Status Of Downtowns
In Small Illinois Communities

By *NORMAN WALZER and POH CHING P'NG

Downtowns have traditionally held a special attraction and meaning for residents in relatively small communities. The stores have been in business for a long time and, even though the amount of merchandise they offer may have dwindled, they still retain a strong clientele. These stores also represent a significant share of the sales taxes that support public services within the community. The 1987 Census of Governments, for instance, reports that in cities smaller than 25,000 sales taxes represented 20.4 percent of the revenues collected.¹ Of no small importance is the fact that downtown merchants serve on the city council, making city government more sensitive to the needs of downtown areas.

Downtown businesses in many, if not most, small communities did not fare well in the 1980s. Population declines, combined with relatively small growth in real income, in the majority of small communities adversely affected these businesses. In addition, the 1980s brought significant competition from both regional malls and large discounters, especially Wal-Mart. The market areas of cities containing discount stores and/or malls expanded but eroded markets of small cities within commuting distance. Residents of small towns who now commute to work in nearby large centers also shop in these cities. Farm families, formerly linked with small trading centers, become tied to larger centers when involved in off-farm employment.

The effect of these trends has been that many, if not most, rural small Illinois communities experienced a decline in number of stores. This article examines changes in mainstreet in rural Illinois communities between 5,000 and 25,000. The data were obtained from a survey in 1992 to which 66 cities responded. For convenience in presentation, cities are divided into those less than 10,000 residents and those between 10,000 and 25,000. The smallest city responding had 5,104 residents (Piano) and the largest was 25,000 (Park Forest).

Characteristics of Downtown Businesses

The average city less than 10,000 responding to the survey had 59 stores compared with 129 in the large cities (Table 1). These comparisons are more meaningful when adjusted for population size. The small cities had one store serving an average of 226 residents compared with 347 residents in the larger cities. Analyzing the number of stores or even retail sales in a city is difficult because customers travel between cities to make purchases. A relatively unique store may attract customers from many miles. At the city level, it is difficult to make more than simple comparisons.

Much as one might expect, the largest percentages of stores in the downtown are retail (67.1 percent and 56.4 percent), but there seems to be at least a minor difference in relative importance of retail, with larger cities having a more diversified downtown. Businesses with larger threshold sizes naturally locate in large cities. The main difference in the composition of downtown businesses arises in those businesses providing services only, rather than stores that provide primarily retail with service as a minor component. An example of a service only business might be a law firm, engineering business, or even a repair shop. In larger communities, the service only businesses represent 33.1 percent of the stores compared with 19.8 percent in cities smaller than 10,000 (Table I).²

Business Trends

Not only does the composition of mainstreet businesses differ with size of city, the recent trends in number of businesses vary also. The reported changes in numbers of large downtown retailers, however, differ from what might have been expected. Fewer cities smaller than 10,000 reported loss of a relatively large downtown retailer (32.3 percent), compared with 37.1 percent for cities larger than 10,000. One simple explanation may be that smaller communities have fewer large downtown retailers. The small communities reported loss of 2.5 stores on average, compared with 1.9 in cities larger than 10,000.

Many factors determine store closings in small

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towns and it is hard to identify a particular cause. Retirement by an owner can close a marginal business. Opening of a major discounter within commuting distance may be sufficient to close a store that was barely profitable. General population declines can hurt all mainstreet businesses.

While the number of observations is small, a pattern in the types of stores that closed is evident. Among the smallest cities, 8 reported that stores owned by members of the community closed while in the larger cities, it was more common to find closings of stores owned by someone not living in the community. This has been a major issue among policy-makers, namely whether stores that are not locally-owned are closed more often than locally-owned stores. The only inference to be drawn is that the experience with locally-owned businesses is similar in both city size groups, whereas those owned by persons not residing in the community are more likely to close in the smallest communities. However, many other factors may affect these comparisons.

Factors Contributing to Closings

One of the more obvious factors affecting downtown businesses is the presence of a mall or discount store on the edge of relatively small communities. This, of course, is more prevalent in cities larger than 10,000 because smaller communities do not meet the population threshold to support a discount center. This view is supported by the fact that 82.9 percent of cities larger than 10,000 reported major shopping areas on the outskirts of the community compared with 74.2 percent of cities smaller than 10,000.

