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5/11/2003

Reeling in retail

By Tony Kindelspire
The Daily Times-Call

LONGMONT — The city’s sales tax revenues aren’t what they could be, and it’s not just because of the poor economy.

People are still buying computers, big-screen televisions and upscale clothes, after all. But they’re often forced to go elsewhere to do so.

That’s why the city is considering spending $60,000 to purchase a product called “CommunityID” from a Texas-based firm, the Buxton Co.

CommunityID is a program that helps communities determine where they are lacking in retail and what specific companies would be an ideal fit, based on demographics and buying habits.

The idea was brought to Longmont city staff by City Council members after they viewed a presentation by the Buxton Co. at a National League of Cities conference in Salt Lake City in December.

“The National League of Cities doesn’t normally allow private corporations to present at their meetings,” said Doug Brown, one of the council members in attendance. “Whether we do it or not, I think we need to look very closely at doing something like that.”

Brown said he is concerned about sales tax dollars that are leaving the city, whether through shoppers going to FlatIron Crossing in Broomfield now or in the future, or when retail begins to sprout in the Tri-Towns area.

“I’m very concerned about what’s going to happen on I-25 in the next 10 years,” Brown said. “Longmont has to think about, ‘What do we want our commercial personality to be?’”

Retailers using sophisticated demographic information in their site selection is nothing new. But what’s unique about CommunityID is that it is targeted to cities and is purported to be the most comprehensive data out there.

After extensive data analysis of a client city is conducted, CommunityID matches that data with those of specific retailers. The client cities are then presented with custom-tailored marketing materials and given the contact information for the companies deemed to be a fit.

At that point, it’s up to the city to close the deal.

“I think what we try to do is make it usable,” said Bill Shelton, a partner in CommunityID with the Buxton Co.

The company claims to have no competitors in the field of “retail recruiting.”

“Most economic developers — their feeling is we don’t do windows and we don’t do retail,” Shelton said.

Several years ago, Shelton and Bob Bolen, the former mayor of Fort Worth, Texas, were partners in an economic development company called the Cornerstone Group.

“It was clear to us that there was a niche that needed to be filled,” Shelton said, adding that cities his company worked with often wanted to recruit retail as strongly as industry.

“It became clear to us that we needed to find a company that had experience in retail, and we found one just four blocks away in Fort Worth in the Buxton Co.,” Shelton said.

The Buxton Co. was originally founded as a site selection firm for retailers. After teaming up with Cornerstone, the company launched CommunityID two years ago.

“We have two proprietary components of what we’ve developed,” Shelton said. “We buy 150 databases that are available to anyone. But one of the proprietary pieces we have developed is the software to blend these databases.”

He said the company has demographic information on 111 million households in the United States, gathered from a myriad of sources, including grocery store discount cards, credit card purchases, warranty cards and even magazine subscriptions.

When you get a haircut, and they ask for your phone number, that data is recorded somewhere — and ultimately makes its way into a Fort Worth computer.

“We have a monopoly — not of information, because you can buy the information, but a monopoly of knowledge to process that information,” said Shelton. “None of the databases we buy are more than 90 days old.

“That’s why 500 retailers use our services — because we have this kind of data.”

The second component, Shelton said, is “working with retailers around the country as we do, we have developed databases on about 3,000 retailers.”

He said the company has 81/2 terabytes — or 8 trillion bytes — of demographic data stored. By comparison, the online Library of Congress contains 161/2 terabytes of data.

“You’ve got to fill out a warranty card, right?” said Phil DelVecchio, Longmont’s director of community development. “I get frustrated, but I still go through and fill out those inane questions.”

DelVecchio has been the point man for the city in dealing with the Buxton Co, which has already made one presentation to city staff and some council members. A second visit to Longmont by a Buxton representative is expected within weeks.

DelVecchio said the next meeting likely will include members of the City Council, the Longmont Area Chamber of Commerce and some private commercial developers.

“Whether it’s wise to spend $60,000 on something like this — that’s the magical question,” DelVecchio said. “With the economy being the way it is, this information might trigger, or accelerate, interest in Longmont that might not otherwise occur.

“If everyone agrees that it’s worth the expenditure, then the next step would be to determine how to pay for it.”

John Cody, president and chief executive officer of the Longmont Area Economic Council, agreed with Shelton that organizations such as LAEC typically don’t recruit retailers but rather focus on primary employers — companies whose goods and services are sold outside this community, therefore bringing in outside money.

But Cody said he could see the viability of something like CommunityID.

“It’s not a part of our mission at this point in time, nor has it ever been,” Cody said. “But I have known a couple of things since I’ve been here.

“The first thing is that in some ways, it was obvious to me early on that Longmont was underserved in certain areas of retail. The second thing is, my surprise that the city hasn’t been more involved in trying to attract retail.”

He said the city should make every effort to capture the retail spending the city loses when consumers are forced to go elsewhere.

Colorado’s tax structure is such that cities do not have to share sales tax revenues with one another, unless they agree to do so through an intergovernmental agreement.

“Most of the cities along the Front Range are extremely conscious of retail and are extremely competitive about retail, because retail sales tax revenues are such an important part of a city’s tax base,” Cody said.

Longmont Councilman Tom McCoy said several parts of the Buxton Co.’s presentation in Salt Lake City caught his attention.

“We really needed to rely on more businesses that don’t require more sprawl,” McCoy said. “I think in the past we’ve had some people in the Chamber and even some on (City) Council who have put too much emphasis on the homebuilders, hoping they would provide a boost to our economy. But I think it’s time to change our thinking a little bit and now is the time to do it.

“It’s $60,000 in a hard economy, but I think we should have that discussion anyway.”

DelVecchio points out that the $60,000 to Buxton would be a one-time expense and would not compete with things such as city salaries.

One person who launched a successful retail business here last year said that from what he has heard about CommunityID, he thinks it is a good idea.

“When I came to Longmont to look at a location, I started talking to people and I thought, ‘This is a great community that I don’t think everybody knows about,’” said Frank Sherman, owner of the Bear Rock Cafe and a former Fort Collins resident.

He said he scouted several locations along the Front Range and settled on Longmont to open the first Bear Rock in the state. The chain is based in North Carolina and soon will expand into other Colorado cities.

“The proof is in five years,” said Sherman, referring to CommunityID. “It’s going to be the best $60,000 they’ve ever spent, because it worked, or it’s going to be the $60,000 that somebody threw up in the air. But you’ll never know until you try.

“The uniqueness of Longmont — if they go out and market this community — you’re probably going to end up with a lot more unique places than if they don’t market it.”

There are those who would argue that the money could be better spent. But Shelton is quick to counter that argument:
“We hear that all the time, but let me ask you this: When does retail count as economic development? If you locate a company — a Best Buy — in Longmont and people start shopping there — is that not economic development?

“If people are going there and you stop that leakage — is that not economic development?”