Guess who’s coming to Lima


Changes in retail provide new targets

By Josh Ellerbrock - jellerbrock@limanews.com



A shopper leaves the Dollar General Store on Cole Street in Lima. While residents of Lima and the surrounding area have begged for a Target store to be built here for years, Dollar General stores popped up instead. Market research plays into the trend.

A shopper leaves the Dollar General Store on Cole Street in Lima. While residents of Lima and the surrounding area have begged for a Target store to be built here for years, Dollar General stores popped up instead. Market research plays into the trend.


Photo illustration by Craig J. Orosz | The Lima News

LIMA — Ohio’s next Target store has been announced. Construction is ongoing, and it’s only 90 miles away from Lima.

While the region’s residents wait for something closer, they can always head to a nearby Dollar General-operated store. Lima alone has nine of them.

Admittedly, the two corporate retail giants don’t serve the same demographic, which makes sense. When it comes to site selection, market data informs the decision, and the region’s population and median income calls for dollar stores.

But the Lima metro does have room to grow, and local developers may have a chance to rejuvenate the region’s retail footprint if the region can find a way to buck a few downward trends and re-purpose underutilized real estate.

Location, location, location

For Superior Plus Realty commercial Realtor Greg Butcher, some industries of the local market are looking good. Others are stagnating.

“Basically the market is pretty strong right now,” Butcher said. “In warehousing, most buildings of any size are full. We’ve only got one 40,000 feet, one 20,000 feet and two 10,000 that I know of available. … Anything that is in pretty good shape and the roof doesn’t leak, it’s full.

“The restaurant market is pretty steady, we got a new one coming into town. With fast food, we pretty much have everything. … (Retail) is a little slower, and part of that is because of the Internet.”

As is the case with many industries in the digital age, it’s hard to talk about retail without talking about the impact of the Internet — especially digital sales, which have forced retailers to rethink how they do business. And for Lima’s retail market, the shift has created issues as a portion of the current commercial real estate retail market in Lima has aged past its relevancy, Butcher said.

Many of Lima’s commercial spaces don’t meld with today’s wider market demands, as retailers and restaurateurs change their brick-and-mortar needs, and those properties that do fit the new paradigm tend to miss some of the staples of a solid location — access, parking and line-of-sight.

The most visible entities affected by such trends are big-box stores. Empty storefronts of 130,000 square foot facilities dot both Elida Road and Harding Highway, defeated by the digital age. Older gas stations have also seen problems as profit margins for straight fill stations have decreased, leading to expansions of interior square footage to recoup losses through sales of food and general items.

“Amazon has changed the whole world, and it’s tougher and tougher for brick and mortar to make it. Everyone is used to staying home and ordering online,” said Dave Evans, real estate and business developer with Clyde Evans Land Co.

The new general trend for retail businesses is to go smaller, Evans said. Today’s boutique stores require less square footage and less inventory, which keeps overhead costs down. If a customer can’t find exactly what they’re looking for, they can go onto the store’s online website to buy it.

A good example of the trend is Wapakoneta’s downtown, which includes enough variation between businesses to create what’s similar to a mall experience in an outside historic setting, said Kathy Keller, regional director of the Ohio Small Business Development Center at Rhodes State College.

A number of Lima groups are aiming to do something similar with the city’s downtown.

Nine stores and counting

The trend toward smaller spaces is also part of the reason why Dollar General has found such success in today’s retail market. The company tops the list in the number of storefront expansions expected in 2019 by announcing its intention to add roughly 975 new stores nationally throughout the year.

Evans said Dollar General’s success has been due to finding an old niche originally vacated by larger big-box stores.

“They became what probably was around a hundred years ago. A little general store was probably something like that,” Evans said.

Such business practices can be seen in rural Auglaize, Allen and Putnam counties. In a number of small communities, Dollar General has found a place in rural markets by being close enough for a short trip, and they keep customers coming back with enough selection and low prices.

“The company looks for places where we can offer customers an easy and convenient shopping choice,” Dollar General spokesperson Angela Petkovic said in an email. “We know convenience is a major factor in our customers’ shopping decisions as we generally serve customers within a three- to-five mile radius, or 10-minute drive. We also take demographic trends, competitive factors, traffic patterns and community concerns into consideration.”

