Here’s the message we’re sending to the “flatlands” during the holiday season:
We were watching Sacramento’s Channel 10 News on television on Monday night and, lo and behold, a Nevada City Chamber board member (who also was on the board of the now-defunct business improvement district) appeared to tout the benefits of buying online.
Jim McConnaughay, owner of Country Collectibles, on Broad Street, said it was getting rid of the physical store in favor of a virtual one. They expect to close the brick and mortar store by the end of January, a rumor that has been going around for a little while.
(There are more, similar rumors out there, I might add).
Jim cited all the costs that go with a “brick and mortar” store, including rent. No kidding. (The building where Country Collectibles was located was owned by Gary Tintle, a fellow Chamber board member).
I was surprised Jim, as a newly re-elected chamber board member, appeared on Sacramento television with this perspective; it doesn’t help our city’s cause much. (We’re upping our involvement in the chamber, meanwhile, donating a weekend in Lake Tahoe at the upcoming installation dinner to help raise money).
Country Collectible’s closure on Broad Street in Nevada City comes as JordanWood is closing its store on Mill Street in Grass Valley and going online only.
“JordanWood was a beautiful store, and they were active members of our downtown community,” wrote Grass Valley Downtown Association Executive Director Howard Levine on Facebook.
We did buy a wonderful wooden advent calendar for our son at JordanWood this holiday season.
TV stations don’t dig deeper, but to succeed in a “mom and pop” retail business, you’re better off:
•Owning your own building, where you can control one of the biggest fixed costs.
•Providing a unique, local product. In my view, too many of our stores sell products that you can buy elsewhere, including on the internet.
•Provide outstanding customer service.
•You need to market and promote yourself outside our economic and cultural “cul de sac.” Our population is flat to declining. You need to draw visitors from the “flatlands.”
In truth, the competition is much stiffer online, and the marketing hurdles to differentiate yourself are greater. Though online is growing at a faster rate, the sales are small compared to “brick and mortar” sales.
Good luck to both stores in their online-only ventures.
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I’m sorry, but I’ll bet McCounnahey’s new online “venture” will be an advertising failure if this televised appearance is any indicator. Does he know to whom he’s speaking and about what? Kate Hancock
You said to succeed, one should “Owning your own building, where you can control one of the biggest fixed costs.”
That is not always the case. In today’s economy, lease payments can quite often be much less than mortgage payments, especially when you factor in the need of an upfront down payment which might better go to inventory. Over the long-term, it might make best sense to own, but if the business has the potential to grow, tying yourself to a physical location does not always make sense.
Two county wineries, Sierra Starr and Smith Vineyards, have benefitted from recently buying buildings in downtown Grass Valley —when real estate prices dipped — and opened them. They are in it for the long haul and using the recession to gear up for future growth.
I want to be clear that I not saying that analysts are saying that buying does not make sense… just that for many business people liquidity may be more valuable.
For some, who are there for years and need to customize properties it is a good time to get a deal!
Good luck to Sierra Star and Smith Vineyards. More power to em!
Yes, there are a lot of variables. A few weeks ago I was glad to see a business planning to open in downtown Truckee where Piper Rotisserie had been vacant on the “main drag.” On a side-note, and I’ll blog about this in the New Year, I’m glad to see all the local businesses promoted on the geo-tourism website.
http://www.SierraNevadaGeotourism.org/
We are very proud of the Geotourism project.
Measurable outcomes are pretty good too. More than 1000 community assets mapped to date, with less than half of the Sierra region done, including hundreds of small businesses with a unique Sierra Nevada twist. Tens of thousands of unique web hits per month. We have a graduate student from Duke doing an analysis of the economic and social impact of the Geotourism projects who is going to hone in on direct revenue generated through the activities.
There is a growing group of commercial real estate analysts who are saying that leasing may be a better deal than buying for the next 10 years, or perhaps longer. The glut of commercial real estate on the market, with many California analysts saying we are overbuilt by about 15%, coupled with restricted access to capital, means leased space is going to be cheap. I am basing this statement on direct personal conversations with real estate professionals who are working on state wide analysis from the Building Industry Association, National Association of Realtors and Urban Land Institute.
