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Brick-and-mortar retailers face steep challenges

Original post made on Jul 27, 2017

Downtown Palo Alto stores are struggling with high costs, difficulties in finding employees who will work for minimum or low wage and a parking shortage, among other problems, a panel of business owners said Wednesday morning during a discussion on the future of retail.

Read the full story here Web Link posted Wednesday, July 26, 2017, 10:45 PM

Comments (33)

Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 27, 2017 at 7:03 pm

This is what we have been saying and the City ignores us. We need better parking for all in Palo Alto. All this trying to stop traffic means workers don't want to work downtown and shopper don't want to shop. We need a parking policy, not an anti-parking policy.

Posted by resident
a resident of Old Palo Alto
on Jul 27, 2017 at 7:22 pm

The problem is all the tech offices moving into downtown. They take up all the parking spaces and reduce the mix of retail stores that draws in customers. Maybe this was a good idea during the Bush recession, but can we kick them out now that the economy has recovered? Yes, retail businesses pay lower rents than tech offices to landlords will have to take a hit, but they've made enough money by now, haven't they?

Posted by Quon Lee
a resident of Midtown
on Jul 27, 2017 at 9:48 pm

[Post removed.]

Posted by Bob
a resident of Downtown North
on Jul 28, 2017 at 9:45 am

Studies have shown that the majority of office workers use public transportation to get to Palo Alto. Clearly office workers are not using parking spaces. In fact, it is the office workers who are in large part supporting the restaurants and retailers downtown. This forum, if you were in attendance, was not about parking it was about how retailers are facing increased competition from the internet and how difficult it is to compete against people buying on line.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 28, 2017 at 11:35 am

Online Name is a registered user.

@Bob, With commuters outnumbering residents 4:1 and Palo Alto already paying carpooling expenses for 1,000 commuters for this NEW program, your claim that all the constantly growing number of commuters don't need parking spaces doesn't make a lot of sense. If they don't need parking spaces, why is the city paying a small fortunate to build more garages and to institute RPP?

So tired of PA becoming an office park while decimating businesses like retail and professional services (medical, dental, finance, accounting, insurance) to make serve the needs of big employers like Palantir that now dominate downtown.

Posted by Shame on them
a resident of Community Center
on Jul 28, 2017 at 11:41 am

The daily post had a much better ad more In depth article covering this story. Bob is correct that the issue is Internet competetion. Palo alto seems to ignore this very pertinent matter. All we hear about is protecting local retail and mom and pop stores. Elected officials ignore the issue of competetion. I next effect the council to propose a bill banning online shopping for palo alto residents.

Posted by resident
a resident of Old Palo Alto
on Jul 28, 2017 at 12:23 pm

Parking along University Ave is always full, yet stores and restaurants are struggling. If workers aren't hogging all the parking spaces, then who's cars are those? Just window shopping?

Posted by Need more 30 minute parking
a resident of Duveneck/St. Francis
on Jul 28, 2017 at 12:27 pm

Need more 30 minute parking is a registered user.

If there were more 30 minute parking spots downtown, there would be more open spots. Lots of workers move their car every two hours to avoid paying for parking. More 30 minute spots would allow enough time to do a few errands, bringing more business to downtown. Business that hire minimum or low wage employees should provide them with parking passes.

Posted by shopping downtown
a resident of Crescent Park
on Jul 28, 2017 at 3:01 pm

There are several trends that I have noticed over the years since the great recession.

1) Downtown Palo Alto has become more favorable to becoming an office park. I miss the days when it was a beautiful place where brilliant minds could gather and share ideas without limitations on parking or traffic conflicts. It was a great place for everyone to hang out.

2) Retail spaces are now taken up by multi-level office buildings. Palo Alto generates more revenue from taxes when new buildings are built. The taxes and the amount of rent charged gets reset when a new building is constructed on previous single level buildings.

3) Mom and Pop stores/businesses that have been there for decades are now being squeezed out. People who dedicated their entire lives to building a business and community are hurting because of excessive rent increases.

4) Parking restrictions are forcing people to go elsewhere. It is no longer a place for people to casually gather unless you are already there.

All these things make it difficult for retailers and restaurants to survive. It feels like downtown Palo Alto is changing to be more of an office park and not a community center. I understand the need for renewal and change, but miss the days when Palo Alto was more hospitable to retailers and restaurants. I think things will only get more difficult for all businesses and offices downtown as road/cable construction will occur over the next several years. This will be noisy and irritating for everyone in the downtown area.

