Kyle Bingham, Pitney Bowes Business Insight
When describing New York, Frank Sinatra famously said, “If I can make it there, I can make it anywhere.” Simply called “The City” by locals, Manhattan has always been a place that’s been tough to break into for many national retailers, but as rents continue to drop and independent retailers abandon their unprofitable storefronts, now is the time for these national retailers to seize an opportunity. According to various reports, Manhattan’s commercial-lease rates are expected to bottom out in the early part of this year; they are expected to begin rising by late summer.
New Yorkers have unique shopping habits and transportation methods, so a national retailer’s traditional formats may not always work in Manhattan. Success stories are a result of concept flexibility. The drugstore chain Duane Reade famously conquered the landscape with creative store configurations and by giving New Yorkers the products they need, convenient locations, and fast service. Walgreens was so enamored by Duane Reade and their presence in Manhattan that they agreed to buy the chain last month for $1.1 billion. Restaurant chains like Chipotle (19 Manhattan units) have also made a push into Manhattan, with some success. Other major national brands, like The Home Depot and, more recently, Costco, have opened locations in Manhattan to more modest success. Both companies had to drastically change their concept to fit the typical New Yorker: families in SUVs weren’t going to be dropping by to buy a new lawn mower or to fill up their minivans with seven cases of peanut butter; entire departments had to be revamped to add more items that could be carried onto the subway or down the block. Those retailers with smaller footprints, like Starbucks, can be more nimble in the city, filling the spaces that others cannot. Starbucks now has more than 170 units in Manhattan, some famously across the street or around the corner from… another Starbucks. Whether for a public-relations play or for a full-blown strategy, one must enter Manhattan armed with research.
In Manhattan, location is truly king, but simply being in Times Square does not guarantee success. Other factors come into play – factors like street-front access, proximity to a subway access point (stairwell), and corner (as opposed to midblock) location. Even being on an avenue instead of a street can have a huge impact on potential revenues. Daytime population also plays a huge role in a site’s potential; in fact, the highest density of daytime employees in the United States is proximate to the 42nd Street/Madison Avenue intersection, near Grand Central Station. Using our extensive database of employee and daytime population in Manhattan and augmenting it with field research, Pitney Bowes Business Insight is able to effectively serve our New York-bound clients. Techniques used to forecast sales for suburban locations don’t necessarily work in Manhattan: drive-time analysis, for example, gets thrown out the window. When analyzing Manhattan, pedestrian counts and proximity to daytime population become paramount. Operations of the business also can also play more of a role in Manhattan than in other, less dense areas. Specifically, adjusting staffing levels to the time of day and the district is important; after all, the staff necessary for a store in the Financial District may be drastically different from one in the Upper West side.
Over the years, I have learned that successfully analyzing Manhattan requires quality data sources for daytime and employee population, a good understanding of pedestrian patterns, and strong fieldwork – not to mention a little bit of intuition. A good pair of walking shoes helps, too.