Concurrent urban incubators
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Ken Nisch, Chairman, JGA, Jacques Panis, President, Shinola, Christine Sturch, Midwest Design Coordinator, Whole Foods Market, Eric Yelsma, Founder, Detroit Denim Co.
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Concurrent urban incubators
- 1. Urban incubators: Fueling accelerated retail growth Ken Nisch, Chairman, JGA Jacques Panis, President, Shinola Christine Sturch, Midwest Design Coordinator, Whole Foods Market Eric Yelsma, Founder, Detroit Denim Co.
- 2. • Dynamic. Retail is critical to vibrant cities. • Integrated work, live, play create vibrancy. • Growing urban markets are prime spots for the new retail model “Retail 2.0” • New faces, hybrids, grass roots & innovative legacy brands are beginning to invigorate urban cores.
- 3. What WAS & what HAPPENED what’s WORKING NOW what’s NEXT
- 4. Retail challenges: • Growth limited by saturation of traditional shopping areas • “Small” is better • Experience > things • Over-stored/over-spaced • Department store relevance • Legacy brand relevance
- 5. Core city retail challenges: • Fragmented ownership & leasing, marketing • Convenience, service base, not real shopping • New millennial, gen-Z & legacy urban base • Fun/fringe vs. needs & wants • Physical realities • Investment--ready to open • Politics, marketing
- 6. Now let’s see what WAS & what HAPPENED by taking a look at Detroit…
- 7. LATE 1800S & EARLY 1900S S. S. Kresge (Kresge’s Kmart) J. L. Hudson (Hudson’s) Crowley brothers (Crowley’s) Ernst Kern (Kern’s)
- 8. By 1920 Detroit became the richest city in the world “There were so many people, you couldn’t even see the pavement.” –Detroit Historian Michael Hauser 1934: Shoppers outside of Detroit’s Kresge’s
- 9. 1945 – EARLY 1950’s: ●3+ million sq ft of retail space; 300 retailers ●Hudson’s:1.2 million sq ft; $163 million sales peak ($1.4 billion today) MID-LATE 1950’s & ON: ●Hudson’s sales fell to $45 million. ●By 1983, all dept stores had closed along with 250 specialty stores. ●Population dwindled from 1.8 million to 675,000.
- 11. Detroit’s retail resurgence begins… adding 500,000+ sq ft of retail space New development of former Hudson’s site in Detroit began Dec 2017
- 12. RECENT DETROIT DEVELOPMENT INVESTMENTS: • $1 billion New Center/Midtown • $1.2 billion Olympia/Arena • $2.2 billion Bedrock • $1 billion Riverfront • $1 billion medical/education
- 13. Suburbs = “over” retail Cities = “under” retail
- 15. 170 retailers & restaurants in Midtown alone, 65 are women or minority-owned 30+ retail entrepreneurs (75% based here), participated in first annual Downtown Detroit Markets pop-up shop hub in 2017
- 16. Detroit’s new Nike Community Store Hires 80% of its team from within a 5-mile radius Requires staff to volunteer in the community
- 17. Detroit’s accelerated retail growth is being fueled by: • Local entrepreneurs & skilled craftsmen aka MAKERS like Detroit Denim • Impactful chains aka CATALYSTS like Whole Foods • Specialized job creators & industry invigorators aka PIONEERS like Shinola
- 18. Eric D. Yelsma Founder DET, MICH
- 20. History 2008 - Got fired 2010 – Incubator in Detroit 2011 - Store created 2016 - Moved 2018 –
- 21. 2010-2015 A Small Business Owner in Detroit Q: How did this happen? Q: How’d it take shape? Q: How did the city help? Q: How did you grow? Q: What does it look like, how does it end?
- 22. Resurgence? Ease of doing business Many neighborhoods developing (Downtown, Mid- town, Cork-town, West End, Indian Village, New Center, North End etc….) Spotlight on city Plenty of room!
- 24. Why Do Retail? Customer Experience Connection Story Service
- 25. Future Product Portfolio Website New Store 2017 20 pair/day 2020 250 pair/day 2023 1,000 pair/day
- 26. End. Thank you.
- 28. Food is Fuel
- 35. Detroit
- 37. Original location: Austin, Texas 1980
- 38. CONSCIOUS CAPITALISM is… Becoming more aware of the higher potential of business and how it CAN be in this world.
