Resources for free and low-cost economic development analysis, part 1

If you need good economic numbers and analysis in a hurry, you should consider hiring a consultant or using fee-based services. (Among the most commonly used are Claritas, ESRI and InfoUSA, but we do not make any endorsements.)

But if  you're willing to put a little time into it, there are plenty of free and low-cost resources that can help you get a pretty good understanding of your local economy.  Federal and state agencies provide a wide range of free resources.  In some cases, their websites will do simple calculations.

For economic research, you want to get information on consumer behavior and characteristics and business activity.  This essay, the first of two, focuses on information about consumers.

For consumer information, some of the best free sources are:

• American Factfinder.  This site from the US Census Bureau contains information from the 2005-2009 American Community Survey (the best source of demographic data until all of the 2010 Census numbers come out).  2010 Census numbers can be found on American Factfinder 2.  Warning: The new American Factfinder is difficult to use.  Please go through the tutorial before using it. 
  The ACS' community profiles provide interesting overviews of incomes, occupation, and industry data, as well as lesser-known data (commuting time, language spoken at home, etc.)
• The Consumer Expenditure Survey can help you estimate what people in your study area are likely to spend on various items.  The CES, from the federal Bureau of Labor Statistics, is a survey of spending patterns on a wide variety of things, from mortgages to shoes.  Unfortunately, the spending categories are not detailed.  You wouldn't know, for example, how much individuals spent on movie tickets.  But you could find out how much they spend on "fees and admissions" and develop some ideas from that.
  One interesting feature of CES is that it has tables showing spending patterns by geographic region, education, race, and other demographic characteristics.
• The federal Bureau of Economic Analysis also has information on consumer spending.  While in some ways more comprehensive than what is found in the Consumer Expenditure Survey, BEA's free analysis is done at a national level.  
• One of the more unusual studies of consumers is the Multicultural Economy series from the University of Georgia's Selig Center for Economic Growth.  This annual study explores buying power -- i.e. disposable income -- for ethnic groups in the United States and every state. You have to pay for the full, current report, but as of 2011, the executive summary of the previous report was available free.
• Psychographics is more valuable than demographics, which is why research companies can charge good money for it.  Psychographics combines information about demographics (age, race, income) with information on spending habits (based on such things as magazine subscriptions).  While you can't get a full psychographic report, you can get a little information from the "My Best Segments" pages from Claritas, a fee-based provider.  The online form tells you the five top psychographic clusters in a particular zip code. 

You can use these numbers from these sources to show how much income or expected spending there might be in your area. It won't show you the whole economic picture (although, to be fair, no amount of research will), but it can give you a head start.  And the money you save on getting consumer information you can use to get more out of fee-based services or economic development consultants. 

--Leonardo Vazquez, AICP/PP

Director, Professional Development Institute

If you know of any additional free resources for consumer information, please feel free to share that information with us.  We'll update this essay as appropriate.

Planning for the growing wealth of diversity in the United States

As the United States gets more diverse, ethnic and racial minorities are controlling more wealth.  That has some significant implications for placebuilding in the 21^st century.

A multicultural shopping district along Roosevelt Avenue in Queens, New York. (Image found through Creative Commons search.  Photo credit: Vidiot)

According to The Multicultural Economy 2010 by the Selig Center for Economic Growth at the University of Georgia’s Terry College of Business, ethnic and racial minorities together hold about $2.6 trillion in buying power, or 23% of the $11.1 trillion in buying power in the United States.  Buying power in “multicultural economy,” as the report calls it, is growing rapidly.  In 2000, the report estimated, African-Americans, Asian Americans, Hispanics, Native Americans and people of mixed races held about 19.7% of the nation’s buying power.  The group with the biggest rise in buying power is Latinos.  In real dollars, the buying power of Latinos rose from $633 billion in 2000 to $1 trillion in 2010.

These trends could have a significant impact in how placebuilders approach such issues as place-based economic development, cultural heritage tourism, housing and circulation planning, and community building. In addition to creating new opportunities, the rise of the multicultural economy can also challenge placebuilders to change their practices.

