A RETAIL MARKET ANALYSIS FOR ELIZABETHPORT

Report to Brand New Day, Inc.

May 29, 1996

RECOMMENDATIONS

Our recommendations are divided into two categories. The general recommendations cover a series of retail options which are most suitable for the First Street properties as well as some broad approaches to support commercial activity in the neighborhood. The other recommendations are targeted to the Second Street site.

Clothing:
Brand New Day should consider recruiting a store for the neighborhood that could meet a wide variety of the retail needs of the community. A majority of residents surveyed, 65 percent, wanted to see a clothing store locate in Elizabethport. The vast majority of these respondents indicated that they traveled outside the neighborhood to shop for clothing items. We estimate that Elizabethport can support nearly 14,000 additional square feet of new retail space selling clothing items. It is clear that the one existing clothing store does not meet the retail needs of the community. However due to the high level of competition from department stores and the new stores in the Metromall, coupled with the wide array of clothing needs of residents, we do not believe that a clothing store focusing only on a specific market, such as children's casual clothing, would be successful in Elizabethport. Any new clothing store in the neighborhood should sell basic clothing items at reasonable prices, such as socks, that people buy on a regular basis.

Other items:
Over 20 percent of the respondents expressed interest in a drug store or a variety store. With nearly 4,800 square feet of unmet demand in personal care products and an additional 6,400 square feet of unmet demand in housekeeping supplies, it is clear that there is a need in Elizabethport for businesses that sell these basic items. The majority of residents travel outside of the community to shop at drug stores and variety stores.

Option 1: Variety Store
A variety store could meet the basic clothing needs of all residents and help meet the need for personal care products and housekeeping supplies in the neighborhood. Without directly competing with larger department stores and chain stores in existing shopping malls or the new Metromall, the variety store could sell a wide range of basic clothing items such as socks, shirts, and children's clothes. McCrory's and the Family Dollar Store are two examples of the possible types of variety stores that could be recruited by Brand New Day to locate in Elizabethport.

The two sites on First Street may be suitable for a variety store. The 177 First Street site with 7,166 square feet on the first floor (excluding the rear building) is ideal for this use. A store at this location could take advantage of the tax incentives provided through the Urban Enterprise Zone program. In addition, a new building could be constructed on the vacant lot on First Street located between South Park and Broadway (the Marina Village site). This site also is located within the Urban Enterprise Zone.

Option 2: Drug Store
The average full-scale drug store is 7,000 square feet in size. With over 10,000 square feet of unmet demand in housekeeping supplies and personal care products in the neighborhood, we believe that a drug store could be successful in Elizabethport. If the store sold some basic clothing items and some food items, the likelihood of success would be even greater. Rite-Aid, a drug store chain that has been unusually willing to locate in lower-income communities, already operates two stores in Elizabeth but the closest to Elizabethport is on Broad Street in central Elizabeth. Brand New Day could contact Rite-Aid about establishing a store in Elizabethport. Both First Street sites would be appropriate for a drug store.

Another option that could meet the retail needs outlined above would be the creation of a marketplace for small vendors and local entrepreneurs. We learned in conversations with residents that summertime often brings out vendors who sell t-shirts and other items. Creating an established marketplace would give a home to these vendors and would allow residents to start their own businesses.

Brand New Day could seek out graduates of the ETI program and could partner with the NJEDA in helping local entrepreneurs to start their businesses. This not only achieves the goal of meeting neighborhood needs, but also ensures that the revenue generated will be kept in the community. Names of ETI graduates are available from Chris Patrick of the Micro-Loan program at the Union County Economic Development office.

Although our inventory counted twenty-four grocery stores (one large, three medium, and twenty small corner stores), 43 percent of the residents we surveyed selected a grocery store as one of the three retail establishments they would most like to see in Elizabethport. Most of these residents traveled to areas outside the community to purchase groceries. It is clear that existing businesses do not fully meet the demand for food by Elizabethport residents.

We feel that there are three options available to Brand New Day to address this need.

Option 1: Recruit a Grocery Store
We estimated that the Elizabethport neighborhood could support an additional 13,000 square feet of stores selling food to be consumed at home. Although the average size of a full-scale independent grocery store is 15,000 square feet, these stores often sell nonfood items such as personal care products and housekeeping supplies. With over 10,000 square feet of unmet retail demand in these two categories, a grocery store selling a variety of items could be successful in Elizabethport.

We recommend that Brand New Day join in the effort to recruit a grocery store for the area. The Industrial Areas Foundation, led by Regional Supervisor Mike Gecan, has been working with a group of churches, including St. Patrick's in Elizabethport, to attract a supermarket to the area. Although the major supermarket chains have resisted the idea, our market research suggests that a smaller chain store, such as IGA or Shop & Bag, would be more appropriate for the community. Such a store could lead to a higher level of competition in the neighborhood among businesses selling food and related items and would improve the quality of existing establishments.

The vacant 80,000 square foot lot on First Street located between South Park and Broadway would be ideal for a new grocery store. Parking could be offered on site or shoppers could use the existing parking spaces on Broadway.

Option 2: Farmer's Market
If a grocery store cannot be recruited to Elizabethport, Brand New Day should look into developing a farmer's market. Following the example of the East St. Louis Action Research Project, which developed a 100,000 square foot retail vendor's market that houses fourteen businesses, a farmer's market could provide high-quality produce and basic grocery items. The site at First Street between South Park and Broadway would also be ideal for such a market.

Option 3: Work to Improve Existing Businesses
If both of these options are unsuccessful, Brand New Day should attempt to work with grocery owners, especially El Unico, the only large grocery store in the neighborhood, to improve the existing establishments. Steps should be taken to improve the quality and selection of goods, to tailor goods and services to the community, and make prices more competitive. Brand New Day could work with the Elizabeth Development Company and other organizations to identify programs that could be of assistance to the owners of the neighborhood's medium and large grocery stores.

We recommend that Brand New Day forge relationships and partnerships with other agencies such as the Elizabeth Development Corporation, the New Jersey Economic Development Authority, and the Small Business Development Center to provide needed support to existing businesses. Elizabethport is home to a large number of retail businesses. Many of these, with some assistance, could significantly increase the retail opportunities available to neighborhood residents. Improvement in existing establishments will improve the business climate and help to attract new retail and services to the area.

The 200-206 Second Street site is too small to accommodate any of the uses recommended above. However, its location across the street from Pioneer Homes and in the center of the community makes it an ideal site for neighborhood retail uses.

One storefront in this five-unit building is currently occupied by a laundromat that provides an essential service to the residents of Pioneer Homes and the surrounding neighborhood. Although there are seven laundromats in Elizabethport, tenants in Brand New Day's apartment buildings have expressed a need for laundromats in the neighborhood. We believe that Brand New Day should work with the laundromat's current owner to double the size of the laundromat and improve the store's quality. The Elizabeth Development Company and the New Jersey Economic Development Authority may also be able to provide some support.

Nearly 20 percent of those surveyed wanted a fast-food restaurant, while more than 10 percent of respondents wanted a sit-down restaurant. The majority of respondents indicated that they traveled outside of the neighborhood to eat-in restaurants. Although the community has sixteen restaurants, five of these provide a questionable level of service and it is clear that the existing restaurants do not meet the needs of the community. We have estimated that there is nearly 14,000 square feet of unmet demand for restaurants in the community. Although the Second-Street site is too small for a fast-food restaurant, we recommend that Brand New Day attempt to recruit a sit-down/take-out establishment. The Elizabeth Development Corporation may be able to provide the name of a graduate of the Entrepreneurial Training Institute who would be interested in locating such a store at 200-206 Second Street.