The Starbucks Effect

Starbucks follows the same growth strategy as Walmart - concentrate in a particular area until all the competition is gone before moving to an new area. When I moved into my current apartment I could walk to 5 Starbucks in less than 10 minutes - now there are 12. There are still some hold-outs but they are mostly in the form of places that also sell coffee. For example, Tim Horton's (that stalwart of Canadiana for half a century) still has a presence but they are being overwhelmed.

The omni-presence of Starbucks has less to do with the economics of selling coffee on the local scale than it does on the global. Many of the 12 Starbucks near me lose money. They are kept open to force the competition to close. It isn't illegal to drive your competition out of business this way. And, as far as coffee goes, there will always be exceptions. Toronto used to have one coffee shop that was operated by fanatics. They are the kind of people one would dread accidentally getting into a conversation with because of their Asperger-like obsession but they made the best coffee I've had in North America. They recently opened a second shop. The limit on their ability to expand isn't the demand but the problem of finding sufficiently obsessive staff.

Whether the commodity is coffee or anything else, the Starbucks model is always limited by its nature; people choose Starbucks because they know the product, know precisely what to expect and that's what they get. The ability to deliver precisely the same product anywhere in the world (what I used to think of as the McDonald's Test) has inherent limitations. There is a mediocrity to uniformity. Small, specialty shops have (for the moment and the foreseeable future) a place in the economic (and therefore physical) landscape. The limitation on specialness is typically rent. And this is a large part of the reason gentrification is self-defeating unless you are a real-estate speculator.

A part of town becomes cool because it is filled with interesting things. The coolness drives up the value with the concomitant intensification of development. The cool places that exist because of low rents are forced out so rents can be raised. The result is another gentrified neighbourhood where the only retail is in outlet form and the outlets lose money but increase either prestige or market share. There is a pen store in Cambridge Ontario better than any I've been able to find in Toronto and it's there because rent on a bad street in Cambridge is about a third as much as rent on a bad street in Toronto. Poor quality sites are sometimes a good quality in a city.

So the result seems to be an inevitable transformation of our cities - what some have called "Disneyfication" or the generic city. The equalizer between the generic (which we most often say we're against while shopping at chain stores all the time) and the unique (which we support theoretically but not monetarily) is movement. Some consumer items are "movement resistant", coffee being an example. I don't want to engage in any kind of "transit" to get coffee. I guess you could call walking transit but I mean a really short walk. Cigarettes are another example. They are almost free in Indiana (the great northern Freak State) but I'm not driving there to get them. I walk to buy a pack - typically less distance than I have to go for a coffee.

Most consumer goods are not transit resistant. Books, for example. Toronto used to have one of the best architecture bookstores in Canada. I drove from London or Waterloo to shop there (that's 2 hours and an hour respectively) but it went under. It was located in a very small area that got gentrified to shit - and Amazon didn't help. There is an obvious equation tho - the easier it is to move around a city, the lower the bar will be set for movement-resistance. Some stores (restaurants, whatever) will be willing to pay higher rents for the cache of being in a certain neighbourhood but the special shops (the unique places that give a city it's identity) can continue to exist provided transit is good enough.

New York provides a telling example. There, when a neighbourhood gets gentrified, it's identity completely changes. NYC's transit system is too under-served and over-used. In fact, I think there's a kind of race on to see whether all of Manhattan can get turned into a slum for zillionaires before the rising ocean levels submerge the island. But I can imagine a different situation for the greater New York where transit was so intensely linked and amazingly fast that gentrification had an entirely different effect on the physical complexion of the streets. Maybe not in New York though. Global cities attract capital from all over the place (the zillionaires of the world competing with each other). It would definitely work in Toronto.

Then areas that are gentrification resistant for some reason - in Toronto the Junction is ripe for gentrification but it's not happening (or happening slower than it otherwise would) because of the weird and difficult confluence of roads and rail lines that give the area its name. Other bulwarks against gentrification are homeless shelters, long-term rent hotels (although these are increasingly endangered by rezoning) rehab facilities, any permanent institution that 1) can't be moved somewhere else, 2) scares people or makes them uncomfortable (particularly at night) and 3) makes speculators doubt the upward mobility of land values. Shoppers don't care about land value, buyers do. Shoppers don't care if they would be uncomfortable walking the street at 2 am, potential residents do. These are perfect locations for businesses with a very limited and specialized clientele - the kind of place for which outlets are no substitute. Rents stay low because the property values stay low. The gentrification-proof model works best if the area is difficult to get to by car or is close to rail lines - shoppers don't mind the sound of trains going by, renters do. A thorough transit connection to such sites would make them ideal preserves for local businesses that would otherwise be forced out by the chain monopoly of Starbuck's, Shoppers Drug Mart, the LCBO, and a bank branch. Check any new building that includes ground level retail for "street appeal" or "pedestrian amenity" and those are the stores and services you will find - plus or minus a cell phone retailer.