Quantifying What Makes Our Local Economies VibrantFrom the Basil Labs team
First and foremost, this analysis is meant as a conversation starter. How can we quantify the often intangible value of small businesses past typical metrics like annual revenue or number of employees? What do these alternative, yet critical metrics mean for policies and decisions regarding cities and retail going into summer 2020?
America is reopening… but not every retailer is. In fact, there is a growing list of massive retail chains which have filed for bankruptcy during COVID-19. But these sensational lists, which include the likes of Nordstrom, J.C. Penney, Aldo, Frontier and more, are missing the full narrative:
Across the country, small businesses — the promising, vibrant and critical elements to the fabric of our economic ecosystems, are considering shutting their doors for good.
There’s no better word to describe this framework than an ecosystem; what damages one element impacts the others. As cities reopen, their number one concern, following the safety and wellbeing of visitors and residents, is their ability to bring consumers back to retail. Yet in order to bring consumers back, cities need businesses to be open — not closed and definitely not shut down. This “chicken and egg” paradox has and will continue to manifest itself in downtowns in America around the world.
In order to break the cycle, we need to break down the knowledge barriers that exist between health officials, downtown and retail-aligned municipal organizations, retailers, and consumers.
In other words:
Consumers need to know that it is safe to venture out and retail is open for business.
Retailers need to know that consumers WILL come out if they reopen.
Cities need to know that businesses will reopen if consumers come and therefore…
Cities and retail need to understand how to draw in visitors/consumers.
If either retailers or cities falter, both crumble — and at the heart of this paradigm are small businesses.
So Then.. How Do We Draw In Visitors?
From our conversations with city-aligned destination organizations, we’ve heard two critical missions:
- Ensure the safety conditions are met for consumers to come out.
- Develop programming and marketing to regain lost consumers during COVID-19.
Right now, we’re going to focus on the second mission, and use a specific, granular example: Ben’s Chili Bowl in Washington DC, to illustrate the potential of a real time, consumer-responsive approach at scale.
Due to the global nature of the virus, this approach focuses on analyzing domestic and local tourism to power strong economic reopenings as well as plots out a long-term framework in which global insights can be blended together with domestic insights.
Fundamentally, our approach relies on provoking consumer action. In order to draw in domestic “drive-by” tourists and visitors, we need to remind them why they love the places they do, and why they can’t get that feeling anywhere else. Small businesses — particularly small businesses that tie into the fabric of the identity of a city — are critical in this endeavor, often in intangible ways.
Luckily, that’s what we do: quantify the intangible elements of consumer experience.
Ben’s Chili Bowl
Ben’s Chili Bowl is iconic to DC. Known for its chili dogs, half-smokes and milkshakes, it has been around since 1958 and has been frequented by celebrities and even President Obama.
Despite its contributions to the identity of DC, Ben’s Chili Bowl, like so many other small businesses, were shut out of the initial round of the Paycheck Protection Program, which was meant to help small businesses stay afloat during COVID-19. It was only on April 28th that the restaurant had their PPP assistance approved. For the city, businesses like Ben’s Chili Bowl are among the most essential that must survive this crisis — as a landmark F&B location of DC, it serves as a touchpoint for visitors to feel the city’s identity for the first or hundredth time.
Different locations cater to different audiences. In order for cities to attract the widest swathes of consumers, we need to understand:
- How consumers perceive businesses and locations
- Where consumers come from
Using community-generated data (publicly-posted, geolocated, and user-generated) data, we use natural language processing and machine learning to transform unstructured text data into concise findings. At the same time, we examine the consumer journey, identifying thousands of other locations around the world that consumers of these businesses have also visited. Taking a randomized sample of people who have posted about these restaurants, we identified over 93,000 other visited locations around the world, over 85,000 of which were domestic inside the United States.
We examined consumer perceptions of each location and analyzed 16 unique topics including:
- DC Fundamental — Locations which consumers describe as an “institution” or a “local gem.” In other words, the fabric of the neighborhood and surrounding retail would not be the same without it.
- With Family and Friends — Spending time at the location with family and friends.
- Opening Hours — Favorability of the opening hours.
- Go To Spot — Consumers indicate they always come back or that they will or won’t bring others next time as well as the location being “overrated” or not.
- Service Speed — The speed of the service.
