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Retail-deprived Gary often fails to attract corporate chain stores because of demographics, including income levels.

“The way site selection works is that there’s an elimination procedure after an initial screening in a market,” Lake County Economic Alliance President and CEO Karen Lauerman said. “Potential communities don’t even realize they’re in consideration.”

Retailers look for other stores nearby that would drive traffic to their location and locations with high visibility, high traffic counts and reasonable real estate costs.

“Nine times out of 10 they’re looking at demographics, population and housing within the area,” Lauerman said. “They’re looking at the look and feel of a community, turnkey sites, and streamlined permitting and zoning so they don’t have to jump through too many hoops.”

Retailers look at the full cost of a leased building to ensure they get a good return on investment, as well as traffic counts and the amount of consumer spending in an area, Lauerman said. They look at how close competitors are, which commercial corridors are developing best, and — in the case of sophisticated companies like Trader Joe’s — educational attainment data.

'You want to roll out the red carpet'

Whatever their demographics, cities still can take steps to make themselves more attractive to new businesses, she said.

“You want to roll out the red carpet to make it a welcoming environment,” Lauerman said. “You don’t want them to have to jump through too many hoops.”

But there’s still realistically only so much city governments can do, since national retailers tend to gravitate toward shiny new private sector development like Centennial Village in Munster or Shops on Main in Schererville, she said. Big companies might only look at the more affluent communities in Northwest Indiana or sometimes completely bypass Northwest Indiana altogether in favor of Chicago's northern or western suburbs, especially if they're only allocated so many locations in the Chicagoland market.

“Northwest Indiana is treated as an eastern suburb of Chicago,” she said. “We might not meet all of the requirements of a restaurant group or retail operation. There’s only so much a community can control.”

Gary could streamline the process for zoning to make it easier for new businesses to come in, line up facade grants for new retail businesses, or look to redevelop environmentally blighted properties. Gary could look to Hammond, which paved the way for the Marina District on Indianapolis Boulevard that’s now home to a Walmart Supercenter, an AT&T store, an IHOP and many other retailers. Hammond also razed the crime-ridden River Park Apartments just north of the Little Calumet River to make way for the Oxbow Landing development that's brought in offices, hotels, a Buffalo Wild Wings and Byway Brewing.

“Developers aren’t looking for the diamond in the rough,” Lauerman said. “When the city of Hammond took down the apartments at Oxbow Park, it was ripe for additional steps. Mayor Karen Freeman-Wilson has been focused on taking down structures to pave way for new redevelopment. ... Areas can appear downtrodden or challenged, but all it takes is a few new businesses to start a growth spurt where more people believe there’s an opportunity in that community.”

Gary has had recent successes like the popular J’s Breakfast Club in Glen Park and could nurture more success stories with a helpful website with FAQs and general information about how to negotiate the process of opening a business in the city, said Lorri Feldt, the regional director of Northwest Indiana Small Business Development Center.

“There’s a lot of challenges so the city could do anything they can to make it easy to approach them and engage in business,” Feldt said. “There could be a single point of contact for a clearly identified economic development official to work with.”

The city could prepare sites for redevelopment and focus on one area at a time, a strategy that proved successful with Michigan City’s Uptown Arts District, a once-struggling area that is now home to many galleries, boutiques, restaurants, and specialty stores, Feldt said. The idea is that revitalizing and stabilizing one neighborhood will serve as a foundation for growth across the city and show what can be done.

“It might be more fruitful to focus on an area like Miller,” she said. “Focus on a small area, and see what you can do.”

'No magic pill'

Gary could help foster a more robust retail sector by building upon its existing eight-week Gary Micro-Enterprise Initiative and other small business incubators by offering more startup training, such as at daylong seminars or accelerator programs, said Dushan Nikolovski, a clinical assistant professor of entrepreneurship at Purdue University Northwest. 

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The city could actively court more entrepreneurs by stressing that it's lower cost in terms of lower local and state taxes and energy costs than elsewhere in the Chicago area.

