How to Fill Vacant Stores Using a Retail Challenge Contest
In 2016, Red Wing Downtown Main Street hosted a Retail Challenge to bring one retail store to downtown. The competition was so successful that it filled four storefronts! Learn about how we did it, and how you can replicate it in your town.
To View this Podcast with the presentation slides, go to our YouTube page HERE: https://youtu.be/d47sEl8cWN8
To learn more about Red Wing Downtown Main Street:
Name: Megan Tsui
Organization: Red Wing Downtown Main Street, Red Wing, MN
Title: Executive Director
Megan Tsui has been the Executive Director of Red Wing Downtown Main Street since 2016. She loves working with the local businesses and being their advocate. She recently completed the “Historic Real Estate Financing’ Course offered through National Main Street and the National Development Center. She hopes to use that training to help bring new development to Red Wing’s second and third stories. She lives in Red Wing in an 1875 Italianate Victorian with her husband Kent and their cats and dogs.
Megan: Hey, everybody! It's Megan Tsui. I'm super excited to be here today and I'm going to be the guest. You lucky ducks.
I'm going to talk about a contest that Red Wing did in 2016 to fill vacant storefronts. We called it a retail challenge and it was really successful and really fun. And I'm going to go over some of the details. I'm doing this podcast a little differently today. If you're listening right now on a podcast, all you hear is audio, but I also have slides and I'll put that up on YouTube so you can actually go to YouTube and watch the whole presentation. If you'd like to, it's meetmedowntownpodcast.com and then search on YouTube and it should pop right up. I'll also link to it off my website, meetmedowntownpodcast.com website. And you'll be able to find it there as well.
So, like I said, I have slides and I'm doing the audio and so sometimes I might forget that you can't see what I'm talking about so I apologize in advance. Otherwise, I also want to encourage you to go to the website because I'm going to have a downloadable packet for you of how you can do this in your town. And it has all of the information that we used to make this happen in Red Wing. And you can download it there. It's a PDF that has everything from our criteria, the plan, what we gave away, the marketing, everything. So, it's pretty much a plug and play kind of a download. So I'd encourage you to go to the meetmedowntownpodcast.com and then click on the latest podcast, which right now would be the, How to Fill Vacant Stores Using a Retail Challenge Contest. And you can click and download that kit there and get started on your own, and you don't have to reinvent the wheel, which is something I do not like to do.
So let's get started. And again let me remind you, if I refer to something on the slide, I'm sorry, I forgot that not everybody can see.
All right, let me tell you a little bit about my town. We're situated along the Mississippi River and it's this beautiful river town, very historic. We have everything you could think of for outdoor fun. You can go fishing, boating, biking, hiking. We have skiing, both Nordic skiing and downhill skiing. You can climb a bluff if you want. And it's just this very idyllic setting right around the curve of the Mississippi. And like I said, there's bluffs and all sorts of beautiful scenery around our town. We have a legacy manufacturing community in this town, I guess. We have the Red Wing Shoe, which some of you may have heard of. They make boots and shoes and, especially for the working, working folks. The Red Wing Pottery is also located here. And then we have Riedell Skates. They make skates for a lot of the Olympians. And these are manufacturers that have been here a long time and are very rooted in our community. And we're really lucky that, especially the Red Wing Shoe is still owned by the same family, as it was when it was started. And so they are very dedicated to our community and to our downtown. Actually, the Red Wing Shoe Corporation is headquartered right in our downtown. So we have a beautiful place to live. We're very lucky. It's idyllic. It's, it's wonderful.
But we had a problem in 2016. I mean the recession hit us in 20--, you know 2008, 2009, 2010, and we weathered that a lot. But for some reason in 2016, we had this rash of vacancies that really left some gaping holes in our town.
The reason we had some of those vacancies was that some owners retired without a succession plan. They retired and they closed their business and that was it. Some businesses just became obsolete. You know, when in this challenging retail environment, some businesses just can't make it or they just got tired. That absolutely happens.
And then we had, we identified a couple voids, one especially in the outfitter idea. We did not have someone who you could, you know, if you were a tourist and you stepped into Red Wing, stayed overnight, you couldn't ride a, rent a bike or anything like that. So we knew that we wanted some sort of a business to be in that, to help fill that void. The other area we knew that we wanted to do to make sure to have some, somebody fill in some way, was Red Wing-themed products. Nobody was doing, you know, the T-shirts and coasters and bags and buttons. And nobody was doing that in our town, and we felt like there was a really missed opportunity to market our town.
