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Giant Sucking Sound
Charting ‘cannibalization' of existing retail,
mall study puts state officials on hot seat
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Business New Haven
3/6/2000
By: Linda G. Mele
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“The Final Report - Impact Analysis: Galleria at Long Wharf Mall” sent everyone scurrying late last month when it was released earlier than originally planned because of a Freedom of Information Act request.
The report was prepared by Matrix Research of Eau Claire, Wisc. At the state's request, the Connecticut Economic Resource Center (CERC) commissioned the study because some $30 million in state financing is supposed to be used to build the $500 million mall that is expected to house about 150 stores, according to Jeff Blodgett, CERC's vice president of research.
Blodgett says the document, dated January 14, is actually a draft of the final report and contains some erroneous information. James F. Abromaitis, commissioner of the state's Department of Economic & Community Development, says the report was based on a flawed model that incorrectly calculated impacts to retail venues.
Upon carefully reviewing the information, DECD discovered the model used for the report contained several incorrect assumptions - the most important being the inclusion of entertainment offerings incorporated into the mall project. As a result of that discovery, a new report that more accurately reflects the actual components of the overall development is being finalized, Abromaitis says.
According to Abromaitis, the difficulty in making this type of information public - before it's been reviewed and, if necessary, corrected - is that it can often be misinterpreted or taken out of context, which in this case, he says, it was.
The report says the Long Wharf mall would obviously “cannibalize” existing retail operations. It predicted that the negative impact of the mall on New Haven's central business district (CBD) would be between 21 and 28 percent.
The report also says it is highly unlikely that this mall's presence will draw significant numbers of people from outside the New Haven market area. It will merely redistribute existing spending dollars.
Abromaitis also says that the only people who viewed the draft report at DECD prior February 22 were attorneys for Westfield Shopping Town, owners of the Connecticut Post Mall in Milford and three other malls in the state. Westfield has vehemently opposed the mall since the project was first announced.
John Isaacs, co-owner of Barrie Ltd. Booters on York Street, says even if the wrong model was used, and the impact percentages change with a corrected model, it will still have a significant impact on downtown merchants.
“A few percentage points either way won't really change the impact,” Isaacs says. Even at the lower percentage of lost downtown business cited - 21 percent - downtown merchants would be very much affected.
“I don't knows of one business in New Haven that could survive on 71 percent of what they are doing now, Isaacs says, calculating based on the 28.5-percent figure in the draft. According to Isaacs, the city produced a report in April 1998 that concluded one-third of the expected $350 million in annual sales would be new sales and two-thirds would be cannibalized from existing businesses.
The city's own report concluded that existing area retailers would lose at least $230 million in sales to the mall each year, Isaacs says. In addition, Isaacs says that the city's consultant deleted that data from a version of the report given the DECD in January 1999.
At that time, DECD was attempting to justify its conclusion that the mall could be fast-tracked because it would have no significant impact on the environment or the regional economy, Isaacs says. By eliminating this information, the city actively concealed the devastating impact of the mall on the region's existing retail industry.
“It 's all political posturing,” Isaacs says. “They're in denial because the report doesn't say what they want it to say.” Mayor John DeStefano called the report “fundamentally flawed,” “inaccurate” and “absurd.”
Isaacs also released a copy of the results of a private survey taken of several dozen downtown businesses. While its sample size is too small to be of statistical significance, it offers anecdotal illustration that:
n Most downtown merchants surveyed (21 of 25) don't think the mall will increase the number of shoppers visiting downtown;
n Three-quarters of the merchants who were asked said the mall would negatively impact their business;
n Nearly all merchants surveyed supported a major retail revitalization of the downtown area;
n The merchants nearly unanimously opposed using public tax dollars to build the mall;
n Only four merchants said they would consider moving their own businesses to the mall.
North Haven First Selectman Anthony Rescigno says he's concerned about anything that might impact businesses in his town. According to the Matrix report, the Long Wharf mall would suck between 18 and 23 percent of existing dollars from North Haven's Home Depot Plaza on Universal Drive near the New Haven/North Haven line.
However, “Because they're saying it's not a final report,” Rescigno says, “I'm going to reserve judgment and comment until the actual final report is released.”
Orange First Selectman Mitchell Goldblatt says that although he hasn't had a chance to review the report, he was told it showed the Orange Promenade Shopping Center would lose between 17 and 22 percent of sales to the mall.
That's a lot, but Orange Promenade is about to lose almost 50 percent of sales, Goldblatt says, due to the evacuation of Sear's to Westfield's Connecticut Post Mall in Milford.
Sear's, currently one of the Orange Promenade's anchor stores, is building a new facility on the grounds of the Connecticut Post Mall in Milford and will relocate from Orange when the building is complete.
“I'm not ready to recommend that we join any lawsuit,” Goldblatt says, “and I'll wait to comment on the report until it's really a final report.”
Goldblatt adds while he believes competition is good, he does have a problem with the fact that the development, which is essentially a private project, is being funded with state tax dollars. State Sen. Winthrop Smith Jr. (R-Milford) and State Rep. James Amann (D-Milford) both oppose the project and the use of state funds to subsidize its construction.
“The whole thing has degenerated into a comical farce,” Smith says, “and it's beginning to really stink.”
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