Reimagining small business, micro-retail centers could provide post-pandemic blueprint

ByAmanda del Castillo KGO logo

Wednesday, April 21, 2021

Micro-retail centers could uplift small businesses post-pandemic

A number of local retailers in San Jose have found small spaces are saving small business.

SAN JOSE, Calif. (KGO) -- A number of local retailers in San Jose have found small spaces are saving business.

Yuri Kim is the owner of Fractal Flora, a plant and flower business. She recently relocated from a 500-square-foot micro-storefront on San Pedro Street in the city's downtown core, to a 1,000-square-foot shop at 1461 Park Avenue.

"You can come into a lot of problems and your business may not make it," Kim told ABC7 News. "But at least with a micro-space, you can test the waters out."

She and a former business partner began Fractal Flora from their home.

"We decided we both really love nature. So we started to collect succulents," Kim explained. "We would do small farmers' markets and craft shows on the weekends. Then finally, we were able to save up a little bit and get a small studio in Japantown in San Jose."

Kim said she and her former business partner formed connections with other local artists and makers. Later, being approached with an opportunity to open a brick-and-mortar store on San Pedro Street.

"That is kind of every small artists, makers dream come true," she said. "And that was the MOMENT spaces in San Pedro Square Market."

With the help of a Knight Foundation grant, the micro-retail center launched in 2018. The center is called MOMENT.

Each storefront is only a couple hundred-square-feet, but big enough for home-based businesses to have their first brick and mortar experience.

Post-pandemic, Kim believes these micro-spaces could provide a blueprint for small businesses.

"We are going to be seeing a lot of these people wanting to take their shops or their businesses that they started in their homes to the next level," said Kim. "To see if it's actually sustainable."

Kim moved from the MOMENT micro-retail center space to the Park Avenue location in September 2020.

"It was more of like a, 'Try it out. See if you like it,' thing," she told ABC7 News. "There were just a lot of things that really gave us more exposure and helped us kind of achieve that dream, that stepping stone of actually graduating to a real brick and mortar which I have now."

Kim opened doors at the new location in October.

"It was like a ballet studio," Kim said. "And because of the pandemic, they could no longer hold classes. So they decided to leave, and the space opened up for us. It was kind of perfect timing."

A recent Gehl study, commissioned by the Knight Foundation, found this very small retail footprint could be a very effective way for people to build economic security.

Chris Thompson, the Knight Foundation's San Jose program Director said that was uncovered by testing the retail route to market.

"The reason was that the project took a lot of the complexity out of the process of securing a place to rent, the long lease cycle, the cost with a large retail space," said Thompson. "It was really tuned into almost- let the entrepreneur experiment, 'Is this retail thing right for my business?'"

Thompson said the study also uncovered the skills that entrepreneurs are bringing to the market now are "interesting," and as he described it, "experiential."

"When you're watching somebody create something- you think about artists," Thompson told ABC7 News. "They can be places where you need to go to get services done. You can think about people that are, for example, in textiles, or sewing or people that are providing services like hair cutting."

"All of those things may be difficult to do on a large scale for an entrepreneur starting out," he said.

However, he said by making the storefronts smaller, grouping them together, and putting them into an existing traffic pattern in a public space has been proven to aid in success.

"It's a great way to build some economic security for those entrepreneurs, to bring new life to those public spaces. And in fact, create something that's greater than the sum of the parts," Thompson said.

He said the idea isn't new. "If you think about it, for 30 years, more than 30 years, that kiosk in the center of the mall. This is just a reaffirmation of that trend," he continued.

"I think we learned during the pandemic, that public spaces can be used for places to eat, as places to shop. As places to go get exercise, places to perform services like haircuts," Thompson said. "We start to think differently about those public spaces."

He said, as part of the post-pandemic build-back strategy, the big thing will be reimagining retail and experiences at the street level.

"And trying to connect those spaces with the spaces around them. So that there's an experience that's stronger, stronger together, so to speak," he told ABC7 News.

"We need to build back our cities so that they are better than the other options that people have," Thompson added. "And people want to get out and experience them."

He said the study also uncovered that success is dependent on these micro-retailers meeting the needs of residents.

A major post-pandemic plan by Google will put many more residents in Downtown San Jose.

"We think it's a trend that has legs," Scott Knies, Executive Director of San Jose Downtown Association (SJDA) said. "And you're actually seeing this in the Google proposal that was just announced for Downtown West."

MOMENT arose from a Knight Cities Challenge grant awarded in 2015 to SJDA.

"Not all of them are going to be successful," Knies said about the small businesses who attempt to find success in micro-spaces. "But it's a place to try out these ideas. What's exciting about the opportunities the pandemic has afforded is we've got a number of spaces that are now looking for tenants. And maybe an opportunity to have more of these makers and smaller retailers go in and experiment a little bit more, throw it against the wall, see if it sticks."

Knies said he also believes micro-retail centers will be beneficial in a post-pandemic world. Especially because there are several similar examples that have already emerged.

"You're seeing that with the so-called 'Ghost Kitchens,' with restaurants. You're going to see it with these accelerators, or kind of resilience shops where you're sharing space and infrastructure and having a number of smaller shops being under the same infrastructure," he said. "You see it a little bit at San Pedro Market or the SoFa market, where you have a number of different retailers and restaurateurs under the same roof."

Knies pointed to more opportunities around the downtown core for additional micro-retail centers.

"We've got a number of buildings that are vacant," he elaborated. "And we're looking at expanding the same concept of getting three, four or five micro-retailers under one roof in a different storefront, in different parts of downtown."

He believes there is demand for micro-retail opportunities.

"There's enough really creative people who are ready to take that leap, pay a little rent, and try a brick and mortar location before doing the full storefront," Knies shared.

For details on the Gehl report, click here.

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