Potsdam’s shopping street management on its quest for private organization

High-street in Potsdam.

High-street in Potsdam.

by Valentin Schipfer

Together with die raumplaner  Inpolis will introduce a concept to continue the shopping street management for Potsdam’s historic city center and for Babelsberg. After having conducted several stakeholder interviews, Inpolis is in the phase of research and analysis right now. I want to present some impressions on Potsdam’s shopping area and thoughts on a retail center management in this entry.

Since 2009 there exists a shopping street management for Potsdam’s inner city. Before phasing out in 2013 the program is funded by the European Regional Development Fund.  Its continuation shall be based on the acquisition of new partners. The aim is to include retailers and other stakeholders as private financers, whereby the regional capital Potsdam will remain as a partner. Until now merely no financial resources are being provided by private stakeholders. In order to continue the management and to raise the stakeholders’ awareness and identification with the program, an organizational model has to be found. Before presenting possible models I want to describe my personal impressions on Potsdam’s shopping street – from my perspective as an assistant.

After having browsed through Potsdam’s shopping streets’ ranking, I was positively surprised at the official on-site excursion: The worst ranked shopping streets do not have more than three vacant stores; I did not see many discount stores either; only two abandoned buildings were spotted. Apart from that, the Dutch quarter does not suffer from any vacancies at all. Ample pedestrian zones with almost no vacancies gave ground for assuming that businesses are working well. On both sides of the pedestrian zones numerous stores of global chains lure consumers to drop in. In addition most of the one-storied buildings’ first floors are unused. They gave further ground for assuming that the well-running retailers from the ground floor pay sufficient rent. In addition, numerous buildings are accessible at day whereby visitors are attracted to the thoroughly cultivated backyards.

Later on a retailer stated that € 2.500,- was the common rent for a 150 m² store in a side street. He also lamented that the promotion in pedestrian zones was prohibited for side street retailers.  For the ones located there, it is allowed though. During summer the car-free areas are stacked with tourists, restaurant chairs and tables as well as with their promotional material. The closer you get to the center, the more global brands belligerently surround you.

The retailers mix contained medium-sized enterprises which operate through multiple outlets with a common format, well placed in the competitive local context; small entrepreneurial businesses with the use of employed work and the entrepreneur as a coordinating role; small “craft” firms with the firm performance closely dependent on skills and on the ability to differentiate the assortment; and few small “refuge” firms – small shops which are not competitive in the market and a lack of job alternatives.

Besides the PR conflict between main road and side street shops, the vacancies in the first floors and compared to a recently inspected shopping street in Berlin’s district Neukölln, my general impressions were rather positive. Apparently the ongoing shopping street concept is working. The foundation has been laid effectively and first activities are paying off. In order to install conditions similar to shopping-malls, shoppers get their money back for car-parking for example. The shopping street map is distributed and promoted successfully. Vacancies are announced in an online portal and events are organized on a regular basis (e.g. flea markets with antiques, open air concerts with classic music). After all these public investments, it is up to the retailers now. But who is going to organize the required coordination? Who is going to build a needed shared long term vision? Who is going to continue to promote the mix of trade and service activities? Who is going to provide the knowledge of marketing? And, first of all, how is the organization going to look like?

Fabio Musso suggests three different models. The centered model is based on the presence of a dominant player that is in the condition to define the type of organization. The player can either be the owner of real estates who is in the position to select business and leisure activities for the area. Or it can be a large retailer, able to prioritize specific firms. The supply of common services can then be centrally negotiated on a contractual basis.

The non-centered associative model is more about an association of retailers. Thereby the relationship between the coordinating subject and the individual firms is on a voluntary basis. There is no formal agreement to carry out joint activities. Each of the activities has to be negotiated – in order to benefit collectively.

The non-centered contractual model requires the hiring of a management company. Together with the retailers the company then defines a vision and objectives in a precise mandate. The firms delegate the activities and cover all costs. The participation to the management company can be voluntary or, where legally possible, mandatory.

Musso also states that there are two main difficulties: Firstly small retailers often distrust associations that could reduce, even partially, their autonomy. Secondly there is a recurring conflict between local governments and retailers. Local administrators are mainly seen in their role of taxation and for measures contrary to the interest of retailers. The non-centered associative model meets the greatest obstacles. The output of its collectively negotiated activities is difficult to define. Therefore no one has sufficient interest to afford the costs.

As you can see, Inpolis  is in the process of gathering and critically reflecting information. I am also thankful for helpful hints concerning useful articles, field manuals or guidelines. In case you know some, feel free to comment here.

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4 Responses to Potsdam’s shopping street management on its quest for private organization

  1. Valentin
    The Business Improvement District (BID) Model operated in UK cities and imported from North america (started in Toronto) – is an interesting organisational and governance model that draws in large and small commercial operators (retail, restaurants, hotels , offices and visitor attractions) in to a consortium where all agree a prospectus (business plan) and vote as to whether to accept an additional levy on their business rates for activities such as marketing and promotion, safe, clean and friendly housekeeping matters. Edinburgh has a BID, Essential Edinburgh covering its main shopping streets in the New Town http://www.essentialedinburgh.co.uk/ . The BID levy generates £ 1 million per annum. The beauty of the BID is that it also stops ‘free loading’ by businesses who take the benefits of activities like marketing, additional cleansing and environmental enhancement but do not contribute to the cost,

  2. Pingback: Potsdam’s shopping street management on its quest for private organization | Sdit

  3. Pingback: Web-based tools to promote a high street « Places.

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