Hartford Business Journal

8 Hartford Business Journal • October 26, 2015 www.HartfordBusiness.com Retail still critical to municipalities' economic growth By Matthew Broderick Special to the Hartford Business Journal A s Canton's director of planning and community development, Neil Pade has noticed a shift in town over the past four years. He says the community — which saw its population grow 17 percent between 2000 and 2010 — has transitioned from defensively reacting to development opportunities to more proactively identify- ing commercial development residents desire. Much of that shift has been driven by a thriving retail sector that has helped spur the towns' economic growth, which last year saw nearly $223 million in retail sales, largely driven by the success of the Shoppes at Farming- ton Valley, an outdoor mall with more than 40 retailers. "The Shoppes have helped drive some of the econom- ic activity in the region from the WestFarms mall area out towards the Farmington Valley," Pade explained. He points to a recent economic study commissioned by the town, which found that one-third of retail custom- ers came from the neighboring towns of Avon and Sims- bury, who generated nearly $40 million in retail revenue. Pade said the town also attracts a large number of recreationists to Canton's community assets, including the Farmington River, hiking trails and the Farming- ton Valley Stage Company. "We're a very visitor-oriented community," he said. Andy Brecher, economic development director for New- ington, which has a retail vacancy rate of 4.5 percent, said retail is vital to his town's economy. According to figures from the state Department of Revenue Services, Newing- ton generated retail sales of more than $770 million in 2013. A major factor in those numbers is the Berlin Turn- pike, which features many big-box stores like Walmart, Sam's Club and Lowe's — situated on land that, Brecher said, has been selling for $1 million per acre. "Commercial taxpayers account for over 25 percent [roughly $23 million] of Newington's property tax rev- enue," Brecher said. The growth and success of the turnpike has been aided by strategic zoning changes to improve the aesthetics of the town's main retail areas, Becher explained. "Reducing signage, lighting and electric vehicle charging stations, and a large municipal parking lot in the town center, have made Newington a more attractive location," he said, add- ing the parking is free everywhere in town. And while Brecher is confident that Newington's vibrant retail sector will continue to be the town's economic engine, he understands that retailers in the region — and nation- wide — will continue to face a growing challenge: Internet sales. "As more consumers grow comfortable with online purchases, it'll be hard for local retailers without a service component to their product to compete," he said. Mark McGovern, director of community services for the town of West Hartford has already seen the impact of that trend. "It's very difficult for an independent retailer [to stay in business]," he said. "In West Hartford Center a lot of traditional retail space has transitioned to restaurants," McGovern explained. According to a report released earlier this month by Massachusetts-based KeyPoint Partners, West Hartford has the lowest retail vacancy rate in the region at 3.3 per- cent. "When there is turnover — or a business closes — the space fills quickly," McGovern explained, noting West Hart- ford's retail sectors are strong outside of the center as well including Corbin's Corner, Bishop's Corner and Park Road. While West Hartford's commercial sector remains strong, McGovern says the town's strategic plan is more focused on residential development. "The value of a strong retail sector is that it adds to property values and spurs residential growth," he said. "The town is currently working on two new apartment buildings to target young professionals." The hope is that strategy will, in turn, drive more retail business. "Additional housing provides more feet on the street," said Barbara Lerner, executive director of the West Hartford Chamber of Commerce. She points specifically to Blue Black Square — a mixed-use development that combines enter- tainment, restaurants and residential space — as proof of a successful model. "We have seen that large national brands can work and co-exist very nicely with the small mom-and- pop [stores] of the West Hartford Center," she said. Robert Bessell, a member of the Canton Economic Development Agency, a volunteer-run organization, sees the value of mixed-use development. With the town's population expected to grow an additional 3 percent by 2020, Bessell said smart land use is key. "Mixed use of land is good from a tax purpose and retail purpose," Bessell said. "There are some real benefits to having people living above businesses. It makes the town more interesting," and successful retail more likely. n Q&A CT retailers adapt to new credit card chip rules Q&A talks about how Connecticut retailers are adapting to new credit card liability rules with Tim Phelan, president of the Connecticut Retail Merchants Association. Q: Connecticut and the nation have recently launched new credit card terminals requiring cus- tomers to enter PIN codes. How has the rollout been? A: The Oct. 1 change was a behind-the-scenes change in rules between the merchant and their card brands. It is designed to encourage mer- chants to upgrade their equipment and also encourage banks and credit unions to issue more secure cards. Mer- chants or issuers are not "required" to upgrade. Failure to upgrade, however, will shift the liability for counterfeit cards to the organization with the least secure solution. Most banks are choosing to issue chip and sign cards not chip and PIN cards. The card networks are letting each institution choose sign or PIN. Under the new rules, merchants are liable for counterfeit transactions that involve a chip card being swiped into a magnetic strip terminal, rather than a chip terminal. Q: What are your mem- bers expect- ing the impact to be during the upcoming holiday buy- ing season? It seems as if transactions take longer to complete. That could mean longer lines on Black Friday for example. A: Chip-card transactions take about 10 seconds longer once the transaction has been initiated. In addition, the cardholder needs to be taught a new way to handle the transaction: You dip the card instead of swiping it. During the transaction you need to leave the card in the reader. This allows the cryptogram to be "refreshed," which is the whole point of con- verting to the new system. While we know that there is a "learning curve," most consum- ers and retail clerks will become very familiar with the transac- tion process and thereby mini- mize the delay at check out. Q. How are your members reacting to the new technol- ogy? What are their thoughts on their increased liability for credit card fraud? A: Retailers, by nature, want to sell goods or services and they adapt to the consumer's choice of payment. This enhancement is good for the ecosys- tem and will mini- mize the impact of a data breach. Once a merchant upgrades their terminal, the liability for coun- terfeit cards moves back to the issuer. Q: What's been the cost to busi- ness? How expen- sive has this been to rollout? A: If a retailer has a standalone terminal, the cost for upgrading is less than $500 per check-out station. If a retailer has a point-of-sale (POS) cash register system, the cost for the hardware is also less than $500. In the case of a POS system, there are additional expenses for rewriting the code to handle the chip data. This cost var- ies widely based on the system and whether or not the code is handled by your staff or outside vendors. Q: There's been some g r u m b l i n g that these new chip credit cards do noth- ing to prevent online theft where no PIN is required. Do your members feel they're being unfairly targeted by the new technology and its liability penalties? A: The liability for online transactions is (and always has been) borne by the merchant. A merchant that handles online transactions should already have strong anti-fraud tools. In other developed countries that have converted to chip, online fraud has gone up because that is the only place that a "bad guy" can use the data that they have stolen. If a merchant does any online transactions, we are encouraging them to review their procedures now, before the fraud starts to ramp up. n TIM PHELAN President, the Connecticut Retail Merchants Association Greater Hartford has many key retail cen- ters including The Shoppes at Farmington Valley (show above and left) and Blue Back Square in West Hartford (shown far left). ▶ ▶ It is designed to encourage merchants to upgrade their equipment and also encourage banks and credit unions to issue more secure cards. FOCUS RETAIL P H O T O S | H B J F I L E

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