Napoleon has been falsely credited with derisively calling England a “Nation of Shopkeepers”. Turns out to be a much more complicated story that I won’t go into at this point. First use of that description of England, from a far more complimentary perspective, was by economist Adam Smith who was calling out England’s mercantile proclivities.
We in the United States are once again exceptional. We trounce the world in the amount of retail square feet per person yet are rather pathetic at producing shopkeepers.
Estimates vary but we currently boast about 50 square feet or retail per person according to recent surveys. The United Kingdom comes in second at about 25 square feet. This list from MishTalk, a global trend analytics web site shows how outsized we are:
- US 46.6 square feet
- India 2.0 square feet
- Mexico 1.5 square feet
- UK 23.0 square feet
- Canada 13.0 square feet
- Australia 6.5 square feet
Given we’ve had very flat income growth and online sales are skyrocketing, it’s no wonder retail stores have been closing in wave after wave. Fifty foot per person is simply not sustainable.
The tenacity of storefront merchants after seven years of depression in Greece overwhelmed me. The variety, quality, and price competitiveness of small footprint retailers in Greece was impressive and led me back to my long-time befuddlement about how Main Street retailing in the US is so paltry compared to other nations.
Obviously, we’re good at big. Walmart and Amazon battle price to the bottom and in cities built for cars transporting large quantities once a month beats small quantities purchased every day.
The impact on our economic independence is huge. According to World Development Indicators database compiled by NationMaster.com, the US finished 69th in the world behind Iran and just ahead of Pakistan in per capita number of small and medium enterprises (SME). Roughly there are 20 SME per 1,000 people in the US compared to 70 per thousand in Greece which finished 17th in the rankings. Retail is a big part of this number as is the distribution system that supplies them. Smaller distributors supplying smaller retailers.
Since Athens and Detroit metro are both around 4.5 million in population, it means that Athens, has around 315,000 SME’s while Detroit has 90,000 if they are tracking national trends. Based on Detroit’s population alone, we would host another 35,000 SME’s if we emulated Greek rather than US rates of SME creation.
Detroit during its rough times was blessed by being bypassed by national retailers. That created opportunity for local independent businesses to establish themselves. Avalon Bread grew up without having to face down Panera or high-end, in-store grocery bakeries. Same with the countless coffee shops and restaurants that don’t have to go head to head with national retailers as other places in the US.
Interest by regional and national retailers has skyrocketed since Detroit’s recovery set in. If we do nothing, we will limit wealth creation by local independent business owners as market share shifts to national/regional chains. It might be time to limit formula businesses in Detroit.
Regardless of whether it’s a franchise or a chain, if there are already more than five their deployment in the city should be restricted. San Francisco has done this while other cities have restricted businesses more than a certain size.
The authenticity of Eastern Market would be challenged by too many national retailers and its role as an instigator of entrepreneurship would be compromised.
Locals business owners need to compete. They can’t be protected from competition forever, but providing a window to become established and creating a supportive eco system to nurture them is crucial.
High end national retailers have their place in Midtown or Downtown or around the new hockey arena. Large format stores might be okay near 8 Mile but we need to implement one of our Eastern Market 2025 strategy recommendations and highly restrict formula businesses to help preserve Eastern Market as an entrepreneurial hotspot and give space for Detroit entrepreneurs to take root.
Time to take root is especially important during the time it takes Detroit to rebuild the densities that can support retail businesses, especially the convenience retail that needs frequent repeat customers to succeed.
Daily shoppers for bread, meat, and fish support independent bakeries, butchers, and fish mongers in Greece but also in our most dense cities where pedestrian convenience greatly outweighs the automobile inconvenience of one stop shopping.
Increasing the number of SME’s per 1,000 is happening in sector after sector as part of the new economy. In 1985, the U.S. had 103 breweries today it has more than 4,200. Same with wine, spirits, and most food categories. Making it happen across the board will take an aggressive regulatory framework and a supportive ecosystem.