Across all topics and locations, we can see that there is a large focus on the “Nearby Places,” “Food,” “and “Staff” of each restaurant. It is important to note that while “Nearby Places” appears to perform below the reference lines (50%, 70%) of the Average Sentiment (y axis), it is still perceived positively, just not as positively as other topics like the “Staff” of these locations.
If we take a closer look at these topics by filtering out “Nearby Places,” “Food,” and “Staff,” we can see that the “Alcoholic Beverages” of these locations is not only frequently mentioned, but also almost always positively mentioned. The “Experiential” nature of these locations is an interestingly high-performing variable — this topic is usually mentioned quite positively or negatively, but not nearly at the frequency that it is mentioned across these restaurants.
Taking a quick peek at Ben’s Chili Bowl on H St, “Fundamental to DC” pops out immediately. It’s a topic that we also see in the other locations, most notably Farmers & Distillers, Granville Moore’s, DC Harvest, and The Big Board — just not to the frequency of Ben’s Chili Bowl.
Farmers and Distillers, on the other hand, has several topics that are mentioned both positively and frequently: “Staff,” “Alcoholic Beverages,” “Atmosphere”, and “Experiential” while suffering from two of the same topics as Ben’s Chili Bowl: “Go-To Spot,” and “Price.”
While we’re able to identify the home cities of many of the visitors at these restaurants, we’ll be focusing on another key component of consumer geographic insights: consumer movement. Where do these consumers spend their time when they are not at a restaurant in our study?
Focusing on nearby counties around Washington DC, we can immediately see different patterns among restaurants in Arlington County, VA, Montgomery County, MD and Prince George’s County, MD. Patrons of Kinship, for example, have concentrations of locations visited in Montgomery and Arlington Counties while Ben’s Chili Bowl and Tony’s Place have concentrations in Prince George’s and Montgomery Counties.
We can also see concentrations across much of the continental US — as a quick note: they do visit Hawaii and Alaska and Puerto Rico as well, we just haven’t included them on this particular map.
Using the same approach implemented domestically, we can actually map out locations visited in other countries. In the maps above, we’ve visualized locations in the UK, London, globally, and in South Korea. While these areas do not have nearly the same density of visited locations as counties in the greater DMV region, these maps, when paired with perception data or home location data, yield powerful analytics regarding tourists in Washington DC.
Foot Traffic Analysis
While consumer movement throughout the DMV region and beyond is important to understand when crafting retail strategies going into the summer of 2020, it is critical to understand foot traffic in and around the businesses themselves. When analyzing foot traffic using Catalyst, a hardware/software solution that tracks pedestrian mobility in open space, by AreaProbe, we can examine the impact of COVID-19 from its inception till today.
Prior to COVID-19, 350-400 people traveled past Ben’s Chili Bowl on an hourly basis, and approximately 8,900 people per day. Since COVID-19, we have seen hourly pedestrian counts decrease by 25% to 40% along the 1100 block of H Street, NE depending on the day and weather conditions.
The crisis has upended standard consumer patterns and consumer practices and preferences may forever be changed following the crisis. Understanding metrics like foot traffic and consumer perception and movement and how they evolve real time will be critical in shaping policies and campaigns to engage consumers and revitalize our Downtown areas across America.
This is not a “one-off” crisis — when heading into the summer of 2020, cities and communities must be aware of the enormous strain placed on retail. The symbiotic relationship between the wellbeing of cities and retail means both must fully understand one another as well as the value each actor creates for the other.
While Ben’s Chili Bowl was able to secure their emergency Paycheck Protection Program assistance (PPP), they are not alone in their struggle to stay above water — we used Ben’s as an example specifically because of the easily quantifiable value it generates Washington DC as a formational component of the city’s identity through our analytical tools. If we were to approach this same issue from another angle and with a different toolkit, we would undoubtedly be able to point to countless other businesses across the DC metropolitan region who contribute to the city that are under threat of closure.
As we said in the beginning, this analysis is meant as a conversation starter. How can we quantify the often intangible value of small businesses past typical metrics like annual revenue or number of employees? These intangible elements will be crucial going forward as both cities and retail will need to work closely together to bring visitors and consumers out and make the local economy hum once again.
Take A Deeper Look
We’ve just scratched the surface on what’s possible. If you’re interested in taking a closer look at our analysis or want to learn more about how consumers experience your area, take a look at our joint initiative: The COVID-19 Retail Audience Recapture Initiative and connect with us at Basillabs.org and AreaProbe.com.