June 4, 2013

A New Formula For Keeping Out Foreign Threats

Hayes Valley was the first neighborhood in San Francisco to ban formula retail (i.e., "chain stores"), having adopted the ban nearly a decade ago in order to block Starbucks from opening on Hayes Street. As written, the formula retail ban blocks businesses with eleven (11) or more retail stores in the U.S. from opening on Hayes Valley’s commercial corridor.

With only eight (8) stores in the U.S., giant formula retailer GANT opened a retail store two months ago at 552 Hayes, smack-dab in the middle of the Hayes Valley corridor.

Spearheaded by concerned local merchants fearing "incursions from formula retail," Supervisor London Breed has since introduced proposed legislation to extend Hayes Valley's formula retail ban to establishments with eleven or more locations anywhere in the world, noting "Hayes Valley must protect its vibrant and expanding small business sector, and maintain its supportive environment for new small business innovators."

As some might recall, two weeks ago San Francisco’s Planning Commission approved the opening of a CVS at 2280 Market Street, based in part upon the Planning Department's recommendation that the competition with other retailers would result "in prices that are more competitive and a greater availability of goods and services."

The proposed Hayes Valley amendment would also extend the formula retail ban to establishments with fewer than eleven locations if fifty percent or more of "the stock, shares, or any similar ownership interest of such establishment is owned by a formula retail use, or a subsidiary, affiliate, or parent of a formula retail use."

Formula Retail Use for Hayes-Gough Neighborhood: Proposed Amendment [sfbos.org]
Planning For A CVS: The Designs For 2280 Market Street [SocketSite]

First Published: June 4, 2013 7:30 AM

Comments from "Plugged In" Readers

While I support small businesses and think the large chains are too powerful -

A total ban seems a step too far and arbitrary

11 stores nationwide...? That could be any successful small business - and why wouldn't we want them here to grow and share their experience

Seems too restrictive IMHO

Posted by: mdg at June 4, 2013 7:33 AM

Really interesting. Especially for an area featuring many of the best boutiques in the city, this will be big. Welcome Stranger and Nomads are arguably the two best men's stores in the city (the only one giving them a run for their money is Unionmade), and are comparable with the best men's boutiques in Manhattan/Brooklyn. I hope neither will suffer because of the Gant store because of the very similar aesthetic, although I'm glad SF has a Gant location.

Posted by: JWS at June 4, 2013 7:35 AM

I support this type of ban in theory, but I agree the specific number is quite an arbitrary decision. I wonder why 11 was chosen?

Changing it to worldwide locations seems to be the right move. SF can still have a Gant location, but it needn't be where a small local business could be instead.

Posted by: mdreaming at June 4, 2013 7:46 AM

under this logic steven alan must leave hayes valley due to their recent expansion.

Posted by: seth rogers at June 4, 2013 7:58 AM

I agree with others... the idea seems reasonable as chains have competitive advantages over local small businesses, but also agree 11 locations seems a little low.

I also agree if you are going to have the restriction, worldwide seems better than nationwide.

Posted by: lyqwyd at June 4, 2013 8:09 AM

Something to think about going forward. I read a few days ago on WSJ an article on Americans becoming more risk averse when it comes to working in and/or starting new (and by definition small, local) businesses.

The economists studying the phenomena sited a number of reasons, but one data point that stood out to me was that for the first time since the statistics were taken, the majority of working Americans work for larger companies (greater than 500 employees) as opposed to what has been in the past, smaller businesses.

Sounds to me that there needs to be some type of balance or we risk alienating larger (and more likely "chain") retailers from supporting our communities. And with less small, local business risk taking (employment & startup), we may end up with empty storefronts.

Posted by: Can't think of cool name at June 4, 2013 8:10 AM

I believe the reason less people are working at small businesses is that they've been crushed by the recession and the federal government is putting much more effort in helping large companies, but little towards small companies.

The same is true with funding, it's very difficult to get a small business loan from a bank these days, but large companies are having little difficulty getting funding.

It's all the more reason to give small businesses whatever help we can.

Posted by: lyqwyd at June 4, 2013 8:16 AM

Blue Bottle is currently at eleven (if you don't count their summer in NYC) and is expanding....

Posted by: Brent at June 4, 2013 8:23 AM

We should probably shut down wildly successful Boulange and Blue Bottle on Octavia so we can have more artisanal shops. They've each exceed 11.

Posted by: Invented at June 4, 2013 8:27 AM

^^invented
There is a serious point there: if you're going to have CU "use permits" that are effectively granted by your neighbors (which I disagree with) then they should be a temporary thing, not a one-off. It should be renewable every X years to see if the business still meets the requirements of the neighbors. Old businesses should not be grandfathered-in - what right do they have, just because they were first on the block?

