Thursday, February 27, 2014

When Will Lexington Cool Off Its Auto Love Affair?

In April of last year it was reported that European car sales were continuing their slide to a 20-year low. 

“The car boom in Germany has come to an end,” said Hans-Peter Wodniok, an analyst at Fairesearch GmbH & Co. “People have stopped buying cars as consumers are much less confident of the future. It was said that the western European passenger-car market was on track last year to hit levels last seen in 1993. This was also about the time that some folks were trying to convince me that our car driving habits were being adopted by the Europeans.

If things have not improved since then, I ask you, just what are the Europeans doing instead of buying cars? The Germans have a long history of being ardent automobile enthusiasts and some of the finest driving machines have been produced by the Germans, but if they are not buying cars to drive, what are they doing?

Germany has become the world's biggest user of one-way car sharing plans. That is where people can find a vehicle using their smart-phone, drive it across town and leave it there without having to return it to a central base, much like the bike sharing programs being started in Washington DC and New York.

In America, we have other alternatives to auto ownership which are emerging. A ride-sharing company called Zipcar and a ride-booking service named Uber Technologies are beginning to appeal to a new generation of drivers, or in many cases riders. Many more young people just aren't pursuing drivers' licenses these days.

In 1983, 87.3 percent of 19-year-olds in the U.S. held a drivers license, by 2010 it had fallen to 69.5%. Automobile ownership, which once equated to a “rite of passage” has dropped to the point that almost one in 10 households don't have a car.

Some of this shift comes from changing attitudes on oil consumption for environmental, political and economic reasons. A new survey from Intel has found that 44 percent of people would prefer to live in a city with automated "driverless" cars than to have some car makers' high-cost product.

The transportation mode which ushered in an era of personal mobility in the last century may now no longer the most convenient conveyance. "The key question is: Do you sell cars or do you sell mobility?" said Tim Ryan, New York-based vice chairman of markets and strategy for consultant PricewaterhouseCoopers. 

Although Germany's new vehicle registrations fell below 3 million last year, continuing a two-decade decline, Chinese consumers continue to have a voracious appetite for automobiles, as more of the country's 1.3 billion people climb the economic ladder. China, in 2009, surpassed the U.S. as the world's largest auto market while struggling with urban gridlock and growing pollution that has created a brown haze over many large cities. In Shanghai, new license plates are auctioned off for an average of $13,400 per tag to slow auto sales and cut pollution..

So, somewhere between the German automotive market and culture and the Chinese market and desires is the U.S., wavering between falling miles traveled per person and a recovering auto economy. The sad fact is that the recovery may be losing steam before rebounding fully. Ford and GM are expecting a basically flat 2014, with low single-digit growth in revenue. Their Oriental competitors may actually see a slight decline.

Will our Millenials follow the lead of their counterparts in Europe and embrace the car-sharing and transit oriented lifestyle? Many indicators say that they will, especially in America's major cities. It will not be easy since many states and communities are still working under antiquated Public Services Commission rules. Pittsburgh's mayor is now asking that the Pennsylvania PSC allow for car-sharing in his city.

The for-hire ride market has been raising tensions between cities or states and the changing Millenial attitudes. The auto industry may also be applying some pressure since it is estimated that for every car that is part of a vehicle-sharing program, the auto industry misses out on 32 sales. Perhaps based on their two decade experience, Germany's powerful auto industry now is betting big on the car sharing idea and not just for short trips within cities.

America's century-long love affair with the car is cooling and young people are three times more likely than older generations to abandon their vehicle if costs increase. Some in our community will rush toward the new technology and many will stay with the old stand-by modes. The question remains as to how do we plan for the results of this trend and how soon will its effects reach Lexington?

