17. Niche Recommendations

A niche is a specialization that allows a downtown to gain dominance in certain categories of the retail market. Niche strategies can help a downtown compete in the competitive retail environment.  Market analysis recommendations should include possible niche opportunities based on the data collected and analyzed throughout this study. 

Successful communities often have two or three successful niches. These communities also benefit from an expanded trade area as their specialization often draws customers from more distant communities.  Once a niche is established, other businesses are often attracted to the community as they are interested in selling to the same targeted consumer segments.

The following summarizes examples of consumer niches, many of which were drawn from a book titled Niche Strategies for Downtown Revitalization by N. David Milder.

Consumer Segment Niches

A niche can be based on a certain type of consumer who works, resides in, or visits your community.  These consumers may demand a wide range of goods and services.  Examples of these consumer-based niches include:

• College Students.  Some communities with colleges and universities have successfully targeted the student population.  Smaller towns and communities with commuter campuses tend to have more difficulty developing this niche.
• Retirees.  As the population ages and older Americans gain a larger share of savings and income, attracting retirees has become an economic development strategy for many communities.  This sector of the population is expected to grow significantly.
• Ethnic Groups.  Downtowns in larger cities are increasingly recognizing the tremendous retail demand created by inner-city consumers.  Successful retailers in these communities realize differences in consumer preferences among and within specific ethnic groups.
• Tourists and Travelers.  Tourism has become a key strategy of big and small communities throughout the country.  The influx of visitors provides demand for retail and entertainment, but also opens up opportunities for other alternatives in the downtowns including festivals, museums, lodging facilities and promotional events.
• Office Workers.  While many downtown office workers prefer to make larger purchases at shopping centers close to their home, many specialty items such as cards, books, CDs, and some apparel are very convenient "lunch-time" purchases.
• Artists and Crafters.  Many downtowns have recognized that local artists and crafters and those interested in their work provide a unique and active consumer segment to target.  Communities serving this niche often have galleries, restaurants and bars, and unique specialty retailers.  Their downtowns may include a mix of professional offices and business support services, such as copy shops and office supply stores.
• County Government Users.  In addition to attracting residents from throughout the county, county seats often attract lawyers, public management consultants and others.
• Medical Facility Users.  In addition to the visitation of patients and their families and friends, hospitals also attract visiting medical professionals.  A mix of medical offices and retail businesses (drug stores, florists, medical supplies, etc.) are often found in these downtowns.

Goods and Services Niches

Some communities have developed a niche focusing on particular goods and services.  Examples of niches based on categories of goods and services include:

• Home Furnishings.  A cluster of related businesses may include home remodeling, furnishings and decorative design.  Specific businesses might include hardware, floor covering, furniture, lighting and paint stores.
• Antiques.  Many small and medium sized communities have been successful in attracting numerous antique shops, often in a historic district.  These businesses work well together in creating an historical, craft and hospitality theme.
• Crafts.  Some communities focus on craft-produced houseware items such as furniture, rugs, textiles, ceramics, and glassware.
• Children's Products.  Some downtowns are successful in this niche by combining stores focusing on children's clothing, furniture, toys and family entertainment centers.
• Food-for-the Home.  This includes specialty foods such as bagels, breads, wines and cooking items.  In some communities, it also includes large grocery stores that serve as an anchor for downtown commercial activity.
• Jewelry.  While many large cities have a jewelry district, some small towns have their own niche composed of jewelry retailers and service businesses.
• Entertainment and the Arts.  Large and small cities across the country have improved downtown retail activity and public image by promoting the arts and entertainment.  Cinemas, theater, concerts, ballet, museums, art galleries, craft shops, and clubs all bring local and visitor spending downtown.
• Restaurants.  Eating places can attract diners from trade area residents, tourists, and downtown employees.  In many downtowns, restaurants have become the largest category of retail activity.
• Weddings.  Some downtowns serve the wedding market by offering jewelry shops, wedding attire, florists, caterers and other related businesses.
• Factory Outlets.  A factory outlet is a store owned and operated by a manufacturer that sells its brand named merchandise at a discount.  These stores are often clustered together to serve a "value retailing" niche.

Identifying Existing and Potential Niches

In many communities, niches already exist, but simply need to be organized.  These niches can grow and become more visible through store expansion, recruitment of new businesses and cooperative advertising and promotion. 

Using data from your market analysis, study the types of businesses that are currently located in your downtown to see how they fit together.  The objective is to identify significant economic strengths in the downtown as evidenced by the number and square foot of complementary businesses, and the economic activity that draws people to these businesses.  Once identified, the challenge then becomes organizing the businesses under a niche banner so that they can benefit from joint promotional and marketing efforts.

Once a niche is identified, the community should use it as part of its broad economic restructuring efforts.  Cluster strategies (See Section 18) can be used to geographically define where businesses serving the niche should be located.  A niche strategy should constantly evaluated and its economic impact quantified.   Positive impacts on the economics of downtown should be widely reported and celebrated.  This will serve to strengthen the niche.

Exploring Potential Niches

Trying to create a new niche can be more challenging than trying to capture an existing niche.  While new niches can be very successful, their development often involves risk and large investments from both the public and private sectors.

Sometimes, having one niche can be a base for developing another one, since the first already draws a certain type of customer.  For example, a downtown with a restaurant niche may draw customers that might utilize entertainment or performing arts facilities. 

Using data from your market analysis, analyze downtown and community characteristics to understand what types of offices, businesses or institutions are located nearby.  Study niches in comparable communities.  Recognize that a very different and expanded trade area could arise depending on the niche developed. Use your business owner and consumer survey findings to obtain ideas about possible niches. 

Niche strategies that are based on either consumer groups or particular goods/services can help a downtown compete in the competitive retail environment.  However, niches need to be carefully analyzed so that they are appropriate for a community.  If done right, these strategies can lead to business expansions, new business development and significant increases in retail activity.