Talking Local Economy with Leslie Parks
July 7, 2020
At our latest Realtor Roundtable meeting, we were joined by Leslie Parks, an economic development consultant who has worked with numerous peninsula cities over the past 20 years, including, San Carlos, San Jose, Millbrae, Burlingame, and most recently, Redwood City. Leslie has her finger on the pulse of the local business community, so we were eager to get her insights into the challenges we face in this ongoing pandemic. You can read a summary of our conversation below:
One point that Leslie was quick to make in our discussion, is that a big reason for our economic struggles right now is that the upper-class is not putting nearly as much money into the economy as they did pre-pandemic. Spending habits for working class families have gone largely unchanged, as most of their money continues to go to necessities like groceries, gas, utilities, etc. It’s the spending habits of upper-class households with disposable incomes that have really dampened our economy. They are shopping online instead of at retail storefronts, they aren’t taking vacations, and they aren’t making as many big purchases for things like automobiles.
This shift in spending habits doesn’t just hurt our local businesses, it hurts our local government as well. Sales tax is a vital source of revenue for local governments, and transactions on sites like Amazon only generate a tiny fraction of the tax revenue that purchases at brick and mortar shops do. This compounds the issues for small businesses even further, because as government money gets tighter it becomes more difficult for them to lend any sort of support to struggling businesses, especially with so many sectors of our community in need of aid right now. The truth is that retail was already in trouble before the pandemic, but this pandemic has accelerated the shift to online shopping, and it will be difficult for many businesses to adapt. Now more than ever, it is important for brick and mortar retail shops to make sure they have a website that easily facilitates online shopping, as well as a strong social media presence, and this is something that local governments can certainly provide assistance with.
Of course, some businesses are better suited to weather a pandemic than others. Restaurants always have the option of serving takeout/pickup, and places like pizzerias who deal with mostly takeout/delivery anyway have fared relatively well. Hardware stores have also largely weathered the storm, as the number of DIY projects and honey-do lists that are getting tackled during this lockdown have increased significantly.
Still, for restaurants that rely heavily on dine-in customers, it can be hard to adapt. Serving takeout and delivery can’t always compensate for what you lost in dine-in business. Take downtown Redwood City for example. No one is working at the massive Box headquarters, the new Chan Zuckerberg facility on Broadway, city hall OR the County offices. The lunch crowd normally generated by this aggregate workforce is a huge driver for the downtown restaurant scene, and without them the streets are quite bare of hungry foot traffic.
Redwood City, as well as other cities like Mountain View and San Carlos, have tried to help their downtown restaurants out by closing off some streets to allow for increased outdoor dining. However, restaurants are supposed to apply for a public right of way with the city before they expand their dining into the street, and with only one permit tech servicing most cities, this process can get backlogged. Even so, this is certainly a help to downtown restaurants. If you walk down Broadway in Redwood City, Laurel in San Carlos, or Castro in Mountain View, you will see many expanded outdoor dining areas full of patrons being attended to by masked wait staff.
These are unprecedented times for small business owners. With COVID cases on the rise and a vaccine still many months out at best, it is going to be a long time before we return to business as usual. Even then, some of the effects this pandemic has had on our spending habits may long outlive the virus. As a community, it is important for us to do what we can to support our local businesses. Get takeout once a week (or more) if you can afford it. Get your books from a local bookstore rather than Amazon. Stop by your local hardware store instead of Home Depot. Look up your favorite boutique retail shops to see if they do online orders. It might not be the cheapest or most convenient option right now, but it could go a long way in helping your community get through these challenging times.
Thank you Leslie for taking the time to chat with us! Your insight and expertise on the local economy is invaluable, and we are grateful for the opportunity to pick your brain 🙂