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Retail 'matchmakers' want to set Johnson City up with new business

David Floyd • Sep 19, 2019 at 10:25 PM

Guitar Center, At Home and Freddy’s Frozen Custard & Steakburgers.

Those are some of the businesses a consultant out of Birmingham, Alabama, says it has helped bring to Johnson City.

During a workshop at 4 p.m. on Thursday, Johnson City commissioners heard a presentation from representatives of Retail Strategies, a company that uses data to recruit retailers that are attracted to the specific demographic and market conditions that exist in certain cities.

“We’re not brokers, we’re not developers, we’re simply matchmakers,” John Ruzik, a portfolio director with the company, told commissioners.

The consultant has been working on a six-month contract this year, earning $2,500 per month, and commissioners will be considering a three- year contract with the company in October. Compensation in that contract would be set at $35,000 per year.

The company previously held a three-year contract with the city, which ran from January 2016 to January 2019. The city paid Retail Strategies $40,000 in the first year and $25,000 per year in the last two years.

Looking at mobile tracking data, drive times, geographic boundaries and proximity to neighboring shopping destinations, the company showed commissioners a “customized trade area” specific to Johnson City, which encapsulates Bristol, Kingsport, Elizabethton, Jonesborough and Greeneville.

The area consists of consumers who are “highly likely” to shop or eat in the Johnson City market once a month.

Johnson City’s customized trade area had an estimated population in 2018 of 430,529 people, and according to Retail Strategies, has a projected growth rate of 2.6%. The average age is 41 for males and 43 for females, and 93% of the people living in the trade area are white.

Taking a specific look at Johnson City’s market, Ruzik said the city has several gaps, which the consultants expressed as dollars leaving the market. That includes a $23 million gap in clothing and clothing accessories, a $21 million gap in electronic and appliance stores and a $12 million gap in sporting goods, hobbies, book and music stores.

That gap takes into account people traveling from Johnson City to other cities within the customized trade area.

“You can never erase a gap in outside spending,” Ruzik said. “You’re always going to have outside consumers going off to find some specialty product ... but we can really understand that this is a large gap.”

 

Responding to a question from Mayor Jenny Brock about the impact of internet sales on brick-and-mortar retail, Ruzik said it’s “a myth that the retail apocalypse is here.”

“Retail is not going to die,” he said. “People still want to feel and touch and smell and taste their products before they buy it. What is changing, though, is that millennials have overtaken baby boomers as the largest consumer class.”

To keep up with the buying habits of millennials, Ruzik said retailers need to incorporate an electronic component to the purchase process.

“Those concepts that are able to do ... a hybrid of brick-and-mortar versus online purchasing are the ones that are the most successful,” Ruzik said.

As far as missing retailers, Jordan Williams, a retail development recruiter with Retail Strategies, said the Johnson City market could support a high end grocer and another sports and recreation retailer.

“I think you guys have a lot of outdoor business,” Williams said. “I think a lot of people already know that. You all have a Trek store, which is to me incredible. ... That’s a very strong indicator for a market. There’s not a lot places where you could sell $1,000 or $5,000 mountain bike and people would come and purchase it.”

Late project

During its regular meeting Thursday, the commission approved a roughly $58,000 increase to the total compensation limit for engineering firm CDM Smith to serve as a third-party contractor on improvements to the Brush Creek and Knob Creek wastewater-treatment plants. Commissioners approved the item on their consent agenda.

This raises the upper limit of compensation for the firm to about $2.31 million, according to city records. The majority of that money was in the original budget for the project.

After receiving a low bid in 2015 totaling $11.9 million, the city hired Bristol contractor Frizzell Construction Co. to conduct improvements to the Brush Creek and Knob Creek wastewater treatment plants.

City Manager Pete Peterson said in early September that the project is more than a year overdue and could mean thousands of dollars in extra expenses by the city.

Peterson said the additional cost to the city comes from extra money paid to CDM Smith to serve as the city’s representative on the project and conduct inspections of the work to ensure it’s being built according to plan.

Ben Frizzell, the president of Frizzell Construction Co., said the delays are due to circumstances outside the company’s control.

The city is aiming to have the project complete at the end of September.

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