San Francisco Takes One More Step Toward An Almost Complete Ban of New Chain Stores (Formula Retail Stores)
San Francisco Takes One More Step Toward An Almost Complete Ban of New Chain Stores (Formula Retail Stores)
The current approach to formula retail is a patchwork quilt of rules prohibiting such stores in certain districts, and requiring conditional use approval through the Planning Commission in others. Some proposals do not ban the use, but create limited use sizes; other proposals regulate formula retail only when it involves certain uses, such as restaurants and pet shops. One very unfortunate result of existing legislation is that businesses founded in the City which are successful enough to open 11 or more stores, even if all are in the City or in the Bay Area, suddenly find themselves unable to grow in their own backyard. Recently, a local pet store whose success led to expansion to more than 11 stores was turned down from opening a new store in the City. Today’s definition of formula retail excludes international stores with less than 11 stores in the U.S., clothiers which have a presence in many department stores but without 11 independent shops, and certain businesses such as gas stations (which are harder and harder to find in San Francisco since they often exist on street corners that are ideal for new housing). Some of these exclusions could be eliminated.
Although San Francisco has approved 75% of formula retail conditional use applications over the last nine years, it is an expensive and lengthy process that discourages many retailers from pursuing a location in these areas. Many believe that the restrictions mean that local non-chain retailers end up being able to charge higher prices than they would if they had more competition. Nonetheless, with a successful local economy for now, that concern does not seem to be on the mind of most San Franciscans. If it is, it may be less important than people’s fondness for our many home grown and eccentric retail stores.
The Planning Department noted that the City has been struggling to define, manage and evaluate formula retail during all of the thirty years since neighborhood commercial districts were created. The City has stated that its goal with these restrictions is to protect the visual character of the City, to prevent larger stores from inhibiting the success of medium and small businesses, and to keep the mix of local to national retailers balanced. However, studies have shown that formula retail businesses provide a broader selection at more affordable prices and also serve as retail anchors in developing areas and thus promote the creation of new stores in such developing areas. Sacramento’s City Council recently eased restrictions on “big box” chain retailers after finding that such restrictions simply meant that these stores were locating outside the city limits, depriving the city of tax revenue and jobs.