So, what did we do?
We started the Red Wing Minnesota Retail Challenge. This was the primary marketing slide. Again, sorry for anybody who's listening on the podcast. It's basically a very simple drawing of a building in our downtown. And then it just says, “Red Wing, Minnesota, Retail Challenge” on it. And it says, “Do Downtown.” And it was very simple for a reason, because we wanted to make sure to have, to keep the idea of what we were going to do for the retail challenge and the kinds of businesses that we wanted to attract, to have it be pretty, we wanted to be ready for anyone.
We knew there were those voids, but we also wanted to make sure that people felt like they could come to our downtown and open a store. So we didn't want to be super specific, I guess, is what I'm trying to say. There were six goals of the Retail Challenge. One was to recruit businesses that would enhance the business mix in downtown Red Wing. Number two is to provide businesses a head start during the toughest year of operation, which is of course the first year. Number three is to strengthen the local economy by attracting unique and specialty businesses. Number four, transform empty business spaces into more attractive and beneficial locations. Number five is to build a buzz and promote Red Wing as a great place to start a business. And number six is to display the community's commitment to downtown Red Wing. That's one thing that we're so proud of, is our community loves our downtown. And it’s apparent in everything we do and how much support we get.
So it's wonderful. So those were those six goals of the retail challenge. We had very clearly identified eligible concepts. This was an important piece and I'd highly encourage you to think about these very carefully. And again, if you download, if you go to the meetmedowntownpodcast.com website and download that kit, you'll see all this in there and how we communicated these eligible concepts to potential contest entries.
One, they had to be a new retail business. It must add to the downtown business map mix. It has to drive traffic to our downtown. Second or third retail satellite businesses from an existing location in another town were eligible.
A significant expansion of a current downtown retail business that includes an added business concept. So, we weren't just looking to fund a retail business to get bigger, they had to add something. And then the last one was, this is a retail-specific competition. Service businesses are not eligible. The main difference between a retail business and a service business is that a retail business stocks and sells tangible goods, things you can touch and feel, whereas the service business sells non-tangible products, things you cannot touch and feel.
We really wanted to stress and help to define that for folks because we didn't want to waste anybody's time and we didn't want to set anybody up for failure. So we really identified those clearly, and I think that was very important. The next thing we did is, we built an incentive package for folks, the business that was going to win. And there were different parts to that incentive package.
So the assets and rent portion of the package was $20,000 in cash to be used to buy hard assets. That was sponsored by the Red Wing HRA, the Housing and Redevelopment Authority. They had a special grant program where they could grant funds to a Downtown Main Street and then we could distribute those funds in hard assets. So that's a pretty big deal to a business starting out. There was a low-interest loan from the Red Wing Port Authority that they offered up. And rent and utilities were subsidized by landlords. We asked all the different various vacant spaces, the landlords of those spaces, if they would help to offset some rent and utilities for a certain amount of time. And that value ended up to be about $4,000. And as you know, when you're starting a business, that's a big deal.
There was also part, an incentive package of marketing. And that included merchandising and retail consulting, which was a $500 value; social media consulting which was a $1,000 value; cash for social media advertising, 500 bucks. We had someone who donated $500 so that we could do that. Graphic design services, $2,500. Local newspaper advertisements, up to $1,300 value. Gift certificates towards signage, $150. A one-page basic web site, $750 value. And the local radio station donated $1000 in ads. So, what a great way to kickstart a business, was really what this ended up being.
All right. We also had legal, financial, and technical aspects of the incentive package. Those included $500 in legal counsel, $500 in accounting and tax services, business consulting, 500 bucks, value of that. We partnered with a bank that waived all the fees for this first set of business checks and endorsing stamp, etc., for $125 dollar value. And then we had some technology support for $150.
A few other things that were offered up, and this is where you can really see, we have a great community, the first thing is we, the Downtown Main Street, offered up a one-year membership to our organization. We had one sponsor package for Downtown Main Streets Events for 2017. So, we put on a bunch of events especially the holiday stroll at winter time. And so that was a thousand dollars that we gave so that they could advertise or sponsor something that we were doing. There's a one-year membership to the local YMCA, $572 value. We have a local State Technical College and they offered one free online course for $100 in value. And then we had $2,000 cash to go towards facade improvements.