Tuesday, February 25, 2014

When This “New Era” Of Retailing Arrives

The next era in retail is coming and it may well involve fewer and smaller stores. The days of the “big box” stores look to have a diminishing luster to them. Sears has closed nearly 300 stores since 2010 and that includes their flagship store in Chicago this coming April. J. C. Penney's, Macy's and Target are all reducing stores and personnel and this is just the beginning. 
There is an indication that there is a shift in the retail environment and it's one that will continue. According to the International Council of Shopping Centers, 44 percent of annual store closings announced since 2010 have occurred in the first quarter. Will this year's closings indicate or confirm the emergence of a new trend?
The Internet and online shopping is the usually identified as the reason for fewer and fewer visits to the local mall. This past holiday season saw a 12% increase online and around 15% decrease in mall foot traffic, so is the mall concept dying? 
"Any time you stop building a product, that's usually the best indication that the customer doesn't want it anymore," said Rick Caruso. You do know that there has not been a new indoor mall built in America since 2006. 
That's not to say there aren't a number of ways to grow new retail business. Retailers just need a new approach. An approach that looks to the lifestyle of its customers. More than three quarters of retail transactions are still made at brick-and- mortar locations, but how was your last in-store experience? Did it involve anything more than you and a transaction device, which may or may not have been attended to by a cogent individual? Retail is far more than just a pure transaction

Experts say that shopping needs to be “an experience”. That experience is what builds a connection between consumers and a retailer's brand. Many of us aging “boomers” can still recall the shopping experiences of old most fondly. Retailers need to lose the boring physical store experiences .


Some large retailers are exploring the technology to track shoppers within the store itself. There are apps which will send tailored offers to smart phones as shoppers reach a certain section of the store; recommending items based on past purchases; or allowing shoppers to program an automated shopping list. Is there a line between helpful and creepy, and when does one cross it? 
What are the key factors that determine how much information a shopper is willing to share? 52 percent of shoppers are willing to share information with retailers if they get a discount on their next purchase and shoppers are more willing to share information with high-end stores. Just remember that Nieman Marcus has had their digital network hacked lately. When will shopper rethink their privacy concerns?

Perhaps the best approach to growing retail is to simply get back to the basics, give the better service and attention to detail. In short, put the customer first. I, myself, have quit patronizing stores which put the self-checkout as a prima facie of customer service.


Wal-Mart, one of those big-box discount retailers, is in need of a bricks-and-mortar makeover – or so some analysts have suggested. The world's largest retailer gave a disappointing full-year forecast, based upon its recent lackluster sales and the expected sharp cuts in food stamp benefits or higher payroll taxes that will hit the disposable income of its core customers. Cold weather and a reduction in food stamp benefits can't the only reasons.

Analysts have also called for Wal-Mart to move its stores closer to major population centers, shrink the square footage of its superstores and shutter about 100 under-performing U.S. locations. "It appears increasingly uneconomic for the customer to drive 20 to 30 miles, or even 20 to 30 minutes, round trip to a supercenter to save a marginal amount on consumable goods.

Apparently Wal-Mart has listened. They have recently said that they are doubling the number of smaller new stores originally planned to open this year. The smaller stores will allow the retailer to reach new customers, particularly in urban areas. This may also appeal to shoppers who want to pick up groceries and other staples mid-week, as they need not go out to the super-centers. Comparable sales at the smaller stores rose 5 percent last quarter, compared to an overall 0.4 percent drop in the United States. Wal-Mart now plans to open between 270 and 300 small stores this fiscal year and is spending an extra $600 million to do so.

One in five Wal-Mart shoppers relies on food stamps and by some accounts, that may also apply to their employees. Last year's cuts to benefits under the Supplemental Nutrition Assistance Program have been particularly painful for Wal-Mart, both in their bottom line and in the public relations field. How ironic it is that Wal-Mart helped create the low-wage economy. The big box development model -- built on cheap land on the edge of the community with taxpayers subsidizing your hard costs of transportation and infrastructure.