For example: Ethnically-based economic development strategies can help revitalize commercial districts that are seeing more empty spaces as more people shop online.   Attracting businesses that cater to members of a large or growing ethnic group in the area can create a more loyal shopping base.  Eventually, as with so many Little Italys or Chinatowns, successful business districts can attract cultural visitors, whose wealth would attract more businesses.

Sounds easy? It’s not.  Small, independent businesses tend to be more fragile than established chains and franchises.  Expect to get tense responses from businesses and residents from other communities, especially those that are losing political or economic power in the community.   And the new ethnic communities will want their values and aesthetics represented.  The design guidelines meant to make the town square look like a Norman Rockwell painting may need to be revisited – or scrapped.

So if you’re a placebuilder in this community, you might be doing more business assistance than pro formas, more conflict management than market analysis, and rethinking the ideas about prescriptive urban design.

Placebuilders should also work to avoid ethnic pride becoming ethnic exclusion.  With a few exceptions, most ethnic commercial districts probably would not prosper in the long-term if they are perceived to be hostile to outsiders.  Many businesses rely on at least some revenue coming from outside of the area.   Those that don’t benefit from having neighbors that get good foot traffic.   From a community development perspective, these ethnic districts will work better if they work more as gateways among cultures than as barriers. 

In most parts of the country, African-Americans and Latinos tend to have lower median household incomes than Non-Hispanic Whites and Asian-Americans.  So a strategy to build on African-American or Latino wealth could mean increasing housing densities and managing greater demands on roads and public transportation. 

While there are a number of successful African-American and Latino commercial districts geared to working-class communities, the growing number of high-earning minority households creates opportunities to build more upscale ethnic districts.  There are restaurants, boutiques and other businesses that serve these markets, and could help anchor these districts.

Another strong anchor is a set of public art, stores, restaurants and services (such as a music school) that is rooted in the arts and culture of the communities being celebrated.

But here again there are challenges.  The strategy will probably work best in areas with large ethnic or cultural populations with struggling commercial areas.  But it would likely involve gentrification of some streets, which could make placebuilders vulnerable to charges of elitism.

But there’s a good community building argument for having some wealthy ethnic districts.  What message do low-income African-Americans, Latinos or other ethnic minorities get when they see wealth exclusively in what they would call “White” neighborhoods?  Does this message help build the confidence and pride that lead residents to want to strengthen their neighborhoods?  Or does the message encourage those most capable to leave – and take their financial, social and creative capital with them?   

New Jersey is one of several states that are getting both wealthier and more diverse – and much of the growing wealth is due to diversity.  According to the Selig Center, total buying power (in real dollars) grew 19% between 2000 and 2010.  Only 7% of that was due to the growing wealth of non-Hispanic Whites.   Ethnic minorities in 2010 have about 27% of the state’s $399 billion in buying power.

At least 32 of the state’s 566 municipalities are potential ethnic or multi-cultural power centers.  These communities are either “majority-minority” or are have no predominant ethnic group.  With the exception of major urban centers like Newark, Jersey City or Camden, many of these municipalities are caught in the middle between large centers that have more resources and get more attention from decisionmakers and suburban areas that have more wealth.   These power centers can benefit from ethnic-oriented economic and community development that could attract attention and dollars.

--Leonardo Vazquez, AICP/PP

In today's economic climate, everyone needs to be a rainmaker

Now more than ever in our lifetimes, the job security of many placebuilders depends on their being able to bring in resources.

In the private sector, infrastructure spending hasn't led to widespread bumps in job hiring.  According to the U.S. Department of Labor, there are about 21,000 fewer jobs in architectural and engineering organizations in the United States, compared to September of 2009.  In good times, technical professionals who hate marketing and networking could rely on others to bring in the money.  Today, any professional who is not overly busy doing billable work or generating it might be seen as a cost that a firm can't afford right now.

(The back office professionals -- mapmakers, researchers, and others who do little direct work with clients or communities -- are especially vulnerable.  Technology is making it possible for others to do the same work at less cost.  And that's not going to change, even when the economy fully recovers.)

To make things more difficult, the lean times are causing more competition.  In strong economies, bigger firms can afford to turn away smaller jobs, confident that something else will come around.  Now, they are chasing the smaller game.  (This is especially tough for the mid-size firms, which might not have the resources of large firms or the flexibility and low overhead costs of small ones.)