Posted by: BobTheBuilder at June 4, 2013 8:33 AM

I am actually not terribly opposed to "grandfathered in" businesses, although I can't really articulate why. Despite being a chain, there is absolutely no doubt that the Blue Bottle in Linden Alley fits Hayes Valley PERFECTLY. I feel like if you were a smaller business that then went on to success, it's different than, say, a Starbucks or Peet's moving in. But I admit this is fairly arbitrary.

to @can't think - I think the difference here is that this is not city wide, but just for Hayes Valley. Hayes has transformed into inarguably THE spot for the city's best boutiques, for both genders. Just speaking for the men, you have Welcome Stranger, Nomads, Azalea, Undefeated, Rand + Stadler, Marine Layer, Acrimony, Department Seventen, several shoe stores, and I know I am missing many. And for the women, it's practically double the number. Nowhere in the city can you find such a concentration of incredible clothing stores, both one-off boutiques and small, high-end chains (like Undefeated).

I think this ban stops the Diesels, Urban Outfitters, J. Crew's, etc from outpricing these smaller companies. There are plenty of other places in the city for those spots, but it keeps Hayes Valley as a destination for people who appreciate forward thinking fashion, similarly to how the Valencia corridor caters to foodies.

I don't think anybody sees Hayes' desirability doing anything but growing for the fashionable set in SF, and empty storefronts are not likely. But with the desirability comes larger chains (like the aforementioned Urban Outfitters and J.Crew) who somewhat cater to the same crowd would die to be able to open a location here and increase their "cool" image. They could outprice all of these boutiques.

Gant is tricky because it is a rare store, and I'm thrilled SF now has a location, it does provide a risk to some of the men's stores, particularly those who carry Gant already and have a similar aesthetic (Nomads and Welcome Stranger).

Posted by: JWS at June 4, 2013 8:44 AM

Instead of banning 'chains' outright, let's do more to make it easier for someone to open and operate a small business and make it easier for chains with good corporate responsibility to locate here.

For example, first two years tax free, no fee permitting, tax breaks for landlords that rent to new business owners etc... Im sure smarter people can come up with better incentives.

We will never completely get rid of chain stores (and I wouldn't want to), but we can encourage chain stores that pay living wages, and give back to the communities they are located in.

So many here like to "stick it to the man", but who ends up paying?

Posted by: wc1 at June 4, 2013 8:52 AM

I am not entirely opposed to well-considered formula retail bans, allowing local, smaller merchants some precedence. But 11 shops worldwide just seems rather draconian. Worldwide? Really? So a foreign retailer with a strong presence in its home country is thereby basically forbidden from opening up a shop in Hayes Valley. Gant doesn't quite fit that model (probably a bit more corporate than a localized Swedish sensation), but nonetheless I think the fears over Gant were largely misplaced. The store carries only one brand. The other shops might have carried that brand, as well, but those shops also likely have more diverse offerings, as well. However, the thing is that, by having shops like Gant and other men's clothing stores in the area, Hayes Valley continues to grow as a destination for men's clothing. So people from all over the City and region (and tourists while visiting here) comes to Hayes Valley to shop for men's clothes. This notion that Gant is going to take away business from Nomads or Welcome Stranger kind of presumes that the only people shopping in Hayes Valley are HV residents. That's just not true.

Posted by: OP at June 4, 2013 8:53 AM

The local verse “formula retail” argument is silly. There are way too many vacancies in neighborhoods such as the Castro which is harmful to everyone.

As an investor to a small business in neighborhood I can attest to the huge capital requirement to start/maintain a business. The permits, licenses, finish out to ensure the site is ADA compliant is staggering. Even the most modest business requires at least $100,000; with most several times that amount. For the most part we do not have people in the neighborhoods who are willing or able to make those investments. We should be more open to other options.

There are several “formula retail” stores in SF that provide good products/services, jobs, and reinvestment into the neighborhood. They also help drive traffic to the benefit of local businesses. Let’s start working with some more of these to be good neighbors and keep the areas vibrant rather than adding more empty spaces with graffiti and the homeless living in the door wells

Posted by: Patrick at June 4, 2013 9:03 AM

Similarly, the Jack Spade store proposed for Valencia falls under the 11 U.S. store limit, but has more locations worldwide.

While I mostly support the formula retail restrictions SF has, I think more distinctions should be made between different retailers based on certain characteristics (such as O&O vs. franchised, cookie-cutter vs. boutique, etc.) Storefront vacancy on a street and displacement of an existing business in a location should also be a major factor. While the CU process is supposed to consider this, much of the time it is hijacked by neighbors who refuse to consider projects objectively.

Posted by: Joel at June 4, 2013 9:12 AM

@Patrick - You are missing the point. This is not formula retail for the struggling Castro, or for the city as a whole. This is formula retail for vibrant Hayes Valley, which is vibrant BECAUSE of its proliferation of local boutiques and restaurants. Should you start seeing empty storefronts in Hayes, then maybe we can reconsider, but this is in place to protect the integrity of what is fast becoming SF's prime retail corridor for hipsters and business men alike.