Posted by mauricio
a resident of Embarcadero Oaks/Leland
on Jul 28, 2017 at 5:17 pm

mauricio is a registered user.

Downtown IS an office park. No small retailer can compete with well financed start ups. Downtown should have been zoned only for small retail and restaurants, not allowing tech companies and fake retail any foothold. Tech firms can pay any extortionist rent, so there is no competition. tHE "vibrancy" Liz Kniss has been pushing for so may years is really the death sentence of Palo Alto as a suburban small town with big quality of life. It is now an office park and it will be Manhattanized in a fairly short time.

Posted by Shame on them
a resident of Community Center
on Jul 28, 2017 at 6:35 pm

Parking, parking, parking. That is the only thing people seem to be harping about. The real issue is internet shopping ( covered in more detail in the daily post story). This morning they were talking About mall traffic being down due to the internet and that only a small percentage of mall's are doing well. Of course parking and complaining about palantir is what the weekly likes. The weekly, the council and some residents have their heads in the ground when it comes to the real issues facing retail in palo alto. The council can mandate retail, no chain stores and other lip service, but people will increase their online shopping at the expense of brick and mortar.

Posted by Long Time Resident
a resident of Old Palo Alto
on Jul 28, 2017 at 7:18 pm

I shop on the internet to avoid getting stuck in a traffic jam and trying to find a parking spot. The two are related.

We are over-populated.

Posted by john_alderman
a resident of Crescent Park
on Jul 28, 2017 at 7:40 pm

john_alderman is a registered user.

@Bob - "Studies have shown that the majority of office workers use public transportation"

This is false.

The 2016 Palo Alto Transportation Management Association study showed only 31% of "Tech Workers" downtown used public transportation. If you look at "Light Office" workers, 74% drive alone and only 14% take public transportation. For service workers it is 80% drive alone, 3% take public transportation.

Note the study was limited to downtown only, so include Stanford Research Park and other areas and the numbers will look even worse for public transportation.

Posted by Todd
a resident of Another Palo Alto neighborhood
on Jul 28, 2017 at 7:42 pm

Obviously this has nothing to do with a labor shortage amongst those willing to work for retail wages...

Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 28, 2017 at 8:17 pm

I tend to prefer brick and mortar stores for most items. I call around and walk from store to store at Stanford.

The last occasional item I needed I walked around Stanford asking in several department stores and not only did they say they didn't have the item, they weren't even interested in looking to see if they could order it or help me in any way. The only alternative was to buy it online where I had several choices.

This is not the first time that I have noticed choices being limited in stores. The reason I end up buying online is because I can't get them in stores.

We do not want stores that keep selling the same merchandise as each other. We do need to have stores that are selling hard to find, but necessary, items as well as helping customers to order online from their particular online store and then get them for future customers!

Posted by Get Serious
a resident of Ventura
on Jul 28, 2017 at 8:24 pm

Employees of many companies receive mass transit benefits if they claim to commute using them. In my experience, very few do. The companies also receive financial benefits based on claims of commute use of mass transit.

For these reasons, surveys of employees of such companies are highly suspect.

Posted by Shame on them
a resident of Community Center
on Jul 28, 2017 at 8:35 pm

Okay, get serious, I will bite. What is your experience with tech workers and how they commute? How many of these workers di you know? Get serious claim Is another inn a long line of unproven factoids that are a hallmark of comments on this forum

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 28, 2017 at 9:12 pm

Online Name is a registered user.

@John Alderman, thanks for posting accurate figures on the commuters. If annual downtown parking permits cost $700, that amount is huge for someone making minimum wage as a retail clerk or a relatively low salary in a medical / dental office but it's a mere pittance to the tech workers with their $100K sign-on bonuses and their 6-figure salaries.

Big-company employers should be picking up the tab for their employees, not making US, the residents pick up the tab by building them new garages and paying their commuting expenses. They should NOT be discouraging residents from shopping downtown to accommodate them!

For decades Google has been providing its employees with free bus service from Hayward, SF etc. etc. but here in Palo Alto we have a transportation commission chaired by a Palantir employee who's decided PA should do the reverse and have the residents subsidize their employees. Ludicrous.

Posted by easong
a resident of another community
on Jul 30, 2017 at 9:26 am

I visit downtown for lunch once or twice a week. Parking is tough from about 11:45-1:15, so I avoid that period. Talking to the wait staff at my regular spots, their biggest problem is parking. They aren't taking Caltrain to work because affordable rents are not found near the Caltrain line. Palo Alto should issue a certain number of employee parking permits to restaurant owners. Otherwise the changing demographics of Redwood City and Sunnyvale will steal these workers away.

