The Starbucks Solution

Mike Sheldrake figured he was dead when Starbucks opened two stores near his indie coffeehouse. Now his business is up 40 percent.

"I just sat there showing their beans and our beans," he recalls, chuckling. "When some people from Starbucks came by and saw what I was doing, they didn't like it at all. One said, 'You can't do that. You can't show our logo.' I said, 'I bought this bag of beans at Vons. I can do anything I want with it.' Another told me, 'This is a setup.' I said, 'We don't have to doctor the beans.' Like I tell everybody, see for yourself."

After all that Starbucks has done for Polly's Gourmet Coffee, this is how Sheldrake wants to repay them?

"Yep," he says, chuckling mischievously. "I want to send 'em back to Seattle."

A stroll past the two Starbucks stores on Second Street doesn't suggest that either outlet will be boarding up the windows any time soon. They have customers from open to close. So does the new Johnny Rockets hamburger shop, located in the building that used to house Howie's Market. Same with the Rite-Aid Drug Store, which recently supplanted the Egyptian Pharmacy, the oldest business in Belmont Shore when it died. Ditto for the Baja Fresh, which moved in when Cherubs Children's Apparel could no longer afford the kind of rent that results when chains like Jamba Juice, Sunglass Hut and Frame-N-Lens determinedly squeeze into a shopping district that's only 15 blocks long. It's a process that started back in 1992, when the Gap/ Banana Republic tandem took over a store occupied for many years by Tuttle's Camera. And it all makes good business sense.

Since Belmont Shore was dredged along the edge of massive wetlands more than 100 years ago, it has remained one of Long Beach's most endearing areas to live—and not coincidentally the city's most enduringly successful retail district. Its demographics are a combination of Iowa, Bohemia and Baywatch. About 15,000 people with an average household income of $60,000 are crammed into houses and apartments that serve as a living collage of 20th-century Southern California home-sweet-homebuilding. The tiny lots, lack of garages and narrow one-way streets not only put everyone within walking distance of Second Street but also create a chronic parking problem that encourages people to make that walk rather than lose their parking space during the drive somewhere else. It's about as close as merchants can come to having a captive clientele.

For years, Second Street was a combination beach hangout, nightspot and full-service shopping district. In addition to fine restaurants, fast-food joints, funky bars and offbeat shops, it was a place where you could buy everything from a tailored suit to a sack of groceries. This authenticity made it the best kind of tourist attraction—in this case, an unadulterated slice of the California lifestyle—a seamless extension of the surrounding neighborhood. Now it's looking more and more like just another shopping center, except with bad parking.

"Bottom line, it's competition," says Frank Colonna, a real-estate agent and a major property owner on Second Street, who used to lead the Belmont Shore Business Association and now represents the area on the Long Beach City Council. "I believe in a capitalistic society and the value of competition. I'll always be a supporter of small business, but there's also a place for the larger corporates on main streets like ours. With their national experience of understanding the marketplace, they sort of bring us to a new level of rethinking our market strategies."

This change of face isn't exclusive to Belmont Shore, of course. Throughout the country, small business districts that have survived the exodus of customers to shopping malls and big-box discounters are now being invaded by a new hybrid breed of competitor. Chain stores that claimed their fame in the malls of the 1970s and 1980s are forging new links in cities' oldest commercial zones. Superstores that were born fuller-than-grown in cinder-block suburban warehouses are opening compact versions of their mega-selves to attract shoppers who don't have the time or desire to leave their neighborhoods for these huge alternate universes.

Often, however, national corporations get opportunities that small businesses don't. Cities frequently create special deals for chain stores, ranging from free business licenses to rent subsidies to interest-free loans to sales-tax rebates. "It's not fair for small independents to be treated unequally to chains, yet it happens," says Ray Grabinski, a Long Beach councilman who owns a pizza shop. "Cities often seek the status and promotional value of a highly regarded chain store. But besides creating an uneven playing field, giving those deals to chains can create instability because huge corporations may not have the same commitment to the neighborhood. Chains tend to come in when times are good and disappear when things are not."

Colonna emphasizes that no businesses in Belmont Shore were attracted by special subsidies. "There was no reason to," he says. "The area is prosperous. The vacancy rate on Second Street is 2 percent. There has always been a steady backlog of small and large businesses ready to move in."

The chain-store scenario is becoming so familiar that when Starbucks showed up shooting with both barrels, lots of people in Belmont Shore figured Polly's Gourmet Coffee was as good as dead. "That's what I thought," Sheldrake admits. "When the first Starbucks opened down the street, I saw my sales dropping a few percentage points every month. It was a chronic problem. Then when the other Starbucks opened 75 yards away, the problem accelerated. I had exhausted all my ideas. I thought it was useless."

« Previous Page
Next Page »