Will FOMO be Retail Strategies Prescription to Diversifying Elk Grove’s Retail Offerings, Increase Sales Tax Receipts?

June 9, 2017 |  

If the written word from an executive officer with Retail Strategies, Elk Grove’s newest hired gun, means anything, then get prepared to start hearing the acronym FOMO being thrown around over the next several months.

In a piece authored by Lacy Beasley, Chief Operating Officer of Birmingham, Ala.-based Retail Strategies, FOMO she claims, is one of the keys to future retailing success.

FOMO, short for Fear of Missing Out, will be key for retailers transitioning from a baby boomer audience to a millennial-centric environment that Beasley cited in her piece titled Retail Turn Over in the TrustBelt States.

Beasley argues, as many others have, that while brick-and-mortar retail establishments are not going anywhere in the aggregate, to succeed, they will need to operate under a new model. FOMO, which is squarely aimed at the millennial cohort, captures customers by creating a shopping environment that turns shopping from an activity of necessity to one that creates a much broader, and as some portray it, a Zen-like holistic mind-altering experience.

Beasley says:
“Fear of Missing Out, or FOMO, is a word that can sum up the millennial generation. They crave experiences over stuff. Being a tech savvy generation, decisions are educated, driven by convenience and should obviously incorporate a social media play. This is driving demand for mixed use development incorporating residential, office, restaurant, retail and recreation.Winners for millennials will incorporate customized, experiential, local or philanthropic options. Retail must have a “cool” factor to be sustainable among this new generation of Millennials that now outnumber the Baby Boomer Generation. Neighborhoods such as Logan Square in Chicago and North Loop in Minneapolis are examples of cool retail nodes that appeal to Millennials and therefore retailers.”
If Elk Grove is to heed Beasley's advice, along with other suggestions they come up with during their tour here, the first question then becomes does the City have the fortitude to follow through? The City does have an area – the Southeast Policy Area – that is currently zoned for amenities that would roughly fit in with Beasely’s advice on FOMO.

Plans for 1,200-acres in SEPA, which represents the city’s last large tract of undeveloped property in the current city limits, calls for a portion of it to be a mixed-use development. Furthermore, for any zoning change, a super majority of the current five-member council is required.

Even though SEPA has been approved, construction activity in the area has been non-existent. The only employment prospect for the development area, which former Elk Grove Mayor Gary Davis asserted will be home to 25,000 well-paying jobs, was the supposed recruitment of Fremont, Calif.-based NRC Manufacturing. 

NRC, who is a subcontractor making low-end circuit boards, has failed to move any other operations to Elk Grove to date. Even if NRC does eventually relocate to Elk Grove in the next 12 to 18 months, which with each passing days becomes less likely, it will not be to SEPA as there are no facilities suitable for manufacturing circuit boards or plans for anything in the near future. 

Furthermore, even though the city council self-imposed a super majority to rezone the area, given the city’s history of having rezones unanimously approved and the sway developers have based on the generous financial contributions they make to the mayor and the city council members, this obstacle is nothing more than a mere annoyance when the time comes for developers to seek rezones. If the city does not rezone the area, it will be a huge departure from its modus operandi, and as we all know, past behavior is the best gauge of future behavior. 

Beyond her FOMO retail theory, Beasley also describes more conventional strategies for recruiting retailers and the cities that hope to recruit them. 

Among the winning categories for future retailers, Beasley predicts the following:
“The winning categories are quick service restaurants, fast casual restaurants, dollar stores, discount apparel, health and beauty, luxury, grocery, home and furniture.  Starbucks, YUM Brands (Taco Bell, KFC, Pizza Hut), Chipotle, Dunkin Donuts, Dollar General, Family Dollar, Five Below, H&M, TJX Stores (TJMaxx, Marshalls, HomeGoods), Ross Dress for Less, Planet Fitness and Ulta are a few of the most aggressively growing retailers in the country in 2017.”
Unfortunately for Elk Grove and Retail Strategies, several of the specific retailers Beasley cites are already located in the city, and those that are not do not provide FOMO experiences or sell luxury items unless Dunkin Donuts has changed their business model. 

With regards to luxury retailers, where will they locate if not in SEPA? Perhaps the unfinished Outlet Collection at Elk Grove where there is still no scheduled opening date, much less a date for resumption of construction. It is unlikely the luxury retailers will take up residence in any of the city's numerous strip centers, teaming with smoke shops, carry-out pizza joints, liquor stores, and nail salons. 

Either Elk Grove Economic Development Director Darrell Doan is so desperate or was awe-struck by a smooth sales pitch by Retail Strategies during one of his visits to Las Vegas convention junkets to spend $50,000 on their leasing agent efforts. We do not see anything on their list of accomplishments beyond the recruitment of pedestrian retailers like Applebees and Red Robin that would indicate that, but you can never tell what tricks the crew from 'Bama might have up their sleeve that might actually reveal them to be the elusive, all-knowing Oracle of retailing strategy.

The placement of new low-end retailers like Family Dollar, Dollar General and similar ilk, which seems to be Retail Strategies forte, is something that can be achieved by aggressive leasing agents and without taxpayer monies. Furthermore, these low-end retailers do not provide the FOMO experiences Beasley has identified as crucial to future retailing success, and the new mix of high-end retailers and their tax receipts that Elk Grove is so desperately in need of to complete any number of unfunded capital projects over the next decade have nowhere to set up shop in the next several years even if they wanted too. 

Over the next year, it will be worth monitoring the activities and spoken words of Doan and Retail Strategies to see if they can deliver. If not, FOMO and Retail Strategies “recommendations” could end up being just another worthless study collecting dust on the desk of whoever might be the Economic Development Director at Elk Grove City Hall a year from now.    


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D.J. Blutarsky said...

The #1 retail strategy in my mind is for retailers to put in foosball tables, puppy day care, and Costco-like food samples on every aisle! How much more 'shopping experience' do you need? When the millennials hear about that, they'll flock over with Mom and Dad and say let's buy a house and move to Elk Grove--it's cool!

Capt. Benjamin Willard said...

From what I can see after viewing Retail Strategies' portfolio, is they seem to specialize in, dare I say, neglected, downtrodden cities in Midwestern and Southern States. While Elk Grove might be many things to our residents, I think most would agree as a relatively new city and community, we are not downtrodden.

Landing a Red Robin restaurant or a Dollar General store might be a real, tangible addition to some rural town in Missouri or Iowa that has an aging, diminishing population. I don't think that was what Mr. Doan and Ms. Gill, much less taxpayers, have in mind for Elk Grove.

I wish them luck and let's hope they bring something more substantial than another discount store selling $1 merchandise if for no other reason so that we can recapture the $50,000 fee we are paying them.

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