Admittedly, local conditions may be different. For example, Truckee realtors are telling me the bargains on rent are still there and building owners are willing to negotiate (I lowered my rent in downtown Truckee from $2.21 per sq. ft. to $0.97 per sq. ft. in 2009) but that will change as resort and heavy tourism economy regions recover quicker than non-resort rural areas. Truckee realtors are telling me they think they will be back up to pre-recession occupancy rates by the end of 2012.
(By the way the 3 sectors of the economy expected to recover quickly and remain strong according to the Center for the Continuing Study of the California Economy are energy, technology applications including medical technology, and tourism)
The key calculation for most business people is the rate of return. With real estate expected to track about even with the CPI for the next decade, which is how long many analysts think it will take for the market to normalize, and business people fresh from being burned by having too many of their assets in illiquid real estate as the Great Recession hit, the better bet may be holding money in other investments that provide more liquidity. If you can get cheap rent, better ROI from other instruments, and preserve liquidity, why buy?
Just saying what I am hearing from many Sierra business people.
By the way, we better get ready for many businesses going on line.
Many retailers I know have added an on-line component to their businesses in the last 3-5 years, and have relied more heavily on it during the recession. Retailers who spent the first 6 months of the recession cutting costs started switching to diversifying revenue as a hedge against weak local sales. Now they realize that on-line sales have significantly less overhead while expanding reach.
Steve, as someone who has run a strictly online business (I’m semi-retired at this time), and understanding that online business contributes to the Nevada County economy, I appreciate your insightful commentary. I think both kind’s of businesses need to be promoted. Indeed some businesses have both a brick and mortar component as well as an online one. Many are online only. There has long been a huge “hidden” economy of small online and niche businesses in this county. In fact, my impression as one who was there starting with my first registered domain in the spring of 1996, is that there were many early internet adopters among these small to very small Nevada County businesses. Many of these businesses are too small to participate in the Chamber and also really do not benefit from chamber participation (and associated time and dues) because their markets are not Nevada County, but the entire nation and in some cases the entire world. For the same reason, you will never see an ad for them in one of our local papers or other local business listings. But never doubt that they are here and that they do contribute to the economy of this region.
Thanks for the comments Gail. I agree that on-line businesses need to be promoted in our region as well. I am working on an economic development strategy for the eastern Sierra region, based on the “cluster based” economic development theory. One of the main drivers of the project is the approval of the “Digital 395″ project, installing broadband up Hwy. 395.
Economic clusters are generally defined as geographic concentrations of interconnected businesses, suppliers, and associated institutions in a particular field.
One of the most important clusters we can encouraged here is what you are describing as a “hidden” economy. It is a huge opportunity for economic expansion in our region.
Michael E. Porter, an economist, explains in a Harvard Business Review article the benefits of clusters: “Clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation; and third, by stimulating the formation of new businesses within the cluster. Geographic, cultural, and institutional proximity provides companies with
special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance. The more complex, knowledge-based, and dynamic the world economy becomes, the more this is true. Competitive advantage lies increasingly in local things–knowledge, relationships, and motivation–that distant rivals cannot replicate.”
http://www.eda.gov/PDF/2007%20Unlocking%20Rural%20Comp%20Report.pdf
Thanks for all the info, Steve. What you are describing hearkens back to the Economic Geography course (400/500 level) way back when I was an undergrad. It was one of the best courses I ever took in any field. Of course it far predated the internet and personal computers, but it sure explained why car dealers all clustered in one area, and what it took for a population to support an opera house, for example.
I appreciate all of your efforts and insight. Thanks for sharing that link. I’ll read it with great interest as I read your post.
Best wishes to these business owners. I have browsed both stores and bought a couple of things from them over the years.
They are what I think of as our towns’ “wallpaper”. They look good and attract tourists, great for the occasional gift, but they do not provide the necessary goods we use on a daily basis.
NC may yet return to the old model of having a grocery, a pharmacy, a barber shop, a hardware store, a soda fountain, dry goods mercantile and a charming little something we used to call the Five and Dime.
