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Cascade: No. 88, Summer 2015

Spotlight on Research: The Role of Small Businesses in Commercial Corridor Revitalization*

Revitalizing the commercial sector in inner-city neighborhoods that have deteriorated is fraught with issues concerning, among others, the appropriate retail mix and location of establishments, as well as the impact of such efforts on residents and consumers. A key decision is who will serve as the prime mover for the revitalization activities. An article by Stacey Sutton takes a slightly unorthodox view by suggesting that small business owners are underexplored stakeholders who could spearhead a retail restructuring campaign.1 The following is a summary of the case she makes to support this contention.

Marvin M. Smith, Ph.D.Marvin M. Smith, Ph.D.

Background

Sutton points out that some recent studies on commercial revitalization "expound ways that city planners and community development agencies successfully mount local strategies for attracting corporate retail development." But she notes that "neither recent studies of 'bottom-up' nor 'top-down' development adequately examine inner-city commercial revival from the perspective of neighborhood based small business owners (or 'merchants')." To explore the efficacy of the role that small businesses might play, the author relies on "an in-depth study of a predominantly Black and low-income neighborhood in Brooklyn, New York, that during the 1980s and 1990s experienced small business-led retail restructuring." Small businesses and their owners hold a special status in their neighborhoods. Sutton indicates that studies have reported that the neighborhood store is regarded as a community institution, while business owners are considered as revered civic leaders who, "wittingly and inadvertently, influence the politics of neighborhood improvement."

Although the author extols the virtues of relying on small businesses as a key component in commercial revitalization, she does not totally dismiss the role played by conventional institutional brokers (e.g., corporate capital, local government, and community organizations). In fact, her objective is to "rethink commercial revitalization by locating merchants alongside more conventional community development stakeholders that typically wield great decision-making power but often lack knowledge of local small businesses."

Methodology and Data

Sutton's analysis relies on an in-depth study of commercial revitalization in Fort Greene, Brooklyn. The revitalization efforts in Fort Greene span more than five decades (1950-2005), but the author's examination concerns the practices employed by black merchants during the 1980s and 1990s. Sutton uses information gleaned from various types of interviews coupled with publicly available data. The fieldwork governing the interviews began in October 2004 and lasted for approximately 14 months. The primary data consist of in-depth, face-to-face interviews with 54 small business owners who started their businesses in Fort Greene between 1952 and 2005 and who were still in business at the time of the interview. These interviews, which captured the owners' experiences and insights, were coupled with interviews with community agencies and local elected officials as well as observations at monthly merchant association meetings, community events, and town hall meetings.

The author combined the fieldwork with an analysis of socioeconomic characteristics based on U.S. Census 1970-2000 tract-level data from the Neighborhood Change Database supplemented with national, citywide, and local archival media reports and periodicals. Sutton eschews traditional black-owned establishments, such as barbershops, beauty salons, and funeral homes. Instead, she focuses on a variety of convenience and specialty retail sectors common in urban areas, such as home furnishings, apparel, food and drink, and miscellaneous retail (e.g., bookstore, florist, stationery store, and newsstand). For purposes of analysis, the author classifies the merchants on the basis of their start-up year: "Pioneers" (1950-1979), "Old-Timers" (1980-1999), and "Newcomers" (2000-2005). She concentrates on the 39 "Old-Timers." According to Sutton, the "Old-Timers that arrived during the 1980s fulfilled the unmet demand for convenience shopping and neighborhood-serving goods and services with hardware stores, full-service 'family-style' restaurants, antique shops, small grocery and health food stores, and shoe repair."

Results

In her article, Sutton details how black merchants spurred commercial revitalization in Fort Greene and fostered "neighborhood reimaging from an area characterized as a Black ghetto to an alluring destination for consumption and entertainment." She also explains "why Old-Timers were particularly vulnerable by the turn of the 21st century."