In difficult economies, many nonprofit organizations tend to struggle with increased demands for services and reduced giving by foundations and corporate entities.  Community based organizations, most of whom were created to address social issues, tend to spend more time on direct service and less time on planning.

The public sector has been a good landing spot for placebuilders who wanted to do good works without the risks and uncertainty of working in the private and nonprofit sectors.  Not anymore. Since September 2009,  around 249,000 public sector jobs have been lost, according to the Department of Labor's September 2010 jobs report.  Placebuilders are especially at risk because unlike the work of police, firefighters, teachers and road crews,  it is harder for placebuilders to show direct or immediate benefits from their work.

What if you have someone in your organization who is great at raising funds, getting contracts or retaining clients.  Those people are going to be the ones in most demand from other places.  It's a big risk to rely on just a few people for sustainability.

If you want to be seen as more valuable to your firm, organization or agency:

• Demonstrate how your work can or does generate more revenue or helps the organization retain clients. Being smart is not enough.  There might be plenty of other smart people who are willing to do your job for less money.  Talk about the value of your work, and your organization's work, to everyone who might affect it -- elected officials, civic and business leaders, potential clients. Urban planners in particular need to be promoting the value of planning.  Consider: If they don't know what you do or what value it gives them, why should they pay you to do it?
  
• Always Be Marketing.  If you're not writing proposals or meeting with potential clients, you should be looking for opportunities and being aware of trends or conditions that could pose threats or provide opportunities for your organization.
  
• If you don't have experience in marketing or business development, learn how to do this work.  It's more difficult and complex than it looks. If you think it's just putting a nice spin on what you already do, you need to learn more about this work.
  
• Offer to get more involved in marketing and business development. Work with others in your organization who are good at getting contracts and grants. But don't just copy what they do -- find ways of marketing and business development that work for you and your organization.  If you're uncomfortable asking your supervisors for this kind of work, volunteer to help raise money or write proposals for a nonprofit that you believe in.  They are likely to appreciate whatever help they can get, and you can develop experience and a track record for generating revenue.

--Leonardo Vazquez, AICP/PP

The Bloustein Online Continuing Education Program offers several classes to help you get more contracts and grants, and retain clients.  The next course in this topic is Business Development for Planners, running from November 3 to December 18, 2010. (Scholarships still available at the time of this writing.) Questions about BOCEP or the class?  Contact us

Economic development for job growth? Size matters -- but not in the way you think

A lot of economic development activities today assumes that bigger is better. That's why ED departments spend millions of dollars at trade shows trying to lure large firms to their cities, elected officials approve tax abatements for big projects, and redevelopment planners try to connect and clear small lots to make room for big companies.

But smaller may actually be better when it comes to economic development that generates jobs.  A team of economists studying metropolitan areas throughout the United States between 1977 and 2000 found that areas with more small firms tend to have more job growth.  "A 10% increase in the number of firms per worker in 1977 at the city level correlates with a 9% increase in employment growth between 1977 and 2000," write Edward Glaeser, William Kerr and Giacomo Ponzetto in their article, "Clusters of Entrepreneurship."  Other key ideas and findings:

*Having a greater percentage of large firms actually reduces entrepreneurship.
*Low costs help increase entrepreneurship, but a region's amenities play a big role in the creation of firms.
*Entrepreneurs are more likely to be from the area where they create their business, and "local entrepreneurs operate stronger businesses." (p. 151)
*Places with a greater share of college educated workers tend to have more entrepreneurs.
*Entrepreneurs are attracted to places with a larger share of small businesses.
*Start-ups and small businesses are more likely to be labor-intensive than capital-intensive.  That is, they are likely to have more workers per square foot.

