Frequently, I get asked, ” Why can’t St. Charles get X to come to town?”
X might be a high-end steak house or an upscale apparel retailer or a big box that specializes in hunting/fishing/camping products. Local residents see some of these stores opening in other nearby suburban areas and ask themselves, “Why not St. Charles?”
We all want the best in retail opportunities for the community and while there are many circumstances that impact retailer decision-making (the state of the economy being the most important), the answer to the question in most cases has to do with the amount of total purchasing power of the market area.
St. Charles is widely known as an affluent community with relatively high household incomes. This is an advantage for us. But, retailers don’t just look at household income. They also want to know how many households there are within a given distance or “drive time.” In short, wealthy consumers are good, but having more of them is better.
Here is some of the text from a response that St. Charles received from a retailer that analyzed our market (the details have been removed to protect the highly confidential and proprietary nature of the information related to this company’s market criteria):
Dear Mayor Dewitte – I am in receipt of your nice letter regarding X and appreciate your taking the time to further describe the development initiatives taking place in and around your community. Of course, most of this is not new to me being a long time proponent of placing X in St. Charles. Though I do not normally do this, I have attached a copy of our internal demographic depictions which illustrates the problem. You will note on our demographics that I have given all manner of favoritism to the St. Charles site. Notwithstanding these efforts, I cannot get the trade area population that is left to exceed 87,000 people….thus illustrating the problem that the CEO has continuously and legitimately voiced with the market.
To determine St. Charles’ relative strength in terms of actual buying power, the City’s Economic Development Department has conducted some comparative analyses between St. Charles and 6 other major commercial centers in the Chicagoland suburban area:
- Yorktown Mall (Lombard),
- Oak Brook Shopping Center,
- The Arboretum (South Barrington),
- Downtown Naperville,
- Old Orchard (Skokie), and
- Woodfield Mall (Schaumburg)
The analysis is predicated on market reach, as determined by fixed drive times – a frequent variable in retail location decisions. When considering median household income for persons residing within a 15-minute drive time, St. Charles (measured from the center of downtown) compares favorably to all 6 markets studied. In short, St. Charles is an attractive location from this perspective.
However, a market’s median household income data represents only a part of the equation in determining its household buying power. That equation must also consider the total number of households (or customers) within the defined market. When looking at these same markets, at 10, 15, and 20-minute drive times, in ALL cases, the St. Charles market buying power is vastly exceeded by the comparative commercial centers. By way of example, within a 15-minute drive time, the comparison centers range from 1.7 (The Arboretum) to 4.6 (Oakbrook) times the buying power of the St. Charles market.
The graph above portrays the above-described comparison between household buying power for the aforesaid market areas (excluding expenditures for transportation and housing). The greater the reach, typically, the larger the delta between St. Charles and each of the other 6 markets. Again, this is a function of surrounding land use patterns and the low concentration of residences.
We love our natural areas and open space in Kane County. It makes for lower traffic volumes, greater recreational opportunities, and a more attractive place to live. However, it also removes land from the “market” and provides fewer opportunities for development. Other land uses, such as the DuPage Airport, golf courses, mega-churches, and large-lot residential development also impact the buying power of St. Charles.
Let me be clear – I am not saying that the wrong choices have been made with regards to land-use decisions. I am only saying that we must consider the impact of these decisions on the ability to attract commercial development (quality and quantity).
Additionally, current trends in housing starts, and the real estate market in general, do not bode well for any dramatic change in circumstances or a resulting increase in our local market buying power.
While St. Charles compares favorably with other suburban retail markets in terms of household affluence, we lag in terms of total buying power due to a greatly reduced number of households/consumers. This serves as one of the primary reasons that some retailers will not consider the Tri-Cities area. It also serves as one of the primary challenges that St. Charles faces in attempting to attract some high-end retailers and restaurants to our community.
While more residences in the market area would increase our purchasing power, many other criteria are, and should be, considered as part of the decision-making process.