Saving Downtowns

For a candidate, an election campaign involves visiting potential constituents to determine what their issues are. In recent weeks I have gone door-to-door among the small businesses — mostly retail — in the downtowns of the 32nd Senate District: Bethlehem, Bridgewater, Middlebury, Oxford, Roxbury, Seymour, Southbury, Thomaston, Watertown and Woodbury.

The good news is that many businesses are weathering the economic downturn and a few are even experiencing upturns. The bad news is that there are more closed storefronts and a number of businesses are hanging on by their fingernails.

One clear trend emerged. Businesses that have been around for many years are doing better than startups, regardless of the line of business. A long-time loyal customer base is proving to be the key to riding out hard times.

But the difficulties all small businesses are facing are daunting.

The primary villain is the high cost of fuel, which results in higher heating bills (and related rent escalations) and higher transport costs for both supplies and deliveries. It also means customers are less willing to drive to your store and have less to spend when they get there.

Bucking The Trend

In addition, the real estate downturn affects not only real estate brokers and interior designers, but also the construction industry and those who sell products to it. One shoe store I visited sells half of its shoes and boots to construction workers.

Sales of high-end items and discretionary purchasing is slowing. One jeweler we talked to has a unique problem — he can’t inventory gold because its price is currently too volatile.

A few businesses have bucked the trend and increased sales. One supermarket carefully manages the items it puts on sale. Another grocer has benefited because local residents don’t want to drive to the big chain supermarket 10 miles away.

A few liquor stores are prospering, and one hair salon apparently has customers who feel that in tough times beauty is a necessity, not a luxury.

Other businesses have maintained sales at pre-downturn levels — a power equipment store, a lumber yard, a Tae Kwon Do studio that trains children, an auto repair shop, a drugstore, and a hardware store.

But the above examples are the exceptions. As a rule, small downtown businesses are hurting. How are they coping? While some businesses can pass higher costs along to customers without undercutting sales (supermarkets, hardware stores), others, especially those in the high-end or discretionary purchase area, including restaurants, are reluctant to pass costs on for fear of losing customers.

Burdens On Business

Some businesses are trying to cope by shortening the hours they are open. Cutting staff does not seem to be a real option, since these small businesses already have lean staffs.

We asked whether state regulations were causing problems. Many cited the high cost of doing business in Connecticut (taxes, fees, etc.). A few mentioned the unfairness of the workers’ compensation system. A few cited local regulations related to public parking and signage.

As I walked these downtowns, I got the sense that Connecticut small towns are at a turning point. If government planning and support is not implemented soon, they will gradually disappear.

The downtown district is the heart of any small town. If it is replaced by outlying malls, the town will lose its heart and, in some ways, cease to exist. Many merchants I spoke with are eager to spend time and effort to shore up these downtowns and widen the diversity of businesses available, but they feel that state and local governments have not been supportive.

There are several things state government can do to promote small business. One step would be to repass a bill — vetoed by Gov. M. Jodi Rell — that would open the state employee health insurance program to small businesses and nonprofits. Other ideas include: easing the tax burden, discouraging undue workers’ compensation premium hikes, providing targeted low-cost financing, restricting onerous one-sided store leases.

But I also hope to persuade state and local governments to support the enhancement of these downtown districts to preserve the heart of these beautiful towns.

John McCarthy, a career foreign service officer who served as U.S. Ambassador to Lebanon, is a Democratic candidate for the Connecticut State Senate from the 32nd District.