There's not much practical advice in their article, but there are several implications for our fields.  Planners and economic development professionals should:

• Create a more welcoming climate for entrepreneurs by promoting business assistance and micro-entrepreneurship programs and preserving clusters of small spaces for start-ups.  In other words, think of downtown development with one-stop business centers.  "Small, decentralized suppliers and customers are more helpful or important for new startups than for expansions of established firms." (p. 161)
• Support initiatives that encourage networking among business people, and encourage leaders of business associations and clubs to be welcoming to new entrepreneurs from outside the community.  The research indicates the power of connections in building successful enterprises.  People who grow up in an area are more likely to know and have friendships with others in the community, making it easier for them to engage in partnerships.  But some places can become insular, especially if a new group of residents is seen as a threat to existing residents.  In other words, if you see a growing population of _______, and nobody from that group is in the local business association, it's a problem.
• Focus on the quality of place.  The research supports the idea that the more desirable a place is to live, work or play in, the more high-value workers and entrepreneurs it attracts.  In other words, a nice waterfront park might do more to generate jobs than a tax abatement. 
• Promote workforce development strategies that increase the number and percentage of college-educated or career-ready people in a community.  Knowledge economy businesses need skilled workers the same way farmers need fertile land.  Workforce development and quality of place solutions should go hand-in-hand.  People who are more skilled and educated have more choices, and you want them to choose to stay in your community.

--Leonardo Vazquez, AICP/PP

The Bloustein Online Continuing Education Program offers two Professional Certificate programs in economic development:  Cultural Planning and Development, and Economic and Community Development.  The Leading Institute's Leading from the Middle program can help you be more persuasive and effective in working with stakeholders and officials to promote job-generating economic development.  Learn more and find out about upcoming courses.

Five key trends for local economic development in the 2010s

Whether the US economy springs back or staggers its way to recovery, there are a number of trends that you can capitalize on for improving your community's economy.

• The arts as engines for the creative and experience economies.  According to a report to be published soon by Arts Build Communities, there was a 10% jump in the number of people working in the creative sector between 1998 and 2007.  Most are probably not artists, but rather the people whose work supports the arts: administrators, blue-collar workers, manufacturers of creative products. The arts are at the heart of two other growing economic trends -- the creative economy and the experience economy. The creative economy includes scientific innovation and cultural products for export (Think Ipads, Droids and the new medicines you see on TV.)  The experience economy includes all those retailers, businesses and places people are willing to pay more money to because of the experience they provide.  (That's why the Mall of America has an amusement park in the center, and not just more chain stores.)
• To take advantage of this opportunity, consider: Attracting and retaining creative sector professionals through place- and community-building efforts; place marketing efforts; providing more flex space; whether your community feels inviting to creative professionals

• The growth of "free agent" nation. Self-employed workers accounted for about 30% of the job growth in the United States between 1998 and 2008. While the number of employees in businesses grew 10% in that time, the number of self-employed workers grew 26%.  (See the County Business Patterns database for more information).  In 2008, about 15% of 142.2 million jobs in the United States were held by self-employed workers.
• To take advantage of this opportunity, consider: Business assistance and development strategies targeted to micro-entrepreneurs; live-work spaces clustered in downtown settings; cooperatives, and other structures that help businesses share resources.

• Ethnic minority communities as emerging markets.  Ethnic minority communities had about 23% of the nation's $10.7 trillion in buying power in 2009, according to the Selig Center for Economic Growth.  While the total amount of disposable income in the United States had been growing through most of this decade,  the buying power of African-Americans, Asian-Americans, Latinos, Native Americans and multiracial Americans grew faster than that of non-Hispanic Whites.  Those trends are likely to increase as the nation gets more diverse.
• To take advantage of this opportunity, consider: Place marketing and business development geared to ethnic communities; developing more culturally competent placebuilding and economic development professionals.

• Green industries replacing gray industries. It may be a decade or more before alternative energy producers and manufacturers of green products become a major source of jobs in many communities.  Placebuilders who plan for these uses now will have a tremendous advantage.  Whether green or gray, industrial uses need large, affordable spaces and the ability to easily move large amounts of goods.  (That's why so many 19th and early 20th century factories in city neighborhoods have become loft housing.)
• To take advantage of this opportunity, consider: Preserving existing industrial and warehousing areas; landbanking; encouraging the transitional use of light industrial spaces as artisan work/live spaces, server farms, or retail/commercial storage facilities.