Find me one vacancy on Gough or Hayes, and I'll concede my point, but this is pretty much THE destination for local small boutiques and restaurants. For every vacancy, there are several interested parties.

Posted by: JWS at June 4, 2013 9:26 AM

I guess if I'm not a hipster then I should not spend my money in Hayes Valley? Seems like the area is catering to a specific target market while ignoring the needs of others who clearly have to travel elsewhere to get what they want. That being said, once the trendy boutiques jack up the rental real estate to a price point that most local independents cannot afford then the area will see empty storefronts and upscale chains knocking on their doors.

As for Blue Bottle and La Boulange...fitting with the neighborhood's current retail ban provisions they should get the heave ho. Buh-bye. Can't have it both ways.

Posted by: Mark at June 4, 2013 9:42 AM

What happens if the location becomes the 10th worldwide and then an 11th or 12th location is opened elsewhere. Must the SF location, #10, be closed to comply?

Posted by: Cade at June 4, 2013 9:52 AM

In regards to the Castro, maybe the landlords need to lower their rents to a level that realistically supports a small business' economic model instead of expecting to reap a high rent from a chain.

Posted by: Marten at June 4, 2013 9:56 AM

Good Vibrations has six stores nationwide...five to go then they will be stiffed.

Posted by: Good Vibrations at June 4, 2013 10:11 AM

Sounds like some of you don't know - Boulange is now STARBUCKS. They are far more than 11 stores now - probably approaching hundreds nationwhide. They were purchased last year and Starbucks has done a good job of hiding the fact. The don't even use Starbucks cups in their shops even though that's what they're serving now instead of their previous, far superior, Equator beans. Stop going there... maybe eventually we'll get a replacement local shop with fresh locally-baked goods again.

Posted by: Steve at June 4, 2013 10:11 AM

I have no problem with grandfathering in places like La Boulange. The idea is to protect emerging local businesses (which it was at one time) not to punish their success. It's a model that keeps places like Hayes Valley incubators for success, not outdoor malls of established companies. It's meant to prevent big national companies from rushing into and smothering "hot" boutique neighborhoods. Union Square and Chestnut have that retail scene, which is fine, but it's good to keep some neighborhoods more unique for the benefit of creative entrepreneurs.

Posted by: James at June 4, 2013 10:16 AM

La Boulange = Starbucks.

Posted by: moz at June 4, 2013 10:16 AM

You cannot imagine how provincial San Francisco seems with silly laws like this when observing it from afar in a much larger and more cosmopolitan city. Everyone clucking over their precious retail zones that must be saved from GANT who is trying to market to the skinny jean hipster bike beardlandia crowd with its $185 cotton button down shirts in vintage patterns. GANT located to Hayes Valley because they felt that is where their customer base was. Why not chill and wait to see if the bearded bikers turn their backs on this retail blight that may be good enough for N.Y.C., Washington and Boston, but not here in special San Francisco.

Other neighborhoods are sure to follow since they do not want to seem any less "unique" than Hayes Valley. I declare a SMUG ALERT over the entire city!

Posted by: Ugh! at June 4, 2013 10:18 AM

@ Mark - I guess no neighborhood should ever find a niche, then. More McDonalds in Chinatown please, and indie record stores in Pacific Heights. If the character of a neighborhood doesn't fit your particular taste, it doesn't mean you can't see how it would fit the taste of many others in the city.

This isn't about protecting a certain crowd, this is a neighborhood that has become a vibrant hotbed of small businesses, and obviously the owners have a vested interest in keeping it that way.

Plus, everybody goes to Hayes. Hipsters and yuppies alike flock there, and families/elderly also gravitate toward the restaurants, particularly in conjunction with the insane amount of cultural centers nearby (opera, ballet, symphony, Asian art museum, new jazz center, etc). This is rapidly becoming one of SF's most charming neighborhoods, and this is designed to keep it that way.

Posted by: JWS at June 4, 2013 10:22 AM

"I have no problem with grandfathering in places like La Boulange."

On one hand, I agree with you. On the other, particularly when it comes to food establishments, purchase of businesses like this by a giant chain like Starbucks inevitably leads to a decrease in quality. Sure, Boulange has more products now, and maybe we can take some pride in knowing that we contributed to places like Gary, Indiana thinking they now have authentic french pastries themselves (not that these ever were) - but the bottom line is that since Starbucks took over Boulange (and even months before when they were preparing for the sale), the quality and freshness of their product deteriorated to not much better than you can get at the Safeway bakery. So good for them - they've made a lot of money the American way and promulgated (somewhat) better food to the masses in the Heartland - but they've baited and switched some of our smaller unique neighborhoods from what once provided fresh, high-quality product to mass-produced average fare.

Posted by: Steve at June 4, 2013 10:31 AM

It would be interesting to know what stores have what leases in place. And how long they have left.

