed in 2008—the rate is expected to spike further to 8 percent. In the parlance of the trade, many chains are simply over-stored."

That, of course, varies widely, region to region and town to town. But according to the Conference Board which collects the Consumer Confidence Index, that "now stands at a 16-year low. Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy."

Add to this the growing share of sales taking place over the Internet and it looks pretty grim for solving our city's budget challenges by attracting more retailers. Moreover, there is an increasing recognition that Americans are over-spending and under-saving compared to our competitors in Europe and Asia.

As Americans adapt to higher oil prices, higher food prices and diminishing job growth, we may be facing a pronounced shift in consumer spending. While that may not be good for local sales tax revenue, it may be good for a sustainable and prosperous economy in the long run.