San Jose City-Wide Retail Strategy Update

Sears. Toys R Us. Payless Shoe Source. Claire’s.

The list of troubled and bankrupt retailers seems to go on and on. Yet retail remains a critically important part of any city’s economic, cultural and social fabric.

All of which explains why San Jose has initiated work on a citywide retail analysis and strategy. In late June, staff presented an update to the City Council’s Community & Economic Development Committee, outlining San Jose’s strengths when it comes to all things shopping.

“Shopping opportunities are really essential to the quality of l in any major city in terms of amenities and placemaking,” said Jared Hart, a supervising planner who is leading the retail study effort. “Sales tax revenue is also vitally important. It makes up the second largest revenue source of the city’s general fund, about 19 percent of all the revenue.”

For the CEDC. a team from the departments of Planning, Building & Code Enforcement and Economic Development presented some of the challenges facing the City’s retail growth strategy. These challenges include the demographics and geography of the city, what real estate investors and developers want, and the changing face of retail itself.

San Jose’s city-wide retail development plan study takes its inspiration from goals set out in the City’s Envision 2040 General Plan that call for a vibrant retail sector. When complete, the current Retail Strategy Project study project will focus on four areas: a retail analysis, which includes Identifying national retail trends that are shaping San Jose’s retail landscape; preparation of a baseline retail profile to illustrate characteristics of the City’s current retail supply and demand; identification of retail-deficient, or opportunity areas that should be targeted for additional retail recruitment and/or development; and recommended strategies to increase overall citywide retail activity. (A downtown retail study is also underway; a North San Jose strategy was finalized earlier this year.)

In terms of national retail trends, the report stressed that retail is not actually dying; in fact, consumer spending in the US hit the highest point ever in 2017. However, retail is evolving as consumers are changing the way they make purchases, and bricks-and-mortar retailers are responding to the challenge posed by convenient on-line shopping options. Retailers are finding ways to make the act of visiting a store more of an experience and less of a chore. Nathan Donato-Weinstein, a business development officer for the Office of Economic Development, wore a red Bass Pro Shops hat to highlight the trend. Bass, the national sporting-goods retailer, opened a San Jose store in 2015, and shoppers flock from miles around to experience lush dioramas, fly-fishing workshops, a theme restaurant (with alligator on the menu) and even a bowling alley.

“This is the kind of retail that is taking on e-commerce, using experience and place-making to effectively compete with it,” said Dena Belzer, founder and president of Strategic Economics. “Amazon can’t compete with the experience of the people watching and the pleasure from the whole experience.”

To the extent that new retail is more experiential and less sales-oriented, cities are likely to capture fewer sales-tax dollars. But retailers – traditional and leading-edge experience-oriented players — are still finding opportunities to expand here. The report notes that San Jose’s retail base has increased along with population, and has concentrated in areas with strong access and average daily traffic. And retail is important for many reasons besides revenue: It provides job opportunities for residents and spaces for communities to come together.

Stay tuned for more from this project, including plenty of data that will be useful for retail site selectors.

The full presentation to CEDC is available for viewing.