- 39. “A business that makes nothing but money is a poor business.” –Henry Ford
- 42. Committed over $14 million so far, committing $25 million. Over 200 loans Provided
- 44. Hired Over 70% from community
- 45. Hired Over 70% from community Asked a lot of Questions
- 46. Hired Over 70% from community Asked a lot of Questions Had a passionate leader
- 47. Hired Over 70% from community Asked a lot of Questions Had a passionate leader Connected with Community
- 49. Partnered with 40 cities across U.S. since 2014
- 77. LET’S RECAP…WHAT’S NEXT? RETAIL 2.0: • Urban, under-retailed markets • Concentrated ownership/landlord control • “Subscription” style • Co-working spaces • Live/Work • Hybrid
- 78. THANK YOU! FOLLOW US ON TWITTER AND INSTAGRAM @JGA_INC VISIT US ON THE WEB @ WWW.JGA.COM JOIN US ON RETAIL FOCUS! EMAIL HKLEE@JGA.COM WITH “SUBSCRIBE” IN THE SUBJECT LINE TO SUBSCRIBE!
Editor's Notes
- KN – This is Tina’s preference for this page. Asks that you explain what Retail 2.0 is here.
- Before we dive in: The retail industry itself is now going through its own transformation – perhaps the most significant yet. Let’s review today’s overall retail challenges, and retail challenges within urban markets:
- Before we dive in: The retail industry itself is now going through its own transformation – perhaps the most significant yet. Let’s review today’s overall retail challenges, and retail challenges within urban markets:
- Poor immigrants as well as current US citizens moved to Detroit, worked hard and started retail businesses, providing goods and jobs to the community. (makers and entrepreneurs!) *Note: These successful entrepreneurs and their retail businesses were involved in the community hands-on, active in philanthropic and civic causes in the greater Detroit area. Some were also known for surprise visiting and chatting with associates at their stores.
- The Book Cadillac Hotel documentary stated that the year the BC opened (1922), Detroit was per capita the richest in the world. The combination of entrepreneurial innovation, low taxes and minimal regulation had created a thriving economy where even the poorest had a standard of living that was the envy of most of the rest of the world. For example, almost everyone could afford a car, as the Ford Model A cost only $385 ($7,000 in today’s dollars, about a third of an entry level car today). Detroit had the highest median income, and highest rate of home ownership, of any major U.S. city. American entrepreneurship, innovation and greedy capitalism had created a fountain of money for all to share. “It was the norm for people to take the bus in weekly to shop – it was a full-day retail experience.
- National merchants such as: Richman Brothers, Bond Clothiers, Marianne’s, Singer sew Centers, Grayson’s, Mary Jane Shoes, Flagg Brothers Shoes, Doubleday Books, Lerner Shops, Lane Bryant, etc. ● Hudson's was one of the largest department stores in the world: -1.2 million sq ft. -Reached high of more than $163 million ($1.4 billion today). Macy’s Herald Square is 2.2 million sq ft and as of Nov 2017 its total sales is $5.3 billion.
- 1998: After sitting vacant for years, Hudson’s was imploded, becoming the tallest structure to ever come down.
- Eliminated 3 million sq ft and adding 500,000 sq ft New development of former Hudson’s site in Detroit began Dec 2017…will feature “latest tech, coolest environmental advances, multiple retailers and a civic gathering space.”
- Detroit is a great laboratory for creating the “new retail model” given the concentration of ownership/landlord control in the business district, long-term investment goals, etc. Midtown is home to Shinola, Jack White’s Third Man Records, Jolly Pumpkin Brewery, and more).
- Downtown Detroit ‘shopping district’ (woodward,etc.) is cheapest rent! Next shift in retail geographic markets: Non-gateway cities, such as New Orleans, Portland, Pittsburgh and Detroit. Today’s consumer = HENRY (High Earner, Not Rich Yet.) They have steady cash flow, but little accumulated wealth. They’re drawn to: tech, auto, ecommerce.
- Generating innovative verticals through applicable channels (subscription style, service-centric, co-working spaces, live/work, hybrid models) – now stores inside restaurants, restaurants & entertainment inside stores, and more. This is native entrepreneur John Varvatos’s retail store on Woodward, which has guitars to test out and music to browse in addition to men’s apparel.