As I'm sure market rate when Nomads went in is different to now. I also don't feel like a J-Crew or the like could find a location big enough for what they need, unless it's the J Crew Liquor store.

Gant feels like it fits the area. It's like gentrification of the stores.

Posted by: BDB at June 4, 2013 11:13 AM

FAQ:

Does a store have to close when it opens it's 11th location?
No, this is known as grandfathering. Once you are in, you can stay in. The same applies when zoning changes. If a location goes from retail to residential or industrial, an existing business does not have to shut down.

Is 11 locations arbitrary?
Yes, but any number would be equally arbitrary.

Does this apply to the whole city of SF?
No, only areas that are enacting the formula retail restrictions.

Can a formula retail open a store that is not of the formula?
Yes, for example Starbucks could open a coffee shop, just not a "Starbucks" coffee shop. It has to be substantially different from the formula, but it doesn't matter who owns it.

Posted by: lyqwyd at June 4, 2013 11:16 AM

In normal grown up cities, hipsters move on to the next neighborhood but in San Francisco things must be preserved under glass. The Marina was old Italian Delis in the 80s but now it has an Apple Store and I am glad for it.

The Haight is no longer in the 60s and the Castro is no longer in the 70s and Hayes Valley is no longer in the 90s. By trying to fight change neighborhoods have suffered as a result. The retail and food choices in the Castro, Haight and 24th street are horrible. Why not let the market decide whether this was smart of GANT to locate here?

Posted by: AntiPlanner at June 4, 2013 11:39 AM

I'm sure GANT will do just fine in Pacific Heights or wherever else they end up. If Hayes Valley wants to have a certain retail climate, why not? This is about one neighborhood, not the whole city.

Posted by: James at June 4, 2013 11:41 AM

FAQ Part 2:

Does this have anything to do with hipsters? No.

Has Hayes Valley suffered by this policy? No.

Does this have anything to do with the Castro or Haight Ashbury? No. It's merely a straw man argument. Neighborhoods can choose to participate in restricting formula retail as they feel necessary, they are not forced to do so.

Posted by: lyqwyd at June 4, 2013 11:46 AM

this is ridiculous. why is the city oppossed to market competition?

Posted by: spencer at June 4, 2013 11:47 AM

It isn't "ridiculous" at all, in fact it's entirely understandable. And as has been pointed out above, it's not City-wide.

People that want generic restaurants and big box stores can and should drive over the bridge and then Hwy 580 to Dublin, where they can get the full-on generic, formula retail and box box store shopping experience.

Posted by: Brahma (incensed renter) at June 4, 2013 11:57 AM

As I pointed out above, nobody is stopping Starbucks from opening a non-starbucks coffee shop, or McDonalds from opening a non-mcdonald's restaurant.

They are welcome to compete all they want, they are just required to play on the same field as the existing small businesses in the neighborhood.

Posted by: lyqwyd at June 4, 2013 12:01 PM

As I pointed out above, nobody is stopping Starbucks from opening a non-starbucks coffee shop, or McDonalds from opening a non-mcdonald's restaurant. They are welcome to compete all they want, they are just required to play on the same field as the existing small businesses in the neighborhood.

Not currently, but as pointed out in the last paragraph of our report above, should this amendment pass, Starbucks would be banned from opening a non-Starbucks store in Hayes Valley.

And while the proposed amendment only applies to Hayes Valley, there's a good likelihood the language would be adopted by others.

Posted by: SocketSite at June 4, 2013 12:07 PM

Some might think my earlier comment was too shrill and didn't add any value to the discussion. Spencer wrote:

this is ridiculous. why is the city oppossed[sic] to market competition?

Lemme see if I can help you out by just returning to the recent project where the editor got on this kick: The proposed Starbucks at 2201 Market Street.

From the planning department's draft motion on the conditional use authorization for the proposed Starbucks (pg. 05, pg. 10 of the acrobat file):

Formula retail businesses have a competitive advantage over independent retailers because they are typically better capitalized and can absorb larger startup costs, pay more for lease space, and commit to longer lease contracts. This can put pressure on existing businesses and potentially price out new startup independent businesses.

Lucid and succinct.

A huge amount of the economy in S.F. is centered on tourism, and if and when the majority of restaurants, coffee shops and retail stores in S.F. are identical to those found in any other city in the world (because, as the above wise words from planning discusses, formula retail businesses tend to drive out locally-owned ones), then tourists will start spending their money in places where something unique and local and authentic can be found. Hope this helps.

Posted by: Brahma (incensed renter) at June 4, 2013 12:37 PM

Can people stop bringing up any neighborhood outside of Hayes Valley as an example???

This neighborhood is NOT suffering due to formula retail rules. At all. In fact, quite the opposite.

When you are bringing up terrible retail in the Haight, Castro, and other stagnant/dying neighborhoods, and asking why the market should not dictate what goes there, you have a point. Chain stores would not be keeping local businesses out of business there, and the businesses that exist are certainly not helping the neighborhood any, so time for it to move on.

