A RETAIL MARKET ANALYSIS FOR ELIZABETHPORT

Report to Brand New Day, Inc.

May 29, 1996

Executive Summary

The Brand New Day, Inc. community development corporation requested Project Community to conduct a retail market analysis of the Elizabethport area of Elizabeth, New Jersey. Once a bustling retail hub that served all of Union County, Elizabethport had become one of Elizabeth's most distressed areas. The closing of the Singer Plant in the late 1960s was symbolic of the withdrawal of businesses from Elizabethport. Brand New Day has served Elizabethport since 1985. Originally, Brand New Day focused on construction and rehabilitation of affordable housing units and the provision of social services, but has more recently ventured into commercial development.

Brand New Day has three sites under consideration for combined residential and commercial development:

1. 200-206 Second Street, "Magnolia Mini Mall"

   The site is a two-story masonry building with a total of more than 8,000 square feet. The downstairs houses five store units each approximately 20 feet wide and 45 feet deep. This site is currently occupied by a laundromat, a pizzeria, and a second-hand shop.

2. "Marina Village"

   a partially vacant block, is the largest site, estimated at approximately 200 by 400 feet, or about 80,000 square feet.

3. 177 First Street, "Commercial Incubator"

   is a 10,138 square foot brick building. The first floor makes up three-fourths of the total floor space and is broken up into four store units. In the rear of the building is a second independent structure.

The objective of the retail market study was to identify consumer needs and determine what type of retail and service establishments the residents of Elizabethport could economically sustain. The research results will be used in the development of these commercial sites.

The analysis followed a traditional retail market study model. First, we determined the trade area and performed a physical inventory. Second, we created an instrument to survey residents about their retail needs and current shopping patterns. Third, we gathered information about income and households in order to estimate consumer expenditures. Finally, we researched existing programs, projects, and developments that currently impact retail development in Elizabethport.

First, we defined the trade areas. Based on observations made in the field and consultations with community members, one primary and two secondary market areas were drawn. All of the sites targeted for development by Brand New Day are located in the primary trade area.

After the trade area was mapped, we conducted a physical inventory of the existing retail and services in Elizabethport. The inventory provides data concerning existing businesses in Elizabethport and allows for a preliminary assessment of the goods and services that the neighborhood lacks.

In the entire research area, we counted 162 retail and service establishments. Over half of these establishments (86) are located in the primary market area. The inventory findings reveal an enormous demand left unmet by neighborhood retailers. There are no book stores, department stores, record stores, shoe stores, shoe repair or sporting good stores. Moreover, there is only one supermarket, hardware store, apparel store, appliance store, gift shop, and variety store.

We conducted a survey of seventy-seven Elizabethport residents and shoppers to determine the retail needs and shopping patterns of local shoppers and residents. Of the residents that answered the survey, 65 percent indicated a desire for clothing stores in Elizabethport. Forty-five percent reported a need for grocery stores, and nearly one in five answered that they would like to see more restaurants in the area.

Expenditure estimates were based on population, income, and "capture rates" (percentage of local dollars spent at local businesses). They were used to identify the types of businesses that could be supported by Elizabethport residents.

The 3,305 households in the primary and secondary trade areas of Elizabethport spend $28 million on retail goods and services each year. Over $9 million is spent on food to be consumed at home and nearly $4 million is spent on apparel and related services. However, based on the results of the survey and the inventory of existing businesses, it was estimated that only 10 to 25 percent of expenditures, depending on the retail category, were made by Elizabethport residents in businesses in the community, amounting to less than $5 million a year. We estimated that no more than 10 percent of expenditures on apparel and related services and only 25 percent of purchases of food to be consumed at home were made in neighborhood businesses.

There is clearly potential to increase the market share in Elizabethport. We estimated that over $9 million of expenditures by Elizabethport residents could be captured by new businesses locating within the community. Nearly $2 million in expenditures in apparel and related services and over $3 million in expenditures on food to be consumed at home could be captured by neighborhood businesses. We concluded Elizabethport could support an additional 68,000 square feet of new retail activity.

A portion of Elizabethport, the old shopping district along First Street, is designated as an Urban Enterprise Zone (UEZ). This state economic development program is designed to attract and retain businesses by offering special benefits.

The Elizabeth Development Company (EDC) offers a host of services including business financing. The Entrepreneurial Training Institute (ETI) offers a business program to help new and aspiring entrepreneurs learn the basics of operating a business.