- Regarding pop-up markets: Did so well it extended for several weeks, Bedrock doubled investment, talks of adding transportation shuttles for this and other year-round pop up shop-like events, the event has had several retail entrepreneurs use this platform to test out their first retail experience, and others who use it to boost their presence. Tee Capel (above left), 33, owner of the online fashion retailer Fly Behavior, hoped her presence in the 1001 Woodward building would help get her established. After $25,000 in sales at the pop-up and having several people encourage her to go brick-and-mortar, she said the mission has been successful. "People are really excited and want to take their family in town and friends in town to show the place off, so it has become a weekend destination," she said of the markets. Hundreds of Detroiters lined up for the 2016 grand opening of this special Nike Community Store (filling the historic Woolworth’s location). Nike Community store also: Captures the spirit of the city with the store’s local design and product offerings. Offers $40,000 in annual grants of $5,000 each to eight local non-profit groups via the expanded Nike Community Impact Fund.
- Regarding pop-up markets: Did so well it extended for several weeks, Bedrock doubled investment, talks of adding transportation shuttles for this and other year-round pop up shop-like events, the event has had several retail entrepreneurs use this platform to test out their first retail experience, and others who use it to boost their presence. Tee Capel (above left), 33, owner of the online fashion retailer Fly Behavior, hoped her presence in the 1001 Woodward building would help get her established. After $25,000 in sales at the pop-up and having several people encourage her to go brick-and-mortar, she said the mission has been successful. "People are really excited and want to take their family in town and friends in town to show the place off, so it has become a weekend destination," she said of the markets. Hundreds of Detroiters lined up for the 2016 grand opening of this special Nike Community Store (filling the historic Woolworth’s location). Nike Community store also: Captures the spirit of the city with the store’s local design and product offerings. Offers $40,000 in annual grants of $5,000 each to eight local non-profit groups via the expanded Nike Community Impact Fund.
- Detroit’s accelerated retail growth is reflecting the “new retail model,” being fueled by: Impactful chains (showing “adaptive model”) aka CATALYSTS like Whole Foods And many more! Much of Detroit’s inspiring architecture and vacant, historic retail buildings are now being utilized and amplified…
- People want more Less about the price and cumsupmtion - that’s what we cater to People can connect with the people who make their apparel (ala Farmers Market)
- First off, Ken, thanks for inviting me to be on this panel its great to be a part of this conversation. We opened the Detroit store almost 5 years ago, but it is still as near and dear to my heart as any store I have opened with the company and the connection and energy feels like it was just yesterday.
- When we talk about how to fuel an urban incubator project what better fuel is there than FOOD!?! One way to accelerate growth in any market, city or neighborhood is to feed it. Back in 2010 when we were looking at the possibility of opening a store in Detroit we found that;
- -200M + grocery dollars leaving city to do grocery shopping -Detroit has one of the lowest per sq mi amount of grocery stores in the US, comparable only to New Orleans and DC
- -92% federal food $ come thru convenience stores (3x national average)
- There was obviously a need for fresh, healthy food options to be a part of the Detroit landscape. But we are a business first so the thought was how could we be a part of this need but still ensure financial success? An organic grocer had recently opened and closed on Woodward Ave, near where the real estate was available for a store. At the time, there were only 90 businesses currently open that had succeeded in midtown Detroit longer than 10 years. At this point in whole foods market career, we had never closed down a WFM built location and didn’t want to make a 26+ million $ investment to start now.
- So why Detroit – Why then? It started with small conversations with Senators, the Secretary of Agriculture, local developers and entrepreneurs all reaching out – touting what an amazing city Detroit was. What amazing people lived, worked and yes, even prospered in Detroit. These conversations got us thinking. Why hadn’t we opened in cities such as Detroit? The realization that we weren’t fulfilling one of WFM”s purposes, to make healthy and nutritious food accessible to everyone, and that we were only serving some communities troubled us. So we went to Detroit. And, we started asking a lot of questions.
- We met with the people dedicated to food in Detroit. Dan Carmody, President of the Eastern Market (Its one of the largest and longest running open air markets in the US. an unmistakable gem –if you’ve never been you need to go visit). Oran Hesterman, President and CEO of Double Up Food Bucks, Sue Mosey, Executive Director of Midtown Detroit, Inc. Phil Jones, a local Foodie, Activist, Chef and Restaurant Owner, Betti Wiggins, Former Director of Food Service for Detroit Public Schools. There are already amazing people doing amazing things for the Detroit community so we sat back and listened to their stories.