Hayes is the opposite. This is one of the most up and coming, if not THE up and coming, neighborhood in the entire city, largely thanks to the vibrant local boutiques and restaurants. This neighborhood is not suffering because of these stores, it is THRIVING because of this ambiance. This is exactly the type of neighborhood where Starbucks, J. Crew, Apple, Urban Outfitters, and Lululemon would KILL to open a location. They would easily outprice the local businesses that give the neighborhood its reputation in the first place, and you'd essentially end up with another Chestnut Street.

Why is the city/Castro/Haight/24th opposed to market competition? No idea, buddy, but we're not talking about the city or those neighborhoods. Hang out at Patricia's Green and walk the little alleyways off Hayes, and tell me this neighborhood doesn't have something special going on. Hayes Valley can, and will, easily thrive even with this policy in place, in fact they will be a better neighborhood for it. Now in 15 years, when the newer condos are older and it has lost its luster and the Dogpatch is the new happening thing, then maybe it's time to revisit this policy. But the entire area is benefitting from what they are doing.

Posted by: JWS at June 4, 2013 12:58 PM

Re the criticism from "Ugh!" that this is a hopelessly provincial concern. I suppose Manhattan is provincial too? (See name link)

Posted by: James at June 4, 2013 1:50 PM

I was referring to the code as is, although it is worthwhile pointing out that that aspect will change if the new law passes.

I personally am against banning people that own a chain from being allowed to start a new unrelated busineses. I don't see any difference between a person that owns 12 unrelated businesses versus one that owns 12 chain stores if they are opening a new business.

Posted by: lyqwyd at June 4, 2013 2:15 PM

then tourists will start spending their money in places where something unique and local and authentic can be found. Hope this helps.

Somewhere like Union Square or Fisherman's Wharf? Those places clearly have no chain stores. Or are they lacking in tourists? It's one of those.

Posted by: anon at June 4, 2013 5:05 PM

Yes, clearly the tourists coming to SF are coming for Hayes Valley, rather than all of the places with chains that are actually saturated by tourists.

It seems to be exactly the opposite - the neighborhoods with almost no tourists have almost no chain stores, and the neighborhoods crawling with tourists are wall-to-wall chains.

Posted by: anon at June 4, 2013 5:09 PM

@JWS made a comment that caught me off guard. In a list of companies mentioned, one of them was Apple. Using Apple as an example, would Hayes (or any) neighborhood want to keep them out?

They obviously are a chain, and have more than 11 outlets, but on the flip side they are unique in regards to the discussion. Is there a local high-tech designer and manufacturer of computers, smartphones and tablets in San Francisco they would push out/keep out by being in Hayes?

Point being, based on previous comments, is there such a thing as a "formula retail" that is unique enough to allow in? I'm not saying I have a list of such (I don't), but just wondering if in developing a position on supporting local, not every large/formula retailer is banned if they can add to the fabric of the neighborhood. And if so, how is that definition... defined?

Posted by: Can't think of cool name at June 4, 2013 5:42 PM

I don't know, but my understanding is that it's a matter of discretionary review, so some places can be allowed, but others denied, but I could be wrong on that.

Personally I have no opinion if some are allowed that are unique enough, or all are banned, I'm fine with it either way. I'm also open to other alternatives to banning formula retail.

What is important to me is the goal of protecting / promoting local small businesses.

Posted by: lyqwyd at June 4, 2013 7:02 PM

"I don't know, but my understanding is that it's a matter of discretionary review, so some places can be allowed, but others denied, but I could be wrong on that."

And that's precisely the problem - approvals now are "arbitrary and capricious" and will become more so if these controls are expended (other NCDs will be sure to follow once Hayes Valley sets the trend).

Some Commissioners are already just plainly closed-minded and irrational (think Suguya), some of them are totally at the mercy of local merchants grandstanding, lying and pleading for protection from competition at the hearings (think Moore).

This whole thing needs to be codified, not left to any individual's "discretion".

Posted by: BobTheBuilder at June 4, 2013 11:45 PM

@BobThe Builder -
I don't know, even if other neighborhoods do it, I'm not that opposed. What is wrong with wanting to have a city full of unique restaurants, shops, bars, and boutiques? People always knock on the Marina for being watered down and for having a Pottery Barn, Gap, Williams & Sonoma, etc, but seem to get annoyed when other neighborhoods enact legislation to try to avoid a Chestnut Street situation.

People have been talking a lot about letting the market speak, but that also applies on a more macro-level to the neighborhoods as a whole as well. If other districts start banning chain stores (once again, not sure what the problem is, what store can't you find in SF already?), the market will speak on that. Just like Hayes is successful with it, and Castro is not. It's ultimately the neighborhood's choice to gamble in favor of an enhanced atmosphere, and if they fail, so be it. The market has spoken, right?

