The City of Killeen contracts with the Greater Killeen Chamber of Commerce to provide economic development services. One of those services is retail development.
Retail development is important for two reasons. First, sales taxes are paid on retail sales. Those sales taxes are an important component of city and county budgets. Second, citizens of our community are also consumers of retail products. The availability of retail products impacts the quality of life here.
A significant amount of the retail growth in the greater Killeen area is recruited. It is important that recruitment be strategic. Recruitment is focused on products where there is unmet consumer demand. We use a retail gap analysis to determine consumer demand. The retail gap analysis reveals to us how much leakage is occurring in the market by product category. Leakage is defined as the difference between purchasing power in the market and the amount of that purchasing power being exercised in the market. Consumers leave the market to buy products that are not available in the market. This is leakage. When we know specifics about the leakage we are experiencing, we can focus recruitment efforts specifically on retailers who will address that leakage.
The gap analysis does two things. It provides valuable information to investors as to the risk of investing in a market. Obviously, they want to invest in markets where there is an unmet demand for the product they will offer. And, it allows community leaders to shape recruitment efforts to address leakage and, at the same time, avoid cannibalization of existing retailers in a market. If demand for a product is being met, you do not want to encourage an increase in the supply of that product.
Once we know leakage levels by product, there are a number of marketing activities in which we engage to get information in the hands of retail investors.
In May of each year, there is a retail trade show hosted by the International Council of Shopping Centers (ICSC). Attendance at the show ranges from 25,000 to 40,000 people. Attendees and exhibitors include municipalities, retailers, developers, site selection consultants and retail service providers. Our staff markets and promotes our retail trade area as an exhibitor during the ICSC conference. We also exhibit at the ICSC Texas Deal Making tradeshow and will soon be an exclusive municipal exhibitor at a retail trade show in Austin.
As an exhibitor, there are opportunities to market to other exhibitors but to also capture the attention of attendees who peruse the tradeshow floor looking for information and deals. Some of the tools used to promote the retail trade area are aerial maps, housing maps, demographic data, and marketing fliers.
Killeen is considered a secondary market. When national retailers enter the Texas market, they typically open in metropolitan markets because the risk is perceived to be lower in metropolitan areas due to large populations. Then, they move into secondary markets.
Of the secondary markets, the Killeen retail trade area is often of high interest by retailers due to our population growth. Retailers evaluate success in a secondary market, such as Waco or College Station, before deciding to open in a similar market. What does that mean for Killeen? Here is an example. Smokey Bones BBQ in Waco is a subsidiary of the Darden Corporation. Darden owns a number of restaurant brands including Red Lobster. Darden had intentions of opening a barbecue restaurant in Killeen. The concept failed in Waco. This caused Darden to cancel their plans for Killeen. A positive example is In ‘N Out Burger. The corporation opened in Killeen, did very well here and, as a result, now has opened a store in Waco.
Working with retail developers is more complex that working on individual stores. It is time intense but, often, produces more retail volume than single store projects. An example of this is The Retail Connection, the developer who is creating La Cascata Retail Village. The project consists of approximately forty acres with over 360,000 sf of retail space. This project will consist of many retailers and will include dining and entertainment venues. The capital investment is approximately $65 million. When build out, the project will provide more than eleven hundred jobs. Developers understand the value that their project will bring to a community. They expect to share in the wealth they are creating. We do this through the development of a Master Development Agreement. The Agreement contain the requirements that the developer will have to meet to receive incentives. And, the Agreement defines and describes those incentives in detail. Everything is performance based. In other words, the developer has to build the project to receive incentives. Phase One of The La Cascata Retail Village will break ground this year.
Leasing of space in Phase One has gone well. So well, in fact, that since the Master Development Agreement was signed, The Retail Connection has acquired an additional thirty acres to expand the project. Our staff is working with the company to complete plans for Phase Two.
There are a number of other multi-acre developments with whom our staff is working in the community. It should be remembered that we cannot stop any retailer from entering the market. However, through the strategic use of the tools we have available to us, we can shape the retail market so that those who choose to live here will have far more choices in the years ahead and, hopefully, a higher quality of life.
Written by: John Crutchfield III, President & CEO, Greater Killeen Chamber of Commerce
Published in the Greater Killeen Business Quarterly 2016 Restaurant & Catering Guide