Posted by RetailBoom
a resident of College Terrace
on Jul 30, 2017 at 11:51 am

Googl around. Several reports out recently about how retail is booming. The nature of retail is changing to be more an experience but it's doing well across the country. Exceptmfor big box retail. Crating a retail environment is key. As stated in the article you need a balance of restaurants and retail, easy access and parking. And landlords who are prevented from charging office rates for retail locations.

Posted by john_alderman
a resident of Crescent Park
on Jul 30, 2017 at 12:23 pm

john_alderman is a registered user.

Online retail is still only ~10% of the retail market. Just look at the ever crowded Stanford Shopping Center to see that there is still life in brack and mortar. The problem downtown is that too much has been ceded to offices, which displaces retail, and squeezes parking, both of which drive down customer traffic, which in turn makes it even harder to survive as a retailer. It is a self inflicted death spiral.

Posted by Property Owner
a resident of Downtown North
on Jul 31, 2017 at 5:41 am

So, btw, Online Name...the following businesses that you mention in your comment that are being squeezed out " professional services (medical, dental, finance, accounting, insurance)" don't qualify as retail in the ordinance to save retail.

Posted by dtnorth
a resident of Downtown North
on Aug 1, 2017 at 12:22 pm

I agree with @shopping downtown. I have lived here for 40 years and we had a business downtown. The years when we had a business in downtown we had lack of parking back then. There were a lot more retail business that is for sure. I now live downtown and I prefer to go into redwood city and downtown los altos as they have a lot more retail stores to peruse. With that said Redwood city is also changing and retail is leaving and office buildings going up. Exactly what is killing Palo Alto. WE are allowing our downtown to become office parks. We are having small 2 stories getting torn down to make room for their 4 story bldgs. Maybe we can get them to give the retail a better price per square ft. I do know of some bldg owner that do that for the small business

Posted by Gale Johnson
a resident of Adobe-Meadow
on Aug 1, 2017 at 2:04 pm comment "but they've made enough money by now, haven't they?" Of course not...what is enough money to property owners/developers who can get max rents from tech companies without a blink? They never make enough money. They are so profit driven they would never consider giving a retail business a break because they don't have to. Rent rates and the parking issue is just part of the problem of keeping retail in downtown. The biggest cause of vacancies, that will never be filled, is the online shopping and the outdoor malls that are doing very well, e.g., Stanford Shopping Center.

I remember those good old days of yore, having lived here since 1961. All the little mom and pop stores, music stores, five and dimes, book stores, toy stores, hardware stores, florists, family owned department stores...those "manly" stores...Bergman's, Weideman's, and Harriman's. We bought a lot of clothes and many other things in those stores, but they are gone forever, and they will never be replaced. Got to adjust to the new ways. And a butcher shop on California Ave. I really liked the owner. He carved up meat, beef cut to our specifications...and you could buy big bags of rice there also.

I better stop before I start tearing up. Those days are gone forever, never to return, so I can only offer my memories of them in words. That's why I'm enrolled in a 'Life Stories' writing class at Avenidas, and write about them.

Posted by Gale Johnson
a resident of Adobe-Meadow
on Aug 1, 2017 at 2:22 pm

Thanks john_alderman...for your research and setting the record straight on the transportation/parking habits of workers in PA. Bob was just popping off I think, with his off the cuff comments and with his personal views buried deeply in them, but lacking any facts to support it. Thanks for your challenge. Awaiting his response, but I won't wait very long because I don't think he has one. lol!

Posted by margaret heath
a resident of College Terrace
on Aug 1, 2017 at 5:07 pm

During one of the council discussions regarding whether it was necessary for the council to take action to support downtown retail, council member Liz Kniss told us that she had visited downtown to see how it was doing. Her opinion following that visit was that downtown was doing just fine, and in her opinion the council did not need to get further involved to protect retail. "If it ain't broke, why fix it?" In other words, as far as Palo Alto retail and neighborhood serving businesses are concerned, the council should be hands-off. After all, why close the barn door before the horse has bolted. Although councilmember Kniss has declared, she is "pro-prosperity" her "hands-off" approach over the years has appeared to favor large commercial property landlords and developers over smaller businesses. Unfortunately, apart from Stanford Shopping Center and Town and Country Village, retail and neighborhood serving businesses are disappearing and it's now probably too little too late to do anything about it.