Economies of scales for large corporations like Gap or Starbucks mean that they can outcompete smaller stores on things like profit margins and rent every single time. So yes, a very successful corner Starbucks in a hot neighborhood will make sense, and it may be what the most efficient market utilization of the space, but then you just have another Starbucks in a city that already has over 70 locations (quick count on the SF Starbucks map). It also does not mean that an independent coffee store with artisan coffee and a loving owner would not also be very successful, and add infinitely more charm. If a neighborhood wants to take a gamble and promote that intimate, local, family owned atmosphere (although many boutiques and restaurants are of course owned by parent companies, like Absinthe Group, but at least the offerings are still unique), then that should be up to them.

The result of not having these would almost certainly be Starbucks instead of Bakery Tartine, Pottery Barn instead of Paxton Gate, Subway instead of Molinari's, etc. all along our best retail corridors. That is not the SF that has made our city an international destination.

Posted by: JWS at June 5, 2013 7:34 AM

"approvals now are "arbitrary and capricious" and will become more so if these controls are expended"

That's how it is in almost every aspect of SF government, and it's much worse in other parts.

If you want to eliminate that aspect I'm fine with that as long as it's done across the board, and not just used as an excuse to complain about formula retail.

As I said above, I'm not concerned about the means, only the end: protecting and / or promoting small businesses.

Posted by: lyqwyd at June 5, 2013 8:20 AM

^^lyqwyd
So maybe I'm the only libertarian left in San Francisco but, really, your government's job is to protect incumbent businesses against competition? Really?

Posted by: BobTheBuilder at June 5, 2013 8:53 AM

...avoid a Chestnut Street situation.

The horrors! Some day I hope that no kids will have to grow up in a place that allows something like the "Chestnut Street situation" to occur.

Posted by: anon at June 5, 2013 9:16 AM

Actually I'm a libertarian too, but I don't consider libertarianism to be defined as government evil, corporations good.

In my opinion the true meaning of libertarianism is to decentralize power as much as possible. Combine that with the fact that the government is actively promoting large corporations over small businesses, I have no problem with promoting small business over large, and is in fact right in line with the core principles of libertarianism.

It's a perversion of libertarianism to pretend that small businesses and large corporate chains are anywhere near playing on a level field.

Posted by: lyqwyd at June 5, 2013 9:30 AM

@BobThe Builder - You aren't protecting local businesses against competition from each other, you are protecting local businesses against mass market chains that would win out every single time, and thus incredibly homogenize the landscape. I tend to be fairly free market in most areas of my life, but the culture of a city is just as important as the buildings, and the culture is directly tied to the restaurants, nightlife, shops, and boutiques. A complete free market would be the most efficient and best utilization, but then Polk, Chestnut, Hayes, Valencia, Columbus, Fillmore, and Haight would all be identical (see below). Nobody wants to live in that SF.

@anon - I don't particularly mind Chestnut in and of itself, in fact, I live three blocks from it. But most in SF treat the Marina like a punchline and avoid it like the plague, many citing the large number of chain stores (GNC, Starbucks, Peet's, Walgreens, Williams- Sonoma, multiple Gap locations, Pottery Barn, Chase/BofA/Wells, T-Mobile, Sunglass Hut, Apple, that's just off the top of my head) as making it one of the least interesting major commercial corridors in San Francisco. And I don't particularly disagree. While Chestnut Street is fine, I don't think anybody wants to see every commercial corridor look identical, and without formula retail restrictions and bans, you're kidding yourself if all of those locations would not be outpricing local stores to open up a location on Hayes, or Valencia, or whatever.

Posted by: JWS at June 5, 2013 9:35 AM

@lyqwyd - my issue with what you're proposing is that you're simply valuing one small business (retail) over another (landlord), by taking away the landlord's right to rent out to the highest use. There has to be a strong case for me to want to take away anyone's rights, so if we're looking to "level the playing field", it should be done something like this:

Create a higher sales tax rate for businesses over a certain size, and potentially even use some of that revenue to lower tax rates for small businesses.

That way you're setting things up in a non-discretionary way that applies to all.

Posted by: anon at June 5, 2013 9:36 AM

@JWS - you're tossing around a lot of unsubstantiated claims ("Nobody wants to live in that SF", Chestnut being one of the "least interesting major corridors in SF", etc) that seem to simply match what you feel is correct.

I don't doubt that we'd see some major chains move into some streets if things were changed, but your vision of SF having the same retail landscape as Pleasanton seems completely unfounded. No other major city in the US has the extent of chain store restrictions that SF does, yet somehow places like Seattle, New York and Chicago have all sorts of neighborhoods full of independent and unique local stores. Why is that? Why haven't the chains all taken over?

Posted by: anon at June 5, 2013 9:43 AM

@Anon -
The discussion of chain stores eroding Manhattan culture has been a hot topic for the past several years. From 7-11s threatening Lower East Side bodegas, to the Upper West Side imposing new limitations on store frontage designed to protect existing mom and pop stores, to Duane Reade putting many local pharmacies out of business, this is an ongoing debate for the city.