- We met with many of the established businesses; Avalon Bakery, Eastern Market, Motorcity Brewing and the Greening of Detroit to name a few. These businesses taught us that there is a clear interest in food and entreprenership in Detroit. We listened and tasted and recognized we would not be the pioneers for Detroit by any means, the local business owners, existing markets, rise of urban agriculture and local artisan food producers are already established success stories. These folks will be our Customers if we were to open, yay! But also our competitors… what would it look like to partner with them rather than competing with them? Spurring a crucial component to Urban Incubation - creating a healthy environment to provide optimal conditions for growth and development. Working together to create a stronger environment for everyone to succeed. We partnered in ways we hadn’t thought of before, like rather than having our own in house bakery we asked Avalon run it and provide all of our bread. We partnered with Eastern Market and D-town farms for the majority of our produce rather than relying on our regular supplier.
- In all the cities we’ve built stores in and connected to the community we’d never seen anything like the spirit and desire for this city. Their determination, resilliancy and “stick-to-it-ness” really are the foundations for urban growth and revitalization. Not any one business coming in, not any one brand or another “taking a risk” in the city. The fuel was already there in the people. We just needed to tap into what was already developing so we could use our strength as a larger company to “incubate” and allow for others to succeed.
- What I am getting at, is the key component in all of this is that we LISTENED to the needs of everyday local shoppers and business owners. This is where we really needed to set aside any preconceived notion about what kind of shopper was in Detroit and what it took to actually succeed in Detroit. By really engaging and starting from a place of respecting the community and listening to where they were and what they were doing, we started believing that this idea could become a reality and Whole Foods Market charted its path to our first Detroit store.
- From then on we were steadfast in our belief that we too could succeed in Detroit, but what we really discovered in all of our conversions is that it is more than about the food. Quoting an article in Slate, “Food is a Great Lens, but it’s not the actual topic we need to address” we also to be a part of feeding the human need for knowledge, health, culture and connection. .
- But before I talk about our plan to do that, our challenges, what we learned and how Detroit changed our company, let me first explain a bit about WFM business practices. Over the last 38 years John Mackey and more recently with his former Co-CEO Walter Robb have operated under an umbrella of conscious capitalism. Whole Foods has from day one strived to be more aware of the higher potential of business and how it CAN be in this world.
- As Michigan native Henry Ford once said, and as we believe, “A business that makes nothing but money is a poor business.” A business needs to exist for something else. To fulfill this Whole Foods defines itself as a mission driven company.
- And as a mission driven company we operate and make all business decisions largely based on our Core Values. It was a moment where we had to challenge ourselves. Our goal in coming to Detroit is to make a successful investment that mattered.
- Right away though we ran into challenges: -Press questioned our intent, our reputation was at stake. This was a project the Wall Street Journal said, “was a business plan gone off the rails”, and nobody said it could be done.
- -Price and Brand Stigma: “Whole Paycheck” We were for the slick and rich only. How do we get around this? Committed to reducing prices, provided education, partnered with established businesses, we involved our selves in the community, we became a part of the community so we could relate. We also really emphasized our local producer loan program in Detroit to help local entreprenurs get their products into our store and therefore have a stake in everyones success!
- Our challenges were all tied in with perception and culture. So we dug in our heels and made our culture “Our Core Values” define our entire process. By doing that, we were involved with community more than ever before. Whole Foods Market committed to discovering how a presence there could meet the needs and reflect the desires of the people of Detroit, be respectful and responsive to local cultures, and increase access to fresh foods across all income levels.
- -we hired over 70% of Team Members from community -we came and asked a lot of questions of grassroots leaders and neighbors. They in turn engaged us, challenged us, critiqued us and inspired the project -Walter Robb, or most passionate advocate for this project constantly reminded us that this idea of putting the community first is really at the heart of the store's efforts. His singular passion was such a guiding force in our success – I believe its important to have someone like him with a vision to make any risky project successful. -We also connected with the community thru healthy eating education classes, mentoring and public call for art that received nearly 100 submissions. This was so exciting for the whole community in Detroit.