And so what an amazing package we had in a total of almost forty thousand dollars by the time we were done. And we really had to partner with all these local organizations, and they were all really excited to do so and to offer, you know, the why, probably normally wouldn't think of being in the retail, you know, recruiting business. But all of a sudden, look at how that could really help make a family think twice about moving a business to Red Wing or opening up a business in Red Wing.
So the timeline for the contest, on March 18th in 2016, we had the initial press release and announcement of the competition happened. By April 15th, we have Phase 1, where there was a business concept and officially the entry form was due.
We wanted to prevent people from spending a lot of time on a concept that wasn't going to meet our needs. So we wanted, we had that part of the entry really helped us not waste anyone's time, again.
By June 3rd we had, business plans were due. June 24th, that's when the final proposal presentations or the pitch happened and personal interviews happened. And then June 29th we announced the winner of the grand prize. And the business had to be opened by October 1st. We really wanted people to take advantage of the amazing tourism that happens in Red Wing during the fall and then also take advantage of those holiday sales that can really get you through some pretty lean months in the bleak winter around here.
So we promoted the contest, like I said before, with a press release. There was a package of information that spelled out everything that was available on our web site. We visited shops in nearby towns that we thought would be a really good fit and fit some of the voids that we had and talked to those store owners about moving here and about the contest and what we could offer. And then we had signs in the window of participating locations and participating vacant spaces that alerted you that this contest was going on.
So as you know, one of the biggest things a person needs before they start a business is a business plan. So, Phase 1 is really the business concept. Phase 2 is the business plan. And like I said before, in Phase 1 we really wanted to make sure we weren't wasting anyone's time. So we asked them to define what types of merchandise they were going to sell. What the definition description of, is the market for their retail business. How they will enhance downtown Red Wing and the Red Wing community as a whole. What resources, assets the applicant has and what resources would be needed to develop their concept fully. That included personal finances, etc. What their qualifications were to develop or expand their business, and what similar businesses and how they propose their businesses were different than those businesses that were already in town. And any other information that they might really sell the committee on the concept.
So that was Phase 1. We asked for that in writing and got, I believe, 10 different concepts. Phase 2, if you were a business that we felt, or had the idea for a business that we felt, would be a good fit, you moved on to Phase 2 and I believe we had eight move on to Phase 2. Phase 2 was a business plan. And that includes things like the company summary, the products, the market analysis, the challenges, opportunities and strengths, a financial plan, a resumé, any management history, references, how many full or part-time employees this project would or business would employ. And then the finances, of course. We also asked for a community impact summary that asked them how this business would impact our community, because ultimately that's what we were after as much as anything.
One of the ways that we help support businesses during this contest is we offered a Business Plan-in-a-day Workshop before that Phase 2 was due. The business plan was due in between Phase 1 when people knew that they could move on in the contest. We offered this Business Plan in a day. It was a six-hour-long workshop about what goes into a business plan, and it allowed people to get started writing their business plans, and then ask questions about writing a business plan. I taught that class and it was really a great way to help people get this part done because it's oftentimes the thing that they put off the longest and yet is the most necessary to actually getting started, to getting up and running.
We also had some business writing assistance from the local small business development center in our area and some consulting with their consultant. So it really helped people to feel like they were more ready. At this point, it started to feel pretty real to a lot of these business owners who had said, you know, and for 10 years I want to start X business. And all of a sudden, it's looking like it could actually happen for them. And so we wanted to make sure that they were realistic and had the tools and the resources they needed.
We also did a pitch clinic, something that I've done, worked with my alma mater college that, I was entrepreneur-in-residence there, and helped get those students ready for a pitch competition, a business plan competition there. And so I brought those skills and did a pitch clinic for anybody who made it into that Phase 2 and was going to pitch their business to the judges. And so that was a great way for those folks to get used to talking about their business, hone their presentation, get to the meat of the presentation and really be ready for that, that Phase 3, which was the final presentation and the pitch and then interview with the judges on the committee. The judges were made up of some retail business owners, community residents, city officials and then the Red Wing Downtown Main Street Board of Directors.