Like other larger companies, Dollar General will also build according to its own design, baking efficiencies into the structure of each store to keep its profit margin high in comparison to competitors. When the company moves to a region, it’s also able to add a few stores at a time, which can support one another in case one isn’t pulling its weight, Keller said.

Top off such advantages with Dollar General’s ability to use its data to find the perfect markets and locations to invest in, and smaller, less-savvy businesses may have a hard time maintaining market share against such advanced targeting.

“(Corporate chains) are out scanning areas. They know what statistics they’re looking for,” said Cynthia Leis, Allen Economic Development Group’s director of development. “They know what type of site they’re looking for.”

Gaps in the market

Either way — big or small — businesses ultimately make their location decisions based on data. When a fledgling entrepreneur enters the SBDC at Rhodes State College, Keller works with the potential business owner to understand if the local market can support the new idea.

Demographics, traffic counts and psychometrics all add something to the overall picture, and if the numbers check out, they move forward with more extensive analysis of what it may take to break even.

Larger companies, such as Target, have multiple employees or consultants dedicated to a similar task — moving through the numbers to match location data with what has worked well in the past. In other words, they know who their customers are, and if they can’t find them here, they look elsewhere. For example, according to its most annual investor report, Target is looking for high trafficked city centers and college campuses to find decent stocks of younger, more affluent retail shoppers.

“They don’t need to be courted. They’ll find a market that makes the most sense,” Keller said.

But that doesn’t mean companies like Target will never find a place in the region. If data is the name of the game, retail decisions can be changed if demographic trends change.

“Lima is a great place to raise a family, but the population is still declining,” said Greg Stolly, commercial agent with Real Living CCR Realtors. “The young folks want to go to Columbus and Cincinnati. Every year, what percentage of students leave? It’s a numbers game is what it is.”

What’s next?

With abandoned real estate of big-box stores taking up desired space on Harding Highway and Elida Road in Lima, commercial Realtors are eyeing a few other options throughout the region. At least for Lima Realtors, the intersection of Eastown and Allentown tops the list. At one point, Butcher said Target had eyed the location and ultimately dropped out, but that leaves the space for somebody else with the right funds.

Butcher said he’s surprised someone hasn’t made plans already, but he suspects the train tracks just off of Elida Road has had some influence in hampering development due to line of sight obstruction. The higher speed limit may also be a problem, Stolly said.

Other places that could be further developed includes some acreage near the Lima Mall and the state Route 81 exit on I-75, which may not have the traffic count to support any major development at this time, Evans said.

A third option is taking the space that big box stores have already claimed and finding innovative ways to demolish and re-use the space. For example, Stolly said the American Mall block between Elm and Market streets could be a great area for senior condominiums, which would move seniors onto land that requires less upkeep and open up middle-income properties to help offset pressure in the housing market.

Then there’s homegrown business. While the majority of real estate interest comes from outside the region — Butcher estimates roughly 75% — local entrepreneurs can use local knowledge to inform some of their business decisions.

Corporations may have extensive data to create a market profile, but locals have knowledge of the business landscape. That can be used to carve out unused niches or prep for oncoming changes in the market, such as increased foot traffic in downtown Lima due to a number of ongoing major projects.

Either way, further development requires some sort of change, either in the numbers or the spaces available.

“It’s all about rooftops — the more people that live in the community. I don’t care if you’re a small pizza shop guy, they all look at the numbers,” Stolly said.

A shopper leaves the Dollar General Store on Cole Street in Lima. While residents of Lima and the surrounding area have begged for a Target store to be built here for years, Dollar General stores popped up instead. Market research plays into the trend.
https://www.limaohio.com/wp-content/uploads/sites/54/2019/08/web1_Dollar-General_01co.jpgA shopper leaves the Dollar General Store on Cole Street in Lima. While residents of Lima and the surrounding area have begged for a Target store to be built here for years, Dollar General stores popped up instead. Market research plays into the trend. Photo illustration by Craig J. Orosz | The Lima News
Changes in retail provide new targets

By Josh Ellerbrock

jellerbrock@limanews.com

Reach Josh Ellerbrock at 567-242-0398.

Reach Josh Ellerbrock at 567-242-0398.

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