• Transnational communities as market expanders.  From classic port-of-entry cities to small farming towns, continued immigration is having a bigger impact on America.  One of those impacts is economic:  It is easier for money and goods to flow between countries.  Communities that participate in transnational economies can significantly expand their market area while minimizing competition with its neighbors. In an age where the Internet and lower costs in other countries are challenging brick-and-mortar American businesses, this is a way for communities of any size to bring more wealth into its borders.
• To take advantage of this opportunity, consider: Building relationships with immigrant groups in and around your community; encouraging the use of light industrial facilities for import, export or assembly of materials; promoting community building efforts that make immigrants feel more welcome in a place.

--Leonardo Vazquez, AICP/PP

The Bloustein Online Continuing Education Program offers courses and professional certificates in economic development, cultural development.  Courses are offered between September and June.  Learn more.

Talking points for connecting the arts and sustainability

Two big trends in urban placebuilding today are arts-based planning and sustainability.  Here are some talking points to help leaders and community understand how they connect.

But first, let’s get on the same page: “The arts” and “sustainability” are two of the most vague concepts in placebuilding. If your audience thinks the arts are just a bunch of weird stuff that only rich people enjoy, or that sustainability is about protecting every blade of grass, you’re not going to have much luck trying to promote either idea.

—  The arts are all activities related to the creation, distribution or consumption of products or experiences that are valued for their aesthetic qualities.  In other words, if someone is willing to pay more for some object or experience because of how it looks or makes them feel, that “thing” is some form of art.  That means that the opera and the classic car show are both artistic experiences.

—  Sustainability is a set of practices by people or groups designed to promote the long-term sharing of resources with future generations.  This includes reducing demands on the environment, promoting economic opportunity, and increasing social equity.  (Remember the 3 E’s of sustainability: Environment, economy and equity.)  If you run into a deep ecologist just wants to focus on environmental protection, let them know people decide whether to go or stay green.  If you don’t take care of people and you don’t enhance quality of life, they’re not going to be too worried about protecting trees.

(Presentation tip: Show a pie chart or triangle to show the relationships among the 3 E’s.)

How the arts (and artists) can contribute to local economies

—  The arts attract wealth (arts patrons, visitors, theater-goers, etc.). Wealth attracts businesses;  businesses attract more wealth, and so on and so on in a virtuous circle. (Presentation tip: Show a flow chart or one of those diagrams with the big arrows running in a circle.)

—  The arts help to diversify the business and employment mix.

—  Artists contribute their skills to many businesses outside the arts.

—  More of the money spent in arts establishments is likely to stay in the local economy, compared to the money spent in chain stores, franchises and the Internet.  (For more on this, read Ann Markusen’s work on the artistic dividend.)

—  The arts are part of place-based experience economies, so artists tend to be involved with local economic revitalization efforts.

—  Creativity is critical to industries that rely on innovation, such as biotechnology and other knowledge economy businesses.

How the arts (and artists) can contribute to the environment

(Note: Art tends to be neutral regarding the environment, but artists have a long history of being connected to the natural world.)

—  Visual artists, such as landscape painters, draw inspiration from local environments.

—  Artists are more likely to be involved in preservation efforts.

—  Artists are more likely to reclaim abandoned and blighted spaces, reducing construction waste.

—  More architects and urban designers are promoting “green” building and design.

—  Visual artists, such as landscape painters, draw inspiration from local environments.

—  Artists are more likely to be involved in preservation efforts.

—  Artists are more likely to reclaim abandoned and blighted spaces, reducing construction waste.

—  More architects and urban designers are promoting “green” building and design.

(Presentation tip: Use an image that shows artists working with children in a ‘green’ project.)

How the arts (and artists) contribute to equity

—  Art provides a safe and inviting bridge for people to learn about other cultures.

—  Art gives people who feel discriminated against a productive way to express themselves.

—  Artists are often involved in revitalization efforts in their communities.

—  The arts can provide job opportunities to people without advanced degrees.  (Ok, it’s probably not a lot of jobs, but it helps.)

How communities can better connect the arts and sustainability

—  Bring arts and sustainability leaders together.

—  Identify current and potential connections between the arts and sustainability initiatives.

—  Create a local cultural plan with a sustainability focus. Try to get it attached to the community’s master plan.

—  Work on short-term and highly visible projects to highlight the connections.