The author points out two factors that contributed to Fort Greene's downfall. The first factor was the 1968 relocation of the "century-old Fort Greene Retail Meat Market to the more prestigious Brooklyn Heights neighborhood." The second factor was the "1968 decommissioning of maritime manufacturing in the Brooklyn Navy Yard," which "exacerbated local unemployment, housing vacancies, and dilapidation." The resulting changes transformed Fort Greene, which was predominantly minority, into a neighborhood that was disproportionately low-income and where nearly one-third of the residents lived in poverty. Fort Greene was dotted with "abandoned buildings, vacant lots, uninviting storefronts, and undercapitalized businesses."

The seeds for Fort Greene's recovery, however, were present in the diverse composition of retail venues operated by Old-Timers, especially in clothing and design-related establishments. In fact, Fort Greene was dubbed the "Black fashion district." In addition to Fort Greene's reputation in the fashion field, it also gained recognition in the New York Daily News for its cafes and restaurants and was characterized as "the heart of New York's black bohemia."2 The newspaper also suggested that "Fort Greene was the African-American equivalent of Greenwich Village." Nonetheless, according to Sutton, despite the lack of small business bank loans, unfavorable relations with suppliers, or the support of city agencies, "Fort Greene served as an incubator for Black merchants during the 1980s and 1990s." Some of the Old-Timers expanded their businesses beyond the neighborhood boundaries, some even to other states. Some of the Old-Timers were able to offset the lack of traditional financial support by taking advantage of limited competition and low commercial rents in the short term.

The Old-Timers savored their role as community builders, but the paucity of business support services made business expansion challenging. Without assistance in making a business site selection, some of the merchants resorted to reoccupying vacant or underutilized storefronts with new ventures. One set of retail merchants who restructured a previously owned hardware business sought not only to provide reasonably priced goods but also to give back to the community. According to Sutton, these merchants "implemented diverse business strategies that responded to community needs, such as hiring youth from the local housing projects, offering flexible payment plans for senior citizens, and training young men in the building maintenance trade."

Fort Greene received an additional boost when "acclaimed Black filmmaker Spike Lee, who grew up in Fort Greene, returned to DeKalb Avenue in 1990 with the new retail venture 'Spike's Joint.'"3 Lee's notoriety generated unparalleled foot traffic for the area. Although Lee's retail venture closed within 5 years, his presence "validated Black merchants who preceded and followed him."

Although the Old-Timers were enjoying varying success individually, they recognized that their future accomplishments would be best served if they banded together. Thus, writes Sutton, "in 1992, Old-Timers established the Bogolan Merchant Association as an institutional voice for Fort Greene small businesses routinely excluded from planning and development decision-making processes." The association sought to enrich the business livelihood of its members and serve as a go-between with community development stakeholders.4 Over time, however, it became difficult to strike a balance between maintaining internal coherence regarding economic and cultural aims, as well as sustaining external political influence. With internal tension among the association's members and the external pressures of a changing environment, the limits of the association were tested. According to Sutton, the "merchants failed to develop mechanisms to sustain their collective vision and advance commercial revitalization."

Sutton emphasizes that "planners and policy makers concerned with inner-city retail should explore the underutilized potential of merchant associations." But she hastens to add that "effective merchant associations must be able to raise capital, beyond membership dues, to facilitate organizational development and subsequently leverage additional external resources to effectively meet their mission to support small business members."

  • * The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
  • 1 Stacey A. Sutton, "Rethinking Commercial Revitalization: A Neighborhood Small Business Perspective," Economic Development Quarterly, 24 (2010), pp. 352-371.
  • 2 Denene Millner, "A Scene Grows in Brooklyn: Fort Greene Has Become a Magnet for the Young, Gifted, and Black," New York Daily News, March 9, 1997.
  • 3 Spike's Joint was the merchandising arm of 40 Acres and a Mule Filmworks production company.
  • 4 These stakeholders included city agencies, elected officials, and community groups.