Sorry that I don't have statistical data about the reputation of Chestnut Street, but you know how the city feels about the Marina, and you know why. The common complaint is that it is homogeneous and uninspired compared to the rest of the city, and I'd be surprised if anybody on this board didn't count this as fact. This is common knowledge. And I LIVE in the Marina, and even enjoy it! But at the end of the day, if I'm on the lookout for the best new restaurants or shopping, I'm heading to SOMA or Mission or North Beach or Hayes Valley, for that very reason. If those neighborhoods want to protect their reputation as destination corridors, so be it. They aren't suffering for it, in fact, they are thriving because of it.

Posted by: JWS at June 5, 2013 9:58 AM

I'm not looking for statistical data, I just don't buy the notion that the Marina is looked at as a place that no one wants to live or shop. The streets, restaurants and shops are packed, be they chains or not (there are quite a few non-chains in the Marina).

This just strikes me as people complaining that the Marina is better than 99% of neighborhoods in the US, but it's not exactly as you would like it to be, thus the need for micromanaging the planning of every little thing in other places.

Posted by: anon at June 5, 2013 10:04 AM

@anon

Being a landlord does not necessarily make you a small business, the apartment building next to me is owned by a large company that has thousands of units.

It's also not necessarily true that chains are better for the landlords.

Additionally, if your theory is that keeping out large chains will hurt small landlords, then any method of doing it will have the same result.

But as I said above, I don't really care about the specifics of how it's done, I only care about the goal.

Ultimately there is always going to be somebody who gets the short end of the stick, it's unfortunate, but it's the nature of life.

I like the formula retail regulation because it's fairly simple. It's not perfect, but I've yet to hear a better alternative.

Posted by: lyqwyd at June 5, 2013 10:12 AM

We are going to have to agree to disagree, but I never said nobody wants to live or shop there. I live there myself!

What I am saying is that the common perception is that the Marina is less distinct than other SF neighborhoods, largely because of the proliferation of chains. What other neighborhoods are trying to do is avoid the same homogenization, because without formula retail rules, do you really not think Gap or Starbucks or whatever would not be pushing to open another profitable location on, for example, Hayes?

Point is, Hayes Valley should be able to protect their environment if they feel like it. If they tank because of it, fine. But they're not. The opposite is happening. They are thriving, and successful new wine bars, restaurants, and boutiques are popping up monthly. As somebody who lives three blocks from Chestnut, there is a night and day difference between the two, and while I love living in the Marina, I would hate to see what they have going for them stunted by Chipotles and Urban Outfitters.

Posted by: JWS at June 5, 2013 10:18 AM

@anon

One other thing, I'm not opposed to your suggestion regarding sales taxes, I think it's a good idea, but I don't think it meets all the goals of the formula retail regulations.

Posted by: lyqwyd at June 5, 2013 10:38 AM

@lyqwyd - The only piece that I can see that wouldn't be met by my proposal is if you want to ban a chain (or all chains) outright. The goal that I would have is to take all discretion out of the process, as that has already led to massive (MASSIVE!) corruption.

So, either do something with sales taxes like I mentioned, or simply ban any company that has more than 11 (or whatever) locations, including subsidiaries. No discretionary review for folks to bribe their way through (either by the chains bribing to be able to open, or incumbents bribing to keep down competition - and yes, the bribes may not be monetary, but they're still bribes), no ifs, ands, or buts. Landlords immediately see the value of their properties fall and thus adjust their rent expectations, and small-time businesses can immediately see the locations that are available (rather than having to sit back and wait for chain stores to continuously apply).

Posted by: anon at June 5, 2013 11:24 AM

@anon, the main difference is franchises. You could have 3 McDonald's on one corner (although even McD's doesn't allow that).

I don't really care about the discretionary review, eliminate it or keep it, there's arguments for and against both approaches.

Posted by: lyqwyd at June 5, 2013 11:31 AM

I would assume that franchises would be included in the list of banned chains, I guess I was assuming that would be obvious.

Posted by: anon at June 5, 2013 12:32 PM

^^anon
The other unmet goal of your proposal is that it does nothing to keep that 20% of your dollar in Rick Karp and his friends' local pockets, as opposed to someone else's pocket in Texas or Arkansas. There is an entrenched lobby of small business owners who shout loudly for, and receive from our elected and unelected decision makers, protection for their businesses to line their own pockets. They are disingenuous if they claim their motives lie elsewhere otherwise.

Posted by: BobTheBuilder at June 5, 2013 12:36 PM

That's the massive corruption that I was mentioning. I went to several of the meetings surrounding a new pet store opening on Geary, and the corruption in the air was absolutely sickening. People weren't even pretending that their goal was simply to line their own pockets, to heck with better customer service, etc.

[Editor's Note: Target On Geary, Yea! Unleashed By PETCO On Geary, Nea!.]

