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Posted Apr 21, 2017, 4:06 PM
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Join Date: Aug 2002
Location: Toronto
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Should Cities Limit Chain Stores To Help Promote Small Business
Retail revolution: should cities ban chain stores?
20 April 2017
By Colin Horgan
Read More: https://www.theguardian.com/cities/2...stores-toronto
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Although banning or limiting chain stores is a controversial way of trying to help small businesses, it has boosters – and precedent.
- In 2006, Nantucket, Massachusetts, banned chain stores from its downtown. In 2015, Jersey City in New Jersey voted to restrict chain stores to 30% of ground-floor commercial space in its downtown core, with some exceptions. That same year a community group in New York City’s East Village released a report proposing limitations on chain stores. --- This area of Manhattan already restricts store frontage sizes and certain changes of store use, but the East Village Community Coalition argued for more: “Placing restrictions on formula retail establishments via zoning amendments provides a path to preserving the rapidly changing East Village,” it said.
- Most famously, in the mid-2000s the city of San Francisco adopted policies to limit chain stores, known as “formula retail”. Broadly speaking, the city defines formula retail as stores with 11 or more locations anywhere in the world, a uniform aesthetic, and a few other criteria. The rules differ neighbourhood by neighbourhood: some areas welcome formula retail, others don’t. Has it worked? --- One of the strictest neighbourhoods in San Francisco is Hayes Valley, which has an outright ban on formula retail. Hayes Valley was once partly covered by the elevated Central Freeway, which was demolished after an earthquake in 1989.
- Relieved of the freeway, the neighbourhood – once an area many San Franciscans avoided – became fashionable almost overnight. “It just flourished like crazy, because it was suddenly under sunlight,” says Dee Dee Workman, vice president of policy for the San Francisco Chamber of Commerce. --- But Workman also argues that the decision to ban chain stores, intended to make the neighbourhood more community-oriented, had the opposite effect. “There used to be a lot more of neighbourhood-serving retail there … retail that people could really use,” she says. The ban on chain stores changed that.
- “What you have now are a lot of non-neighbourhood-serving retail: very, very high-end expensive little boutiques, selling super expensive shoes and purses and things.” This excludes residents, she argues. “The people who have traditionally lived in that neighbourhood, who are lower-income and are hanging on by their fingernails, there’s really nothing there for them,” Workman says. “I would say in that case, the formula retail ban is counter-productive.”
- A different experiment has taken place in Britain, where successive Labour governments have attempted to combat the Thatcher-era encroachment of gigantic superstores and supermarkets on city centres, with planning guidelines that limit square footage – effectively making it difficult to open large retail spaces. The result was a proliferation of smaller spaces. Tesco, for example, is just one of the supermarkets that has studded British urban high streets with small branches such as Tesco Express or Tesco Metro. ---
Harvard Business School’s Rafaella Sadun has used the British example to examine whether planning regulations protect independent retailers. She concluded in a 2013 report that the regulations backfired: the big chains simply set up smaller outlets.
- It was a similar case in Vermont, where a longstanding ban on big-box stores failed to prevent the proliferation of discount “dollar store” chains, which squeaked in under the zoning limits. In 2012, the residents of Chester sued Dollar General for opening a store near the town centre. The case went to the Vermont Supreme Court, which ruled in favour of Dollar General. France has had tough regulations against large chain outlets since 1996, when the Raffarin law restricted the size of hypermarkets. By 2009, according to the Organisation for Economic Co-operation and Development (OECD), the floor area of hypermarkets was around 20% less than in the UK.
- But the OECD reported that while the laws “have not really succeeded in halting the steady decline in the ranks of small shopkeepers, they have helped stabilise the market share of small-scale food retailers”. However, the laws also “allowed the large, long-established groups to strengthen their market position, undermining competition in many regional markets”. Nevertheless, the idea of limiting chain stores appears to be catching. Shortly after Layton’s proposal in Toronto, a group in Vancouver floated the idea that the city should not only ban chain stores from certain areas, but tax empty storefronts, too.
- “Many whole blocks of independent businesses are taken out, and what might go in are one of the big five banks and chain stores,” Amy Robinson of LOCO BC told CTV News. “What we’re really concerned about is the loss of affordable space for independent businesses.” --- That’s exactly what small businesspeople like the Cat’s Cradle owner Pritchard and his co-owner Mark Citron on Yonge Street have seen: a once-vibrant area dry up. To them, regulation of some kind sounds like a good start to controlling not only who operates in the area, but perhaps their ever-rising taxes as well.
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Chain stores in New York, where some activists are proposing ‘formula retail’ be limited to preserve the character of different neighbourhoods. Photograph: Getty
‘Dominated by multistorey facades of bright corporate advertising’ … Yonge Street in Toronto, Canada. Photograph: Alamy
Graffiti in Stokes Croft, Bristol, where a riot broke out in 2011 after police engaged with protesters against the opening of the city’s 32nd Tesco branch. Photograph: Sam Frost
Vesuvio cafe in San Francisco, where some neighbourhoods strictly limit chain stores. Photograph: Alamy
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