- -we hired over 70% of Team Members from community -we came and asked a lot of questions of grassroots leaders and neighbors. They in turn engaged us, challenged us, critiqued us and inspired the project -Walter Robb, or most passionate advocate for this project constantly reminded us that this idea of putting the community first is really at the heart of the store's efforts. His singular passion was such a guiding force in our success – I believe its important to have someone like him with a vision to make any risky project successful. -We also connected with the community thru healthy eating education classes, mentoring and public call for art that received nearly 100 submissions. This was so exciting for the whole community in Detroit.
- -we hired over 70% of Team Members from community -we came and asked a lot of questions of grassroots leaders and neighbors. They in turn engaged us, challenged us, critiqued us and inspired the project -Walter Robb, or most passionate advocate for this project constantly reminded us that this idea of putting the community first is really at the heart of the store's efforts. His singular passion was such a guiding force in our success – I believe its important to have someone like him with a vision to make any risky project successful. -We also connected with the community thru healthy eating education classes, mentoring and public call for art that received nearly 100 submissions. This was so exciting for the whole community in Detroit.
- -we hired over 70% of Team Members from community -we came and asked a lot of questions of grassroots leaders and neighbors. They in turn engaged us, challenged us, critiqued us and inspired the project -Walter Robb, or most passionate advocate for this project constantly reminded us that this idea of putting the community first is really at the heart of the store's efforts. His singular passion was such a guiding force in our success – I believe its important to have someone like him with a vision to make any risky project successful. -We also connected with the community thru healthy eating education classes, mentoring and public call for art that received nearly 100 submissions. This was so exciting for the whole community in Detroit.
- The Results: -The process we went thru was defined as “Community First Retailing”. It was a two year journey that gave us an opening day where we celebrated with our new found Detroit friends and partners. We recognized friends in the opening day crowd, rather than just random shoppers. We hugged and told stories about how we got there rather than just focusing on opening the doors. - 2000 press mentions on opening day, 1800 facebook likes. And the store has been financially successful since day one. -To interact with the community we’d been offering healthy eating classes in and around the community since 2012 and those classes have only grown in # and popularity. We have replicated this model throughout the company as well. -47 local and exclusive to WFM products were sold in the store and direct provider relationships with Eastern Market and Avalon Bakery were a success. -Opened a door for other retailers to take the risk; since then Target, Meijer, Nike, Warby Parker, Under Armour to name a few of the retailers that have opened in the Detroit area.
- Opening in Detroit has changed the way we view business. -It Influenced development of Whole Cities Foundation – since 2014 Whole Cities Foundation has partnered with organizations in over 40 cities across U.S. to build thriving local food systems and improve health. Use Detroit as example for other urban markets; Jackson, MS, Newark NJ, New Orleans LA, Englewood in Chicago - We realized we have resources that we take for granted that others don’t have access to, such as setting up a small business to be able to sell to WFM. We were committed to supporting as many local producers as we could in Detroit but unlike other cities where people had access to legal resources, kitchens, facilities, and money to start up their product a lot of what we found was still being made in peoples homes. It was hard to get all the product we wanted on our shelves with the right tags, insurance, etc. So now when we open a new store in a Whole Cities market, we make sure we are providing services such as lawyers, product testing kitchens, insurance companies, etc. - Finally, we overhauled our core value as a company, “serving and supporting our local and global communities” as a result of re-imagining what's possible between a company and a community when dialogue happens creating a new model for WFM store development called Community First: Where we infuse ourselves into a city/community early on and listen to their best interests as the lens for looking at all major decisions. Everything from location, to store design, to product mix, to team members who work there.
- Our goal was to make an investment that mattered. And we are here to stay. Possibly even build another location! The cherry on top is that we helped accelerate growth in all of Detroit as well. We attribute our success to putting culture and community first. Really listening to what people were saying. I think this lesson could go a long way to success in everyday life, in and outside the business community.
- Leave you with pics from Detroit store. Thank you for your time!
- MAKER, CATALYST & PIONEER RETAILERS BECOMING GO-TO RETAIL DESTINATIONS IN URBAN MARKETS…AND TURNING THESE NON-DESTINATION CITIES THEMSELVES INTO DESTINATIONS, PLACES TO LIVE, WORK, PLAY. NEW RETAIL MODEL IS FUELING AND ACCELERATING GROWTH TODAY, AND IS THE FUTURE… Generating innovative verticals through applicable channels (subscription style, service-centric, co-working spaces, live/work, hybrid models) – now stores inside restaurants, restaurants & entertainment inside stores, and more.