—  Develop a leadership group committed to promoting the arts and sustainability.  Build the group to include all parts of the community.

—  Try more. Learn from your mistakes. Create new solutions. Update your plan. Build more leaders.  Repeat.

--Leonardo Vazquez, AICP/PP 

Rutgers University's Arts Build Communities provides research, continuing education and technical assistance in the arts and community and economic development.  Learn more...

How planning turned a dusty village into an international icon

Like the beautiful brown-to-red rock formations nearby, the City of Santa Fe seems to rise organically from northern New Mexico’s high desert.  Santa Fe is an international arts and culture destination, each year drawing artists, aficionados of Spanish colonial or Native American history, and millions upon millions of dollars owned by tourists buying into “Santa Fe style.” 

But like so many  “adobe” buildings – which are really made up of the same materials used for your house – Santa Fe’s image has been meticulously planned and maintained.   The city demonstrates the enduring power of planning and placemaking.

At 400 years old, Santa Fe is one of America’s oldest cities of European heritage.  (Nearby Acoma Pueblo, from 1100 AD, is actually the oldest continuing settlement in the United States.)  But the Santa Fe that most people know got its start in the early 20^th century, with the 1912 City Plan.

As told by Chris Wilson in The Myth of Santa Fe, the innovative plan envisioned Santa Fe as a national cultural tourism destination.  To this end, the plan recommended that all buildings be maintained in variations of Pueblo or Spanish Territorial forms (later known as Santa Fe Style), no industrial activities be allowed downtown and that curving pedestrian streets in the downtown be protected from widening and straightening.  

The vision was so powerful that some owners of existing structures built in ornate architectural forms -- such as Italianate -- changed their facades to fit in with the Santa Fe -- even though there were no legal requirements to do so.

One of the most amazing aspects of the vision is that it didn't carry any legal weight until the 1950s, when Santa Fe created its zoning code mandating the Santa Fe design style.  (The code is still one of the most restrictive design ordinances in the United States.)

With so much art and natural beauty, cultural tourism in Santa Fe today seems a natural fit.  Not so in 1912.  The City is surrounded by natural beauty, but no more so than any other Northern New Mexico town. In the early 20th century, there were more artists in Taos.  A closer town, Espanola, sits on the Rio Grande (a more likely pre-automobile navigation route) and is closer to many of the Pueblo villages that inspired Santa Fe's leaders.  Albuquerque was a bigger town and on the famed Atcheson Topeka Santa Fe (ATSF) railroad main line between Chicago and Los Angeles.

So why did the vision work and continue to endure?

The vision met the the different interests of the various groups in the city.  

After several decades of economic decline, business people were looking for an economic development boost. The city did not get to be on the ATSF main rail line, depriving it of the opportunity to compete with other southwestern towns for manufacturing and distribution.  In a place without the agricultural capacity or waterways of other growing cities, cultural tourism couldn't hurt.

The architectural style reflected the interests of descendants of Spanish conquistadors and immigrants who were part of the cultural and economic elites or otherwise engaged with Anglos.  It also helped that Edgar Hewett, who was as influential to Santa Fe then as Jane Jacobs was to New York, and other Anglo leaders encouraged the creation of the Santa Fe Fiesta to celebrate Spanish culture.

In the early 20th century, there was a growing industry in Native American arts and artifacts.  Cultural tourism could bring more business opportunities for Pueblo Indians.

Northern New Mexico was already attracting artists, architects, archaeologists and cultural historians who could now get into the high desert through trains and early automobiles.  (In fact, the leading painters and patrons of New Mexico's art scene came from New York.)  These cultural elites would of course support a vision that preserved their fantasies of New Mexico.

Although the vision was created largely by an archaeologist and former college president, Edgar Hewett, leaders throughout the city were involved in its development. 

The plan mixed technical planning knowledge  -- more mundane aspects dealt with open space and growth management -- with a clear image for the city's development.