There are two basic views about the presence of a discount store or mall. Some claim that it increases the drawing power of a community and, therefore, benefits all retail businesses able to access a larger clientele. Others claim that businesses on the outskirts of a city draw from downtown stores because of wider selection, lower prices, and free/ample parking. Responding mayors do not agree about these effects and differ by size of city. Approximately half (51.6 percent) of responding mayors in cities smaller than 10,000 reported that stores on the outskirts draw business from the downtown. In larger cities, though, this view is held by fewer mayors (42.9 percent). An equal number of mayors in these cities reported that discount stores or

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malls tend to attract customers to the community but, in smaller cities, only 32.3 percent reported this trend. Both groups of mayors agree that downtown retailers do not relocate to the outskirts in many cases. This issue is a more likely concern in larger cities where the downtown is threatened by a major mail and a much larger number of large stores relocate from the downtown to a mall on the outskirts of the city.

Condition of Downtown

While the trends in downtown business were not especially bright in the 1980s, the condition of downtowns, as reported by mayors is better than might have been expected. On average, 71 percent of the mayors in cities smaller than 10,000 reported that less than 10 percent of the downtown commercial space is vacant compared with 48.6 percent of mayors reporting this condition in cities between 10,000 and 25,000. The next category (between 10 and 20 percent vacant) demonstrated a major distinction by city size with 34.3 percent of mayors in larger cities reporting this level, compared with only 9.7 percent in the smaller cities. A slightly higher percentage (12.9 percent) among smaller communities reported between 20 and 30 percent vacancy. Once again, the relatively small number of cities reporting these levels and the numerous factors that could explain these differences make interpretations difficult.

Summary

Many factors affect the viability of small communities in rural Illinois and other states. One only has to drive through small towns to see evidence of stores that formerly provided merchandise and services to a thriving population. The population declines of these communities in the 1980s has changed the nature of the communities and the role they will play in the future. Ease in transportation and shifts in retail marketing to larger discount stores or shopping centers mean that smaller communities cannot compete as well as they did in the past.

Change does not necessarily mean disaster, however. What is important is that residents and business owners recognize that the long-term economic transformation and changes in population distribution force changes in marketing strategies and the goods or services provided. While it is true that some communities

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will consist of a convenience center, bank, elevator, and maybe a specialty store such as an antique shop, others may be able to retain a more diversified shopping area. Most will never return to their former status but can compete with discount stores of shopping centers on several fronts. Some of the strategies followed by cities in competing with these centers will be discussed in a sequel to this article. •

Table 1. Characteristics of Downtowns
Characteristics	Cities with population
	< 10,000 pct./avg	(n)	> 10,0001 pct./avg	(n)
Number of stores in downtown	59.0	(29)	129.3	(31)
Percentage of businesses:
Petal	67.1	(29)	56.4	(32)
Other	27.2	(4)	15.2	(9)
Services only	19.8	(27)	33.1	(31)
Wholesale	8.4	(12)	10.9	(12)
Manufacturing	7.7	(9)	8.4	(12)
Cities losing relatively large downtown retailers in the past 5 years?
yes	32.3	(10)	37.1	(13)
no	64.5	(20)	54.3	(19)
no response	3.2	(1)	8.6	(3)
total	100.0	(31)	100.0	(35)
If yes, how many?	2.5	(10)	1.9	(10)
If yes, how many were:
privately owned by resident of the community	2.1	(8)	1.4	(8)
privately owned by someone NOT living in the community	1.5	(4)	5.5	(2)
a branch store in a chain	1.0	(3)	2.5	(6)
other	-	-	1.0	(2)
Large shopping areas such as a mall or discount store(s) on the outskirts of community?
yes	74.2	(23)	82.9	(29)
no	22.6	(7)	11.4	(4)
no response	3.2	(1)	5.7	(2)
total	100.0	(31)	100.0	(35)
If yes, have they mainly:
drawn business away from downtown	51.6	(16)	42.9	(15)
attracted new customers to the community	32.3	(10	42.9	(15)
caused more services to downtown	12.9	(4	17.1	(6)
not had much effect on downtown	12.9	(4)	28.6	(10)
relocated downtown retailers to outskirts of city	19.4	(6)	14.3	(5)
Percentage of downtown commercial space vacant?
less than 10 percent	71.0	(22)	48.6	(17)
between 10 and 20 percent	9.7	(3)	34.3	(12)
between 20 and 30 percent	12.9	(4)	11.4	(4)
more than 30	6.4	(2)	-	-
no response	-	-	5.7	(2)
total	100.0	(31)	100.0	(35)

¹Excludes cities with population greater than 25,000

Source: Survey of Downtown Status and Development, Illinois Institute for Rural Affairs, Summer 1912.

1. U.S. Bureau of the Census, Survey of Governments, 1987: Annual Finance Statistics, computer tapes.

2. Information on number of stores was available from the survey, but data in sufficient detail on sales was not.

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