PhilMur's thoughts on biz/tech/money/life

Austin, TX is known for a lot of things– the self-proclaimed live music capital of the world, a fairly progressive social and political agenda, and an eclectic culture thanks to the concentration of artists and the tens of thousands of University of Texas undergraduate and graduate students that make their way–and home–here for most of the year.

I have also come to discover, since my move here less than 2 months ago, that the city contains what I believe is an unusually high number of mom-n-pop stores, most of them focused on very narrow, niche products and services.

Here are just a few of them near my house – I jotted the names of these down as I went out to run an errand the other day – these are literally all located within about a 2 mile radius of my home.

The Light Bulb Shop
Another light bulb shop (didn’t get the name down, but only 0.5 mile away from its competitor)
The Vacuum Shop
The Front Door Company
Tonecraft Amp Repair
Austin HappyMac
Find-N-Grind Skate Shop
Austin Books & Comics
AAA Medical Oxygen Supply
Great Hall Games – an awesome store devoted to board games!!
Austin Nuts (nuts and candy shop)
Scooter Revolution
Light shop (can’t remember the name)
Ceiling fan shop (can’t remember the name)
Fancy Plants (silk plant store)
Dozens of hamburger joints around since the 50′s
A dozen or so used book stores

Here’s my question: why do these, and countless others very close to me, continue to exist (and do very well in most cases!) when in most cities such small, niche shops have long ago fallen prey to larger retailers?

Despite a lifelong interest in how cities develop, grow, and change, I don’t necessarily have complete answers to this question and so I would love to hear some comments with suggestions.  Why they do they thrive here in Austin while in other urban centers (particularly in the South where I have spent my life), these types of shops closed decades ago?

Most of us understand that in a free-market economy, producers will produce a good or service when they can sell them at a reasonable profit margin.   Granted, that is a very simplified explanation, but it works for this illustration.  In most cities small business owners lost out to giant malls in the suburbs from the 1950′s to the present, who sold items for lower cost and in many cases presented shoppers with a greater variety of goods.  The “mom-n-pop” owners could no longer justify keeping their doors open, with little or no profits, and in many cases finally closing shop after months or years of losses.

One has to assume the mom-n-pops that remain in Austin only do so because they make sufficient profit to allow them to continue to operate and give their owners motivation to keep the store open.  Maybe this is due to the unique products that many of them provide, not found at major stores (i.e. specialty front doors, amplifier repairs, etc. per my examples above).   Obviously, there still has to be sufficient demand for scooters or silk plants for even a local store to focus on selling those things.  If the demand grew too strong or the products became something desired nationwide, such mom-n-pops (unless they could transform themselves to a chain of stores of growing significance) would likely lose out to a company or individual with deep pockets who will inevitably grow a nationwide presence to meet the new national demand.

So, my point is this: local, niche stores can generally only exist successfully when the demand they supply is of a local, unique nature– or when protected by other geographic or legal barriers.  For example, the unique population in Austin drives much of the demand met by these niche stores.   An amp repair store is most likely to thrive in a city with many musicians.  Likewise, a shop focused completely on light bulbs will do better in a city where utility rates are higher and there is high value attached to energy conservation (such as here).  In addition, Austin is a fairly progressive city and within the city limits you often find citizens who fight to keep big box stores out of the city center.  As a result even shoppers who might be happy to drive over to a Wal-Mart to buy a vacuum bag will likely find themselves going to a specialty vacuum shop if going to the Wal-Mart means a 20 minute drive as a result of the legal blocking of an in-city store.

The mom-n-pop store is not necessarily gone for good, or just restricted to cities such as Austin.  Times change, and the once-dominant suburban indoor shopping mall is now struggling as infill developments inside MOST cities move retail activity back into the city, and as the open-air shopping concept picks up steam in the suburbs and in the city.  In fact, I read one source recently that claimed not one new indoor traditional shopping mall has been constructed in the U.S. since 2006.   With these changes, individual shop owners have an opportunity yet again to get in front of the eyes of valuable potential customers, by developing a niche offering that matches local demand and preferences.  Don’t try and beat the big retailers at their game– play your own game.  THAT is what you can learn from Austin’s retailers.