Thanks Judith. We could use a good bakery too. I’m not a baker, but I’d be interested in helping to facilitate one through an expansion of the Private Industry Council/Stonehouse venture or the like. It is on the “to do” list. I’ve had my eye on that spot across from the Nevada City Marketplace/Clavey. There’s parking and room for a bakery, but the cost of the kitchen and permitting are additional hurdles.
A great bakery for sure.
There is one in Saratoga Springs NY, legendary.
No heavy hippie health muffins, not to put that down, to each his own, and I like bran muffins sometimes.
Pastry is an art.
Sometimes it should just be decadent.
Having an over-the-top bakery could do a lot for this town’s brand reputation.
The Marketplace on Pine is ideal for a bakery.
Think of the aroma on the streets and the revival of that corner of town.
My husband has a friend who is head chef in a hospital in Switzerland.
He contracts his breads from the town’s three bakeries.
But his pastries are made in house by his excellent staff.
You wouldn’t believe the kitchen.
You wouldn’t believe the food.
The hospital here just eliminated smoking, great step.
Why would we have all those good folks, patients and healers alike, up there eating such poor food, when our restaurants could provide a better, healthier and tastier alternative?
Just a thought.
Oh, and as long as were are wishing, a comfortable and attractive movie house and a nice place to have wine and tapas after the flick.
Seems like the chamber is shooting itself in the foot, McConnaughay for touting online shopping and Tintle for his high rents, not exactly a scenario for expanding business in Nevada City. Speaking of bakeries, have you tried the muffins made by Chris at Java John’s? Outstanding! And…I agree with Kate.
Steve,
Yep, Chris could have a great future as a baker. We like his cranberry nut bread.
Amen to Steve’s comment.
Hi Jeff, this is Peggy McConnaughay, co-owner of Country Collectibles on Broad St (in business for 21 years!) and http://www.countryncollectibles.com (our online business/store for the last 8 years).
I resent your comments and misquotes about what Jim said during his interview last night. Were we watching the same thing? He never said “in favor of a virtual one.” If you really had your facts, you would’ve known that we have been VERY successful with the online store for 8 years and have operated our brick and mortar store in the black for 20 of the 21 years in business. I have a customer list of 6,000 from the 228 Broad St. and a large email list from our online store.
My background is in finance. I don’t get it when you make such false statements about people.
Have you lost your sensitivity chip?
We also have donated endless hours to the city of Nevada City including on our hands and knees (with a small group of other volunteers) cleaning up Calanan Park, started the Sidewalk Sale 5 years ago and volunteered my time running that for an additional 4 years.
We have also been members of the NC Chamber of Commerce for years. Are you?
If you think you have the answers for Nevada City and what businesses should be there, then rent some space on Broad St., invest in that equipment to get your business started, the same way we did 21 years ago.
Peggy
PS. This reply is from ME, not my husband.
Hi Peggy,
Thanks for your note, but you’re sounding a little defensive yourself. That’s the verbiage if you go back and listen to the broadcast.
Like I said, I was surprised that Jim, as newly re-elected Chamber board member, would go on Sacramento TV to promote online when our town’s brick and mortar stores could use some promotion. I just would have declined to go on camera, as did JordanWood’s owners, but that’s my opinion.
Thanks for all the hours you donated to the city, but I’m sure it’s also no surprise that you also burned bridges with what some perceived as your “my way or the highway” approach to problem solving and the political alliances you forged. I’ll let others judge that.
Just so you understand, I have told the chamber people all along that we would happily become more involved when the divisive politics changed and some divisive board members resigned — and thankfully that’s happening.
Our family sometimes feel like our hometown gets “hijacked” by people who don’t live here — for their own benefit.
As I said we are donating a weekend in Lake Tahoe to the upcoming Chamber fundraiser and received a big thanks from board members and the staff for that. So far, it’s the most gererous gift. Maybe you can donate one of your “Welcome to the Lake” towels from Country Collectibles for a joint auction item! BTW, we were asked to attend the installment dinner, but I hope you can understand why we would not feel comfortable doing that — just yet.
Happy New Year, Peggy, and good luck with your online-only venture! I’m sure we can both agree that we hope a new business will fill the empty space soon.