Retail and economic development

I’ve never been a big fan of the retail sector as an economic development focus.  I was reminded of this fact after reading this article discuss the great length communities are going to in their desire to attract Apple Stores.    The article suggests that Salt Lake City may have even offered free rent to attract the store.

The logic is that Apple Stores will be draws for retail traffic that otherwise would not have come.  This is the reason why municipal governments will attempt to attract big box or niche retailers (such as outlets).

This has multiple benefits including a broader range of retail options for local residents they would otherwise not have been able to access locally and potentially more tax revenue for governments.

It’s still not my favourite sector.  Wages are low and value add is limited.

But like President Obama, my position on this is ‘evolving’.

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3 Responses to Retail and economic development

  1. The opening of a Sephora in Dieppe’s Champlain Mall is a similar phenomenon. It’s the sort of thing you can’t find everywhere, with the result that people have to travel out of the region to get certain bands (like, eg., M-A-C).

  2. David F says:

    I still find the “Apple” economic impact theory slightly unnerving…there are two real scenarios where an Apple store and any orbiting retail options really have an effect:

    1) They attract people from neighbouring areas to come shop in your city.
    2) They encourage people to buy in store, rather than online.

    I don’t know if the tax revenue is all that substantial; if you buy an Apple product online, you’re paying HST, which would be no net-new sales tax on goods purchased in store (unless the purchaser was from out-of-province or the purchase replaced an out-of-province purchase.) There would be a municipal property tax bump, assuming of course that Apple and its orbiters are able to push new development rather than just filling mall space by bumping other tenants out.

    At the end of the day, though, I get a little unnervy talking about positive effects from an Apple Store in a place where, typically, people spend every nickel they earn already. Unless you’re attracting new customers from away (harder now, especially given Apple’s two day, free shipping to basically everywhere if you buy online) or convincing people not to go to a neighbouring province, I don’t see how this is anything but a reorganization of the same retail dollars spent in a region.

    There’s a quality of life bump in having more options, sure, and I would assume it makes a region seem a little more Creative Class-esque than it did before, but retail is still a low-wage, induced industry.

  3. Oliver D says:

    @David F The real benefit of an Apple Store is the after-sales customer service. It’s very convenient to have a local place to go. There’s also a benefit to new customers who are unfamiliar with Apple products who may be wary of ordering an unknown product online.

    I do agree that retail is a sector that we shouldn’t concentrate too much on. Obviously, it’s very strong in Moncton because they draw on a significant surrounding population base. But with very few exceptions (Freeport ME being one), you can’t expect the retail sector to dominate a community’s economic situation.

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