Posted by Joe retail
a resident of Downtown North
on Aug 1, 2017 at 10:01 pm

Working the market for years there is no doubt that the high rents and limited ground floor space play a part in pushing out low sales volumes type stores. Supply and demand plays the largest part. While low performing stores closing is a 'natural' event per se at some point the closing is hastened dramatically by high occupancy costs. High costs also are prohibitive for low sales volume retailers - music stores can't make it but the right apparel and shoestores can make it. Food and beverage can. food and beverage operators are facing dramatically increasing bottom line costs, finding it hard to keep employees among high rents and in a desirable market , stiff competition as well. Retail is changing dramatically but brick and mortar is not dead in anyway. Retail itself as we have known it for literally hundreds of years is changing. Retail must be significant - must differentiate and offer an experience. Department stores are dying yes, but they all sell the same things- khakis and polo shirts and boxers and socks. Don't forget they used to sell unique goods - hunting and fishing equipment - tools - etc. instead of what they are know - Low price super sales to their customers. Retailers that are dying now in many ways have killed them selves in the rush to sell at all costs - foregoing why many shop in the first place - to find something special - to see something new - to taste something different. That will never change and retailers that address this are thriving - ironically many are coming FROM online. Compound above with yes, limited parking, competition from office users downtown, there are challenges. Parking and office users absolutely affect the success of retailers however. Can't argue it. No doubt P.A allowed too many office users to locate in ground floor space. Also salons, fitness and other personal services are by enlarge banned from university. If you ever think there are too many of a certain retailer on a block 99% of the time it's the zoning. You can thank your local council and planning for that.

Posted by margaret heath
a resident of College Terrace
on Aug 2, 2017 at 1:30 pm

"Also salons, fitness and other personal services are by enlarge banned from university. "

Councilmember Kniss talked specifically about continuing to allow salons and fitness continue to be included on the list of allowed uses in the retail zoning. Hence the unattractive one-on-one fitness training studio that replaced the Village Stationers on the corner of California Avenue and Birch is an allowed use. Although with one-on-one fitness training it brings in minimal foot traffic for the large retail space on California Avenue it occupies. Kniss urged the council not to remove fitness studios from the list of allowed uses because fitness studios like those offering yoga classes bring in so many people.

Posted by Gale Johnson
a resident of Adobe-Meadow
on Aug 2, 2017 at 2:44 pm

What draws new retail is older and current retail that is surviving and thriving. Business owners see others succeed and so they are willing to try it in those locations. Doesn't always work out because of what is offered.

Posted by Me 2
a resident of Old Palo Alto
on Aug 3, 2017 at 8:15 am

More retail desired, yet we all pass a punishing minimum wage law?

That's called shooting yourself in the foot.

Posted by Long time resident
a resident of Crescent Park
on Aug 4, 2017 at 7:54 am

Retail--in general--seems doomed in PA, especially downtown. Here's an anecdote that exemplifies the situation.

I needed an item, and I walked downtown to at least window shop, if not purchase, what I needed. I found the item in a Univ. Ave. retail store, yet hesitated because the price seemed high. And yes, a smartphone search confirmed that.

At home in the evening, I found the identical item (same brand, exactly the same item) from a business who distributes through Amazon for 1/3 of the PA retailer's price. Delivery in 2 days, or delivery tomorrow for a few dollars more.

Sorry, I pass on 300% more to shop locally.

Posted by john_alderman
a resident of Crescent Park
on Aug 4, 2017 at 4:00 pm

john_alderman is a registered user.

@Long time resident - would you share what the item was? 300% premium for retail vs online seems like an outlier.

Posted by MP Resident
a resident of Menlo Park
on Aug 4, 2017 at 5:01 pm

300% actually seems about right for smaller items. Try buying something like a HDMI cable locally - it's all the "monster cable" type rip-offs, that sort of thing.

Local retail is useful when it comes with a service (e.g. bike shop with fitting and repair), restaurants, food (fresh food is hard to do well online), shoes (with fitting, though you can always buy more from Zappos), or things you need *now* (e.g. drug stores, hardware stores).

Otherwise, it's a dinosaur. Online may be 10% of the volume, I would wager it's a much higher percentage of the profits. Most retail help is useless, stock-outs are common, and prices 3x Amazon are not at all unheard of. I don't buy clothing locally, electronics are easier online, kitchenware is much easier online, and nobody really needs that much furniture (despite what the Menlo Park planners seem to think). I do occasionally go to Stanford Mall for the restaurants, but generally nothing else.

Pushing for more unnecessary retail when we already have far more retail per person than anywhere else in the world is some cross between wishful thinking and trying to bring back a past that isn't coming back.

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