The vision was culturally competent for its time.  Rather than have one ethnic group's interests dominate others, it strove to promote a vision of Native Americans, Spanish descendants, and Anglo-Americans living together in peace.  (This is the essential "myth" that Wilson describes so well.  The integration, Wilson says, was largely superficial, and often excluded lower-income people who considered themselves more "Mexican" than "Spanish."  The strict design guidelines deny Latino residents -- some of whom use tropical colors in and around their homes -- opportunities to see their architectural tastes reflected in the tourist areas.)   Today, the city's strict design guidelines and architectural standards would not be considered culturally competent for the diversity there.

The vision worked.  It attracted artists and cultural tourists, elevating it above other cities in New Mexico and the American Southwest as a cultural tourism destination.

(About the image -- A centuries-old Spanish mission? Nope.  The Santa Fe Museum of Fine Arts, built in 1907.  Its director, Edgar Hewett, who was the Jane Jacobs of his time, spearheaded the development of the 1912 Plan of Santa Fe.  Source: http://marilynsnyder.org/images/New%20Mexico/SF%20Museum%20of%20Fine%20Arts%201.JPG)

--Leonardo Vazquez, AICP/PP

You can buy anything on the Internet except an experience

According to Retail Traffic Magazine (by way of Planetizen), both foot traffic and sales are up at the largest mall in the United States. In these difficult times, the success of the Mall of America can offer some insights into the future of retail-based economic development.


The Mall of America shows the growing strength of the experience economy. A key to its success has been adding more rides to the large amusement park at the center of its complex. In the experience economy, consumers are willing to pay more for a good or service if they have a positive experience with the business. (That experience could be fun, pretty, stimulating, ego-boosting, etc.) Joseph Pine and James Gilmour, who coined the term in The Experience Economy, were writing about the importance of businesses spending time on enhancing consumer experiences, even if those actions didn’t immediately ring up sales. (For example: a salesperson acting like your personal shopper in a store.)

Today, you can buy almost anything (that’s legal to buy), except for an experience.

For our field, participating in the experience economy means making our built environments more interesting, exciting, safe, surprising, or whatever the communities we serve enjoy. The ‘experience’ starts when the consumer feels he or she is in the place. If that person gets lost, it is going to affect his or her willingness to spend time and money – or to come back. In the experience economy, streetscaping, public art and architectural design are not just decorative; they are critical parts of the economic development infrastructure. Events are not public relations gimmicks; they are important marketing tools.

Enhancing the public environment can especially help businesses that serve low and moderate-income communities. Because many of these businesses make their profits on volume, rather than per-capita sales, and they tend to be in older, smaller spaces, they tend to use more floor space for retailing or service activity. In other words, stores that cater to wealthier people, or that have higher profit margins, can afford to have more floor space available for experiences. (That’s why the places that sell coffee for $4 a cup have more chairs and nicer art than the places that sell it for $1 a cup.) While all retail districts can benefit from enhanced physical design, businesses in lower income communities tend to have less capacity to do it on their own.

Many traditional downtowns and some cities, like Las Vegas, are succeeding through experience economy strategies. Urban design in highway commercial areas tends to ignore attractive site design (A key exception are upscale lifestyle centers, which are essentially lifestyle-themed open-air malls.) The oversight might be a costly mistake. Fifty years ago, traditional downtowns began to be threatened by malls. Thirty years ago, malls began to be threatened by big box stores. Today, those stores, and many highway retail uses, are threatened by the Internet. Internet shopping is growing rapidly; two-thirds of all Internet users in the United States made an online purchase in 2009, said Internet Retailer.

Of course, enhancing the visual environment is not enough. Consumers want to go where they feel welcome and safe. Circulation planning and the management of retail districts are key. Also, in age when anyone can have a public voice through the Internet, a key part of any experience economy strategy is keeping up-to-date with the changing pulse of stakeholders. In business, they call in market research. We can think of it as needs assessment or public engagement.

In many cities and communities, there are still elected officials and public administrators, as well as members of the public, who think that decisions on where and how long to shop depend solely on price and convenience. Hopefully, this essay has given you some talking points.

For more resources:

Check out the Urban Land Institute or the American Planning Association for resources on urban design.

The Bloustein Online Continuing Education Program offers a number of courses on economic development, branding and other issues raised in this essay. Please visit http://www.policy.rutgers.edu/bocep to learn more.

Leonardo Vazquez, AICP/PP