As Edward McMahon  put it so clearly, “The two things that have kept Wal-Mart out of cities were its inflexibility on design issues and opposition from labor unions and civic activists who oppose the company because of its low wages and negative impact on existing local businesses. Now that it appears that Wal-Mart is willing (when pushed by local government) to adapt its stores to the urban environment, it is likely only a matter of time before the retail giant moves into cities all over the country and cities that want good design are going to have to demand it.

On December 4, 2013 Wal-Mart opened its first two stores in Washington, DC and the new stores illustrate the lengths to which brick and mortar retailers will go to get into rapidly growing urban markets. Having the world’s largest retailer interested in locating in the city where we’ve lost almost every other department store over the last four decades — that is a good thing.

Target, Whole Foods, Safeway, Giant, and other chains are also breaking the old rules. Smaller buildings, stores in multi-story buildings or in mixed use developments. The Euclid Kroger, for all of their hype, is not breaking new ground.

In some ways, the idea of national chains opening big new urban stores is a return to the way things once were. In 1960, we called it department store. Today we call it a Walmart.
Edward McMahon

Sunday, February 9, 2014

Wondering In A Winter Walking Land

Once again this winter I have taken to looking at the impediments imposed upon the residents of Aylesford and Chevy Chase. This area has been characterized as being one of the most walkable parts of our community. That is true, except when “ole man Winter” comes to stay.

I read a comment on Facebook from a friend, which spoke to her normal daily commute to work in Chevy Chase after a heavy snowfall. The short, five – six block walk featured one, lone, shoveled walkway and that was done by a church. Yes, there were sub-freezing temperatures and a coating of ice but people got out and walked just the same.

I also received a tweet exposing a downtown surface parking lot for having plowed the lot but leaving sidewalks full of snow to traverse for the remainder of the trip to work or shop. By local ordinance, the property owner or their local agent/tenant is responsible for clearing the public sidewalk within 4 hours of the end of snowfall. In Lexington, that is rarely done.

On my daily way home from work I usually pass through the University campus and they have done a admirable job around the main buildings and the like. On some of their lesser properties, not so good but better than the business folks who make their profits on the student residents. For all of the apartment owner who rent to these kids and don't make the sidewalks safe for them to get to class and back, I say shame on you.

And don't think that the regular merchants and property owners along Euclid Ave are exempt from the shame. The embattled Kroger Corporation should take a look at its Chevy Chase location. The parking lot was cleared and paths made toward the front door, but they are responsible all the way to the street and the sidewalk there was untouched. Even though they acknowledged that a large percentage of their customers from the neighborhood approach by foot, Kroger has done nothing to make their property safer for them. As they move the new building closer to the streets, will they continue to ignore the pedestrian along the Marquis portion in particular?

Many of the retailers in Chevy Chase shopping center did, eventually, do a decent job of clearing the snow and ice. The same cannot be said of the homeowners in Ashland Park where still there are long stretches of uncleared sidewalks, yet plenty of plowed driveways are plainly seen. I also noticed that ice damaged trees were attended to but not the sidewalks

Why is it that this area, home to many of Lexington's elite(and don't tell them that they are not), feels the need to disregard non-drivers? The doctors, lawyers and even highly placed city officials should know their responsibilities and the consequences of not performing them, and that may be the problem. There are NO consequences enforced.

The fines for not following the required civic duties of homeowners and residents are NOT being assessed. Why do we have them if they are not enforced? Why do they not carry as much weight as our simple vehicle infractions of running a stop sign or failure to yield? Perhaps the Council could spend as much time and effort debating this as the did the handicap parking issue, with a similar result of raising fines to not be collected.

I have only detailed a short 2 or 3 mile stretch of roadway and I am sure that many of you can elaborate on others. Walkable areas like the Southland Dr neighborhoods or parts of the north end all have the same problem. I just think that we should be doing something about it. The groundhog says that we still have 6 weeks of winter, so we are not done yet. And there is always next year still to come.