Posted by: anon at June 5, 2013 12:46 PM

@anon

The current regulation blocks franchises, a sales tax based approach would not.

Posted by: lyqwyd at June 5, 2013 1:27 PM

My sales tax based approach would include franchises as a chain and target them in the same way. Maybe I'm missing what you mean?

There is no difference - right now the legislation includes franchises, and my sales tax based approach would include franchises...

Posted by: anon at June 5, 2013 4:14 PM

Franchises are individual businesses that pay a licensing fee to the franchisor, their sales are not on the books of the named company.

Unless your sales tax approach specifically targets franchises in aggregate then it wouldn't count the sales of all franchises. If it does, then I don't really see a fundamental difference between the two. One approach focuses on the number of stores, the other focuses on the number of dollars.

But like I said previously, I don't care about the specific approach, and I like the sales tax approach as an alternative.

Posted by: lyqwyd at June 5, 2013 6:54 PM

The difference is that my approach takes human discretion out of it. I have no problem with number of stores being used as the determining factor rather than sales, etc, but I have a gigantic problem with it all being sort of wishy-washy, "we don't like chains, but we like certain ones at some times if they know the right people or donate to the right concern" so we'll approve a CVS here but not a Starbucks here. The only part of my plan that I mentioned was having higher sales taxes for X group than Y group - how we determine which of those groups is bigger or more "chainy" up to discussion.

Sales tax is something that would hit incumbent chains as well - I see no reason why we should grandfather in big businesses if we feel that they're detrimental. If the sales tax hit becomes too big, existing chains will shutter and give rise to more space for independent places.

Or alternatively, just ban all chains that have more than X number of stores. Just don't leave it up to who can bribe the right people or run the best ground campaign. That's incredibly lame, and just as unfair as the ballot initiative system.

Posted by: anon at June 5, 2013 7:53 PM

Some great lines in George Packer's piece in the New Yorker last week about Silicon Valley and the bay area. My favorite:

"It suddenly occurred to me that the hottest tech startups are solving all the problems of being twenty years old, with cash on hand, because that's who thinks them up."

I'm not sure I can draw a direct line between this concept and outlawing the 11 store skinny jean retailer, but it's similar in a precious-first-world-problem sort of way.

Posted by: soccermom at June 5, 2013 10:10 PM

To each his own.

Bans on large corporate businesses is why we moved out of SF.

It is true that smaller shops prosper this way - though why we ought to protect snooty boutiques is another question - but it also inconveniences a shopper who wants to get a shirt from Banana Republic or JCrew and not necessarily a hand stitched, organic, linen, fair-trade, Guatemalan made, Hayes valley-designed, $599 hipster shirt.

Of course, you can drive (until they ban cars in SF) to Union Square so that is all this is an inconvenience but, at least for us, the inconveniences caused us to move to Walnut Creek - now we live in an outdoor mall... AWESOME!

Posted by: wrath at June 6, 2013 11:40 AM

You moved to Walnut Creek so you could go to Banana Republic more easily? That's pretty sad.

Posted by: R at June 6, 2013 12:08 PM

I know - but my sad story will no doubt move no hearts at the next BOS meeting...

Nonetheless, we are now within walking distance of ten Starbuckses, a Williams Sonoma, a Crate & Barrel, a Pottery Barn, a Cheesecake Factory, a Barnes & Noble and of a CPK. Not to mention, Banana Republic, JCrew, J Jill, Burberry's etc. With the new Neiman Marcus & the Nordstrom my social & cultural life is BLOOMING!

So, while I thank you for your concern, please don't feel like we're suffering here. While the move was a pain in the butt - we are now doing better than ever - just a bit hot but most of WC is airconditioned so we can't complain!

Posted by: wrath at June 6, 2013 12:40 PM

Walking distance to 10 Starbucks! A dream I never thought was possible. Make room, I'm coming to join you.

Posted by: R at June 6, 2013 12:43 PM

I just wanted to say I just LOVE Soccermon's posts! Especially the point about this being a "precious-first-world-problem" posted earlier in this thread. People trying to make a difference in the world living complex professional lives while raising a family do not have time to worry about whether an expensive hipster shirt store has 10 or 11 locations worldwide.

BBC Radio 4 recently did a show on California and the difference between L.A. and San Francisco. The program came to the conclusion that Los Angeles was a city of people who moved there to recreate themselves while San Francisco was a city of people who moved here to recreate OTHER peoples lives and spaces. It may seem strange but S.F. was portrayed as a city of restrictions where strong politically correct political dogma has created a very narrow series of lifestyles while Southern California was shown to be a huge kaleidoscope of variety both in politics, lifestyles, and economic diversity. This city was actually portrayed as being very close minded and very insular and rather selfish in what it prohibited and what it encouraged. (The archived link is unavailable in the U.S. unfortunately)

Posted by: anonandon at June 6, 2013 6:40 PM

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