Since today is Small Business Saturday, following pitifully on the grotesque excess of “Black Friday” (a day as ill-named as it is ill-conceived), I’m compelled to ponder the state of small businesses in the California landscape. By my small sample set, it’s not great.
Obviously, tons of small businesses aren’t retailers. But retail is clearly the focus on Small Business Saturday, and, of course, retail thrives in well conceived urban environments. In theory, planners draft regulations and approve developments to foster nice retail environments, developers create the actual places, and entrepreneurs do the rest. Naturally, online retail has upended this process. And, in Los Angeles, it's getting further twisted in at least two different ways.
This tale of two storefronts begins in Boyle Heights, the historically Latino neighborhood east of downtown Los Angeles. Boyle Heights has become the epicenter of debates over gentrification in Los Angeles, and the most potent symbol of those debates is Weird Wave Coffee Brewers.
If ever there was a classic small business, it’s Weird Wave. They’re independent and founded by a group of local entrepreneurs. It's exactly the type of place where American Express wants you to swipe your Platinum card when you’re en route from the organic toy store to the fair trade haberdashery.
And yet, since it opened about six months ago, Weird Wave has weathered every conceivable accusation and form of protest. According to the critics, its owners are not noble entrepreneurs but rather colonizers, trying to whitewash the neighborhood, drive up prices, drive out locals, and perpetuate capitalist predation. All of this in about ten feet of storefront.
Meanwhile, the McDonald’s across the street serves up its nutritionless gunk by the billions. Gentrification is a serious issue, and residents have every right to be concerned. But talk about aiming for the wrong target.
Over on the Westside, an equally troubling, if far less boisterous drama is playing out. In fact, it’s not a drama at all. It’s the absence of drama.
For at least a decade, a Noah’s Bagels and a Jamba Juice sat side-by-side on San Vicente Boulevard. Around the same time that Weird Wave opened, both of them cleared out. Their departure is hardly a blow to western civilization. The absence, though, speaks to a major disturbance in the economics of real estate.
Since they left, their storefronts have been dead as doornails. The windows are painted over, and the streetscape has one more void. You’d think that they’d both be prime real estate, if not for a independent entrepreneur then for somebody. And they are — but there’s prime and there’s prime.
What I suspect is going on is that the building’s management (or real estate agents) haven’t yet heard that physical retailers are struggling. They probably jacked up the rent and, either because of ego or wishful thinking, aren’t willing to do the economically sensible thing: lower it until it reaches the spot on the supply curve that intersects with the demand curve. That’s the thing about this retail apocalypse: of all the factors that go into a successful store, rent is the one that’s most flexible, if landlords are willing to be flexible. If the world wants to buy fewer bagels but you can reduce the cost of rent, you can still make it work.
Unfortunately, landlords - especially of buildings that are already paid off — don’t have much incentive to fill their spaces. The corporate owner of the former Noah’s and Jamba spaces surely cares less about the vacancies than do those of us who drive and walk past them every day. The same can be said for countless other storefronts in Los Angeles and elsewhere, including New York City.
So there you have it: On the Eastside, a genuine small business that promises to enhance is neighborhood is catching anti-capitialist fervor. On the Westside, capitalism itself has pretty much broken down.
Happy Small Business Saturday, everyone.