"One of the biggest things they could do is to promote entrepreneurship," Nikolovski said. "We're close to Chicago, but they have higher prices. We have lower rents and lower costs for small businesses."

Gary could build out more infrastructure for retail businesses, offer them forgivable loans if they stick around in the city for long enough, and encourage them to locate in clusters such as on busy roads like Fifth Avenue, where they collectively could draw more traffic, Nikolovski said. 

"We offer incentives to big industries," he said. "Think about if we tried to bring in small- to medium-sized industries instead, and what impact that could have."

With a population of about 76,000 residents, Gary still has enough residents to support and sustain small businesses, Nikolovski said. The 18th Street Brewery brewpub on Lake Street in Miller proved that people will come out to Gary if the product is strong enough, drawing customers from as far away as Chicago, he said.

"If you have the right type of business, it can help rejuvenate the area," Nikolovski said. "Block to block, you still have enough people who are going to go out shopping. If there's a cluster of businesses, people will be more likely to go there. Gary retailers still need to compete against the big boys on prices, but perhaps they could with incentives, training, low costs, low energy expenses, affordable real estate and may low-interest loans from the city. Someone might be able to save 15 cents or 20 cents on a pot by going to an out-of-town Walmart, but would they want to get on a bus or in a car in order to do so?"

As the steel industry and the city's industrial sector continues to shrink, Gary should strategize about ways to replace big industry with smaller ones, Nikolovski said.

"There's no magic pill," he said. "Eventually, I think it can be done. The cost of living may be lower in Gary than in Munster, but people still need to eat out and buy groceries. The city can thrive if you put shoppers in locations where they feel comfortable and want to spend money. Whether you're selling cupcakes, pizza, a small restaurant or a gym, you can make it work if you're passionate."

Gary could groom more residents to open businesses with more training programs, ideally no longer than a day or two, perhaps in conjunction with Indiana University Northwest, Purdue University Northwest, Ivy Tech Community College, or other local colleges, Nikolovski said.

"There's a reasonable cost of doing business here," he said. "There's low taxes. Gary needs to take baby steps instead of making giant leaps. You need smaller and mid-sized businesses to grow back the economy."

'Dying for services'

Gary has pursued a number of initiatives to increase the number of retail businesses in recent years, such as microloans, facade improvement grants, the Minority Business to Business Showcase and the Gary Micro-Entreprise Initiative that offers eight weeks of training on how to start a business. Nonprofit-led efforts include The Stage Small Business Incubator in Miller and the ArtHouse: A Social Kitchen culinary incubator in downtown Gary.

Prominent South Side Chicago artist Theaster Gates said last year he founded ArtHouse largely because Gary only had 33 restaurants serving a city of more than 76,000 at the time, leaving many residents and neighborhoods deprived of places to go out to eat.

“We had a vision and a dream that this could be more than an installation of public art, that it could nurture culinary entrepreneurs,” Gates said at an event last year with philanthropist Michael Bloomberg, who bankrolled the ArtHouse. “We see this place as an economic driver for the community.”

State Rep. Vernon Smith, the owner of the Beautiful Things Gallery, Floral and Gift Shop at The Village Shopping Center on the city's west side, said he’s long lobbied for such efforts to create more homegrown businesses, believing they offer a potential path out of the city’s retail desert woes. The success of locally owned merchants could pique the interest of larger corporate stores.

“If we can nurture and build up small local businesses, we can show the big corporations there’s a reason to come here,” he said. “They need to see that Gary residents will spend their money in Gary.”

Mark Prusinski, the owner of the Direct from China fireworks store in Black Oak, is near retirement age and said he would otherwise pursue the many business ideas he had for Gary because he believes the city is underserved.

“Look how well Fresh County Market does with that nice store on Grant Street,” he said. “Along Grant Street, you have a number of subdivisions with a lot of nice homes with African-Americans, young middle-aged couples with good jobs. They’re buying goods somewhere but not here. People in Gary are dying for services.”

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.