So we had six businesses finally submit and go through the pitch. So of those six, let me tell you who the business was that won. The business that won was Red Wing Bicycle and Outfitter.
Again, you'll remember I talked about the void that we had in the outfitter area of a business here in town. And so this is Andrew Peterson and he was the lucky winner. He had had a business, a bike shop, repair shop before in Red Wing and closed it to spend more time with his family and, he said, kind of get a normal day job. And he hated every minute of it. And he really missed his bike shop and we missed his bike shop in town. So he was the winner. And in the slide if you're watching on YouTube, that's one of the members of our Red Wing Main Street Board of Directors and Andrew. And so he has kayaks and bikes and equipment and he repairs bikes and sells bikes and all sorts of outdoor stuff. So that was great. But that's not the end of the story. Well, we wanted to have one retail business started and we had the funds for that one business all identified in the kind of winning package. There were three additional stores that opened as a result of our retail challenge.
So three additional stores opened as a result of the retail challenge. Isn't that just crazy! That just blew our minds and we were really, really excited to have one store much less three. So let me tell you a little bit about the stores that opened up during this time.
Red Wing did not have a comic book store and it didn't have a game store. So that was definitely one of the businesses we were super excited about that was interested in coming to town.
Adam Hansen and his wife Sarah had a little baby, they were living in Minneapolis, and they wanted, Adam had always wanted to have a comic book store. And so they actually sold their house in the Twin Cities and moved to Red Wing to open up River Town Comic and Games. And they bought a house in town, and they really became members of our community because of this contest. They happened to be in Red Wing one day during the, when we were marketing the retail challenge and saw a sign in the window of one of the vacant spaces announcing the challenge. And that's how they got involved. So that absolutely works to put things in windows, etc. You know, sometimes we wonder what, what works and what doesn't. But we knew from their story that it did.
So Adam opened his comic book store and the local port authority offered some low-interest loans to the other folks who decided to open because of the retail challenge. Backwoods Framing & Engraving is a big story. Luann Brainerd is the owner of the store and she actually purchased the building. She was a part of the competition. She didn't win, but she purchased the building and received some funds from the Port Authority to help her fix up the building and then open up her framing and engravings shop. She had had it out of her house for many, many years and needed to get it into town. She lived out in the country a little bit.
And so it was a great opportunity for her to make the move into Red Wing. And, like I said, she bought a building and then converted the second floor into apartments. And she has one and then I believe she rents out another one.
And she did a whole bunch of improvements to that building. It had been a long time neglected building that the landlords just hadn't invested in for quite some time. And so it really helped bring up the value of the properties in downtown because of what she did. So, again, I know the Port Authority helped her with some of the costs of the things that she had and some low-interest loans and some other things that helped her.
We had a pop-up store, The Red Wing Mercantile, that opened up for that Christmas, as a 2016 Christmas season, and it was wonderful. It had those, that Red Wing merchandise in it. It had all locally made, you know, regionally made products, and it was just a beautiful store. Unfortunately the woman who ran the store had a family and had, you know, a regular job and so it was just too hard to do both the store and her job and have a family, so she did end up closing the store after the holidays, but it still was, we think it was a great success.
There's some additional dollars that were brought in to the contest from the City of Red Wing. Those stores that didn't win the contest received five thousand dollars in seed money. And then again, many of them received an additional low-interest loan from the Red Wing Port Authority. So it was a really amazing thing to see everyone step up and collaborate and get excited about this program and this contest.
I've been asked before about how much time did this take, and it took a great deal of time. But what took a lot of the time was getting the contest set up.
And so again, if you want to go to the meetmedowntownpodcast.com website, we can help you get through a lot of that part of, what are the goals and all the things you need to convince people to help support the effort by putting in things that you can give away.
I'll tell you, though that in Red Wing, this contest happened, the executive director was let go. It's a long story. But this program was 100 percent administered by volunteers and board members. So, if you think about the amount of time, you know, you could have to make this happen. It was really, I think a good way for volunteers and board members to understand how to plug themselves into a very specific contest. And I think that was one of the, a big advantage to this and how we got more than just staff to put this together. I was not the executive director at the time. I had helped in a consulting role with the organization before I came on board as the director, so I was pulled into this contest a little bit too.
