Muni - A Residents View: Second Panel Discussion on Retail Economy and the State of Retail Market on July 27, 2017

From: Muni
Dae: Mon, Jul 31, 2017 at 7:48 AM
Subject: A Residents View: Second Panel Discussion on Retail Economy and the State of Retail Market on July 27, 2017
To: City Council <citycouncil@cupertino.org>, svaidhyanathan@cupertino.org, bchang@cupertino.org, cityclerk@cupertino.org, dpaul@cupertino.org, rsinks@cupertino.org, sscharf@cupertino.org
Cc: Munisekaran Madhdhipatla <msekar@hotmail.com>

I attended the panel discussion on retail on July 27, 2017 organized by our city office. Thanks for doing this as the panel was well qualified and were in the know on the topic; it was definitely a positive experience compared to the previous session on Santa Clara 3.0. I did see 3 of you [Mayor Savita, Councilmen Rod & Darcy] attend this session as well; it is possible I missed other councilmen.

I was disappointed that the room was more than half empty compared to the first session on Santa Clara 3.0. It is possible residents chose to watch from their homes.

The biggest takeaways for me in the context of Cupertino are

1.  Retail is alive and kicking; not dead as proclaimed by the developers and some in our community.

2.  There was no discussion about Urban Villages and retail doing well there; so, Urban Villages is a non-starter from retail perspective.

3.  It was very clear that ground floor only retail in mixed use development is not succeeding for lack of THE EXPERIENCE. 

4.  As nobody is building any new malls from ground up and only redeveloping existing malls, it is all the more important that Vallco Mall be redeveloped as a RETAIL DESTINATION for residents delivering THE EXPERIENCE.

5.  As clearly described by an example of 2 large target stores [140K SFT each] succeeding across a freeway, given our population density and nearby towns, a retail only mall will succeed at Vallco despite argument by the developer.

Here are my notes from meeting supporting above takeaways; auxiliary deductions are in parenthesis below.

1.  For retail to succeed, THE EXPERIENCE is the most important aspect. 

2.  Retail Environment is constantly changing; you have to foresee what is coming and keep adjusting. [This makes sense given what we see in Valley Fair and Great Mall as there is always something new].

3.  Every area is different; old rules such as ‘No competition in 20 mile radius, 20K residents per grocery store’ can not be applied any more.

4.  Retailers look for 2 main thoroughfares and ample parking is important; especially ground level parking.

5.  Retailers want to be close to their audience; demographics, economic profile and trade analytics play key role. [They could not get any closer to us than Vallco; right now, our residents go to other cities for retail].

6.  Co-tenancy, space layout and signage are important aspects; access to transportation is important too.

7.  Developers don’t want to allocate space for retail in mixed use; mixed use concept makes us drive further for groceries. [A definite negative against mixed use.]

8.  Nobody is building new retail malls ground up anymore; most of them are redevelopments taking a pure mall and adding entertainment and fitness.

9.  Public space is important to any city and retail is important part of how city grows; sales tax revenue is very important to any city. [Unfortunately our sales tax $$s are going to other cities].

10.  Lots of malls are being repositioned and this is best time for independent retailers to succeed.

11.  Millennials are deferring big purchases to later; things we bought in 20s, millennials are buying in 30s; that is creating a gap in spending.

12.  Shoppers are looking for experience; if we cannot deliver experience, they go online to get what they want.

13.  Value based shopping [Costco and Walmart] are thriving and high end retail is doing fine too; the middle is getting squeezed.

14.  All retailers should have a dual strategy to succeed; both online and physical presence are important.

15.  Cost of building is so high, some developers are holding back even after getting city approvals to proceed with development.

16.  City needs to be flexible to allow for retail to succeed; listening to the community and getting them onboard is key for any development. [So relevant in our community]

17.  Fitness centers are expanding; every community needs a gathering place; usually people gather around retail experience. [We already have a successful fitness center at Vallco]

18.  Ethnic grocery stores are competing with traditional ones; retailers have to keep a finger on the pulse and constantly adjust to the change. 

19.  One of the panel member shared 4 major developments he handled recently locally; in most of them, the retail component was big; like 30 – 40%. So, I posed the question asking if 10% [OAKs] and 17% [Vallco] retail space proposed is a formula for success. Unfortunately my question was watered down by handlers to ‘What % should be retail in a development?’ which got answered vaguely as ‘There is no formula’.

20.  One of the panel member gave an example of 2 Target stores of 150K SFT size each just across freeways thriving with $100 mil sales each while national average for Target store is $30-$40 mil.

21.  With online sales, delivery within hours becomes a differentiating factor; so, there is more need for industrial use warehouse & delivery type of space; cities and communities oppose such space in the middle of communities.

22.  Somebody asked a question about Cupertino being described as retail desert by councilman Steven Scharf; given the retail SFT # per capita stated by the questioner, the moderator said Cupertino cannot be a retail desert purely based on SFT #s. But one of the panelist relocated from Seattle with exposure to Cupertino agreed that Cupertino is indeed a retail desert as there is no retail destination; she did not think Main Street qualified for that.

Hopefully, these data points from experts convince you to redevelop Vallco as a RETAIL ONLY destination delivering THE EXPERIENCE for our residents and SALES TAX revenue to the city.

Thanks.

Sincerely,

Muni M.

Cupertino Resident