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By Steve Levy

The Retail Implications of the Comp Plan

Uploaded: Nov 4, 2017

The retail scene is changing. Online sales have led to large numbers of store closings all around the country—in affluent and less affluent areas alike. Shopping malls are adapting by replacing traditional retail outlets with a variety of restaurant, entertainment and other options.

A vibrant retail environment is a goal of the council and residents. How do the Comp Plan and related policies affect the retail environment in town?

There are some positives. The most important in my mind is the effort to develop coordinated area plans for downtown and California Avenue. Town and Country and Stanford shopping centers have the advantage of coordinated management, which leads to a planned mix of stores and other attractions. Moreover, they both have the advantage of many activities in one place.

The transportation policies in the Comp Plan address two concerns of retailers. One is that workers find it hard to get to downtown and Cal Ave. Retailers and restaurant owners report having trouble finding workers even as we raise wages. The TMA program and new funding can make it easier and cheaper for some workers to get to their jobs.

Parking or no car options for customers are also a challenge as reported in the retailer forum held earlier this fall. The Comp Plan and infrastructure plan are moving toward additional garage space, consideration of expanded shuttle service and other changes such as parking assistance apps and paid parking.

Finally, the Comp Plan envisions growing the customer base through new housing, new hotels and some expanded employment.

For retail to survive in a world of online competition, well managed shopping centers, rising wages, parking challenges, high rent in many areas needs a growing customer base with some if not many new customers with broad spending power.
The data from the city’s fiscal impact study are indicative of where the customer base is now.

--Most sales tax revenues come from visitors and businesses, not residents. In 2015 the study reports 48% of sales tax revenue came from visitor spending, 41% from local employees and business spending and 11% from local households.

If visitors and businesses and their employees are the major support for sales tax revenue, that should influence our planning and use that to build clusters that serve these customers while also giving the best chance for retail that local residents will use.

If I have one disagreement with the current approach in Palo Alto it is the idea of preserving or having retail everywhere. I think the same approach that we have for housing of clusters of activity is the best bet for increased customer support. Retailers cannot be expected to thrive or seek places where there is not a sufficient customer base. Instead of trying to maintain retail where it is not likely to be viable, I prefer an approach that builds a customer base and supports retail in clusters of activity that are more likely to attract customers.