So it was just such a great way to make this happen without a bunch of staff time. I mean, and because the director had been let go and there was some drama around that, this contest really helped the organization be seen as still very viable and important for our community.
There were a couple ripple effects that happened that we attribute to this contest. One, a shoe store from a neighboring town opened up a pop-up store that Christmas and decided to stay.
So she stayed for about two years in her store, with a shoe store, and it was really great. It was right along Main Street and it was a beautiful store. And then she had some things happen in her business and so ended up closing it. But we know that, you know, she came because we invited her because we stopped by and handed her something and said, "You should come and move to our town, you know, move your business or open another business in our town." And so she did. And we were really glad to have her in our community, and she didn't take part in the contest but she did open a store.
We also had Duluth Trading Company, is a really fun company that does work apparel and footwear and accessories.
And we had, during the retail challenge when we were out, when the board members were out trying to recruit businesses to come to town, we'd reached out to Duluth Trading Company a couple of times. And we don't have any idea if our reaching out for sure brought them to town but we know that we did. And then pretty soon after they actually opened a retail store right in our downtown. So, who knows? But we're just going to say that all of it adds up in some way. We can't be sure there's a correlation there, but we're going to say there may be.
So here we are about three years later. Here's where we stand.
So Red Wing Bicycle and Backwoods Framing & Engraving are still open and they're still in the same locations and I think that they're doing very well. The comic book store is closing this spring and Luya opened up a store in a neighboring town and closed ours. So the shoe store did close. The Red Wing Mercantile pop up was open for one holiday season. But what we've seen is a continued pretty low vacancy rate in our downtown for retail because we think that we learned a lot during the retail challenge and it really helped us to support our retailers and we're continually trying to do that the best we can. So, could you make this happen in your town?
I hope so. The biggest takeaways that I want to give you are, the keys to the success in Red Wing were the partnerships. When I've given this talk before, that's kind of when people go, "You know it's hard. Our local EDA or local port authority doesn't understand that, you know, fill in the blank, or we don't have, you know, a group that's willing to give that kind of money, or we just don't have..."
And that could be a problem. But I think you just go where you can find the partners that are willing, and a lot of times what happens is the, you know, one partnership leads to another which leads to another. So, give yourself time to build up those partnerships and figure out what are the ways that those different businesses and different organizations in your community can help contribute to this effort.
I mean, at the end of the day there were probably 20 different businesses or organizations that supported this new retail business. If he were to come in, you know, let's say he'd moved to town and had, you know, started this business, didn't know anybody. Think how much harder it is to start a business than with, when you have 20 different partners behind you either in marketing or the newspaper or radio station. All that stuff adds up to really help support and create an environment in which the business can be successful.
I think the other keys to our success was creativity. We were trying to think outside the box, and then we had very clear expectations and guidelines. Because we had clear expectations and guidelines in the very beginning, we didn't have a lot of hurt feelings towards the end. I mean, we, yes the people who didn't win were disappointed and, but a lot of them opened their business anyway. So, we had clear expectations and guidelines. But then I also think, I want to add, that we also created that level of support with the business plan and the pitch clinic and having the consultant from the Small Business Development Center, because those resources then became somebody, you know, people that that business could count on into the future. So, they were not just on their own. So that is how Red Wing did their retail challenge in 2016. And I really, really hope that you will consider doing one in your downtown.
I think that they're really fun. It's actually, it's time-consuming, but I wouldn't say it's difficult. And I think it's something that can help change a conversation and a lot of downtowns. And it really puts you on the, the frontlines of filling those vacant spaces. So, it really, the landlords and the building owners, you start to become pretty important to them, which, sometimes it's hard. You know, we can sometimes reach those, those business owners but they may be just leasing this space or something else. But when you do a retail challenge like this and you start to connect to those landlords, all of sudden you become a pretty important resource. So, I think that was another thing that we learned from the challenge.
So, I welcome your questions You can ask me questions either in the comment section on the web site, again meetmedowntownpodcast.com, go online and download the packet.
It's a PDF that has everything that we used to make this happen and you can steal away, duplicate away anything you want out of there or you can go on social media. I'm on Instagram and on Facebook and you can ask questions there as well @Meetmedowntownpodcast. All right. That's what I have for you today. Have a great day and I'll see you downtown.