It might take about three years for the City of Hays to see results from its contract with a retail consultant based in Birmingham, Ala.
Clay Craft, portfolio director of Retail Strategies, told Hays City Commissioners at their regular weekly work session on Thursday evening that the ultimate goal of its deal with the city is to bring new retail stores to Hays. But it takes time.
A national consultant, Craft said Retail Strategies is working nationwide for Hays and asking retailers who are looking at Kansas, “Have you looked at Hays?”
“We’re on a national level. So retailers in California, Florida, they’re moving across the country and as they do, we’re having conversations with those guys, and leveraging those conversations for Hays,” Craft said.
The city entered into the year-to-year contract with Retail Strategies about a year ago. The consulting company was born out of a commercial brokerage firm, Craft said, to bridge the gap between commercial real estate and municipalities.
“We’re going to take you through our strategic planning, our process and hopefully this ends in results, which is new retail and cash registers ringing at the end of this,” Craft told the city commissioners.
The typical retail real estate deal, from conception to completion with cash registers, takes from 18 to 36 months, Craft said.
“These things take a long time,” he said. “I’m not here to try and buy us any time, I’m just trying to inform you.”
While in Hays this week, Craft said he and his project partner, Keith Shamblin, have been driving the Hays market and looking at properties, whether new development, redevelopment or an existing business, to present specific ones to national retailers.
“We’ve accumulated about 35 properties we think are a potential fits for national retailers. We don’t work on all these properties at once. We pick the best ones, based on the types of retailers, and make specific pitches to them.”
Traffic, access and convenience are all important, he said. Some of the properties include Big Creek Crossing, the former Hastings store, the former Carlos O’Kelly, Tebo Village, which recently lost the Pasta Jay’s restaurant, and the former Ramada Inn site on Vine Street, and a piece of property at 22nd Street and Commerce Parkway the city has purchased an option on.
Online shopping makes up about 9 percent of all retail sales right now, but 78 percent of people still prefer to shop in stores. Retail is not going away, he said, noting that on average people spend $1,700 a month in stores, versus $247 online. Likewise, conversion rates are much higher in stores than online, he said.
“Millenials are driving retail,” he said. “They like to have experiences, they like to touch, feel things, and they want things now. That’s trickling down to all sectors of real estate.”
Retail Strategies has also defined the customized trade area for Hays, which defines a core customer base of consumers who are highly likely to shop and eat in the market at least once a month. The data show most of the Hays custom trade market is pulling from north and west, he said.
Retail Strategies defined the area by combining mobile tracking data with drive-times, geographic boundaries and proximity to neighboring shopping destinations, he said.
The Hays customized trade area is estimated to be more than twice the city’s population, at 89,192 people. The average age for men is 40, and for women, 43. There are an estimated 44,247 households, with $49,066 median household income. About 32 percent are one-person households, and 38 percent are two-person, 12 percent are three-person and 10 percent are four-person. It’s predominantly blue-collar, at 61 percent, Craft said.
The daytime population is 97,639 people.
“The daytime population swells, which is always great,” Craft said. “There’s an influx of people during the day and that’s very, very important for restaurants.”
Also from the analysis, the consultant calculated the amount of dollars leaving the custom trade area: $94 million in the food and beverage stores category; $69 million to restaurants; $39 million to general merchandise stores; $19 million to health and personal care stores; and $17 million to clothing and clothing accessories stores.
Commissioners Henry Schwaller IV and Sandy Jacobs, as well as Mayor James Meier, were surprised by those numbers.
“Walk us through that,” asked Schwaller. “Food and beverage stores, where are they going? … What’s going on? Are they leaving town to go to Salina say?”
The one he always hears people complain about is a shortage of clothing store options, Meier said, and yet, clothing is far down on the list.
Craft explained that the numbers don’t refer to people from Hays going elsewhere, but rather people from the entire custom trade area.
“We’re talking about the whole 87,000,” Craft said. “It’s about a much bigger picture. If you’re drawing from that bigger area, you’ve got to be attentive to that area, and understand those residents also. Our target demographic is not just Hays. We’re trying to pull from way north and west.”
Looking at the numbers, Jacobs said “so it’s saying that all these small towns have the ability to come to Hays, and they’re not, they’re going farther?”
People who live in the custom trade area are leaving it to go outside. That indicates there’s pent-up demand, and the ability to spend money, but the dollars aren’t being spent in the custom trade area, Craft said.
City boundaries don’t mean anything to a retailer, he said, rather they’re looking at household income, resident daytime population, residential population, and demographic information.
One area where Hays shines is current bachelor degree attainment of 34 percent, which is “outstanding,” he said, “that’s one of your best selling points.”
“The benchmark for a lot of national retailers right now is about 20 percent, because they know that educated consumers have more dollars,” Craft said.
A couple retail store wins like that under the city’s belt and it’s looking at significant job growth and significant sales tax.
“Retail is complicated. Cities hire us because they don’t have the expertise, they don’t have the time,” Craft said. “The city of Hays is really lucky to have some really great local brokers in the market. We are here to absolutely settle in with those guys.”
He reminded the commission that retailers change their plans every three to six months.
“A 'no' today doesn’t mean a 'no' six months from now, so you have to continually engage these guys,” he said.