Two major retail developments will be built near Elizabethport. The Metromall is a retail outlet center soon to be developed within Elizabeth. The mall will contain 250 factory outlet stores, twelve major anchors, and eighteen restaurants. Currently, Elizabethport is cutoff from the Metromall. Eventually, the completion of the Kapkowski Road will connect the Metromall complex to Third Street in Elizabethport. IKEA, the Swedish discount furniture and home furnishings chain, is expanding and developing a 375,000 square foot specialized retail center on a 50-acre site adjacent to the Metromall.

One: Variety Store / Drug Store

• Brand New Day should consider recruiting a store for the neighborhood that could meet a wide variety of the retail needs in the community.
• Clothing: A new clothing store in the neighborhood should sell basic clothing items at reasonable prices. Sixty-five percent of the residents surveyed wanted a clothing store in the area. According to expenditure estimates, Elizabethport could support nearly 14,000 additional retail space selling clothing. However, due to the level of competition from the new Metromall and department stores, a clothing store is unlikely to be successful.
• Other items: Twenty percent of respondents expressed interest in a drug store or variety store. Expenditure estimates show more than 10,000 square feet of unmet demand in personal care products and housekeeping supplies.

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. The two sites on First Street, both of which are located in the Urban Enterprise Zone, are ideal for this type of store.

Option 2: Drug Store

• The high level of unmet demand in housekeeping supplies and personal care products in Elizabethport indicates that a new drugstore would be successful. Most national chain drug stores are 7,000 square feet in size, well within the estimated 10,000 square feet of unmet demand in personal care products and housekeeping supplies. If the store sold clothing items and some food items, the potential for success would be even greater. Again the two sites on First Street are ideal for this type of store.

Two: Elizabethport Market

• Another option that would meet clothing, housekeeping supply, and personal care products needs is a marketplace for small vendors and local business entrepreneurs. Such a marketplace would provide a home for local business start-ups.

Three: Supermarket / Grocery Store

• Although there are twenty-four grocery stores of various sizes in Elizabethport, 43 percent of the people surveyed wanted a new grocery store in the neighborhood. In addition, we estimated that there are more than 10,000 square feet of unmet demand in stores that sell food to be consumed at home. Clearly, existing stores do not adequately meet the needs of residents.

Option 1: Recruit a Grocery Store

• With the great unmet demand for food to be consumed at home, personal care products, and housekeeping supplies, a grocery store selling food and a variety of basic convenience items could be successful in Elizabethport. Brand New Day should join in the ongoing effort to recruit a grocery store for Elizabethport. Future efforts should focus on smaller grocery chains such as IGA or Shop & Bag for medium-size stores (15,000 square feet on average). The vacant lot on First Street between South Park and Broadway is an ideal spot for a grocery store.

Option 2: Farmer's Market

• If a grocery store cannot be recruited for Elizabethport, Brand New Day should look into developing a farmer's market to provide high quality produce and basic grocery items. Again, the Marina Village site on First Street is ideal for this project.

Option 3: Work to Improve Existing Businesses

• If the first two options are not feasible, Brand New Day should work with existing grocery stores to improve the quality and selection of goods, tailor services to the community, and keep prices competitive.

Four: Support Existing Businesses

• Brand New Day should forge relationships with other agencies in the area, including the Elizabeth Development Company, to provide needed support to existing businesses. With some assistance, many existing businesses could significantly increase the retail opportunities available to neighborhood residents.

Site Specific 200-206 Second Street, "Magnolia Mini Mall"

• The Second Street site is too small to accommodate any of the uses recommended by Project Community based on the market study. However, the site is centrally located within the community which makes it ideal for retail use. Brand New Day could do two things with the Second Street site.

Option 1: Expand the Existing Laundromat

• Although there are several laundromats in Elizabethport, tenants in Brand New Day's apartment buildings have expressed a need for more local laundromats. Brand New Day should work with the current owner of the existing laundromat to double the size of the business and improve its quality.

Option 2: Restaurant

• Nearly 20 percent of those surveyed wanted a fast-food restaurant and over 10 percent wanted a sit-down restaurant. Expenditure estimates show that there is nearly 14,000 square feet of unmet demand for restaurants in the community. Since the site is not large enough for a fast-food restaurant, Brand New Day should recruit a small sit-down/takeout restaurant for the Second Street site.

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