Is Your Anchor Sinking or Saving Your Region?

In a recent panel discussion, I was asked a provocative question – “Can Michigan succeed if Detroit fails?” I found it interesting because the question forces you to try and understand the interdependent dynamics between MSAs and their surrounding areas.

I responded by using the analogy of an ““anchor store”” in a shopping mall.

An ““anchor store”” is a store that increases mall shopper traffic because of its reputation. Planned shopping malls usually have an “anchor store” surrounded by a variety of specialty retailers. Consumers are attracted to the mall because they are confident the “anchor store” will likely have the quality merchandise they are looking for. But, they also shop and buy product from the specialty stores. Studies indicate even retailers that sell products that can be viewed as substitutes for products in the ““anchor store”” see increased sales. In essence, it increases the probability of merchandise being seen and considered for purchase. The value of the traffic far outweighs the inherent competitiveness and makes collocation a win:win. The brand image of the “anchor store” exerts a positive halo effect that raises the tide so all boats are lifted

Can Michigan succeed economically if Detroit fails? I personally think it is highly improbable. I think the smartest strategy is to strengthen the brand image of the “anchor store” (Detroit) so the balance of communities in Michigan have an opportunity to compete for an even larger number of capital investment deals.

For perspective, Detroit has a history that pre-dates our Nation. It developed from a missionary outpost in 1701 to one of the largest American cities by the early 20th century. That represents 300 years of brand equity building. A quick look at the key MSAs located in the United States make it clear that it takes both time and significant investment to create an ““anchor store”” for Regional economic development.

It Takes Time to Become an “anchor MSA”

TOP 10 MSAs BY POPULATION

New York            started in 1624

Los Angeles        founded in 1781

Chicago                incorporated in 1833

Houston               founded in 1836

Philadelphia       founded in 1682

Phoenix                incorporated in 1881

San Diego            founded in 1769

San Antonio        founded in 1718

Dallas                    founded in 1841

Detroit                    established 1701

Once the investment has been made, the goal is to keep the “anchor MSA” as relevant and desirable as possible. This is best done through the design and execution of a forward looking strategic plan that guides choices on asset creation, infrastructure investment and public policy reform. When the brand image is tarnished, the solution is in getting back to the basics.

Is it Even Possible to Change a Big City’s Identity

It is a reasonable question. If the image of an MSA gets damaged, can it be refurbished?

In my opinion, the short answer is yes. But, as the saying goes, “You can’t simply put lipstick on a pig”. You need to fundamentally improve the value proposition with smart development and then ensure potential capital investors are aware of the changes made.

Pittsburgh is a classic example of an “anchor MSA” that that lost its luster and retooled its brand identity. Once known for its steel industry, today its economy is largely based on healthcare, education, technology, robotics and financial services. Modern Pittsburgh is economically viable and has a well-balanced portfolio of industries to build a sustainable future. In my opinion it is a great case study of what is possible.

Obviously Detroit in not Pittsburgh and the auto industry is not the steel industry. But, Pittsburgh provides a reason for optimism. It demonstrates that large MSAs can chart a new path to prosperity, and are not destined to be a victim of their past.

Provide Your Thoughts

Can Michigan succeed without a strong Detroit? If you were on the panel, what would your response have been? I’d appreciate your perspective.

While you are thinking about it, how healthy is your “anchor MSA”? Is it helping to raise the tide of economic opportunity or is it sinking your community?

Pay It Forward

If you liked this blog post forward it to a friend. If you have a Facebook account, become a fan of Strengthening Brand America. If you are a LinkedIn user, join the Strengthening Brand America Group. If you like twitter, follow BrandAmerica to keep track of updates on this website.

What do you think of this post?
  • Awesome (0)
  • Interesting (1)
  • Useful (0)
  • Boring (0)
  • Sucks (0)

12 Comments  |   Forward this to a friend Forward this to a friend   |   Number of emails sent: 542

Category Strategy

Bookmark and Share

You can follow any responses to this entry through the RSS 2.0 feed.

12 Comments so far

  1. Miki Ellsworth

    August 31, 2011

    At the risk of asking a more provocative question, can the “motor city” not retain it’s branded image by attracting investment from the another motor industry-boating?

    The great lakes region has been endowed by nature with what is arguably the worlds best boating. Detroit’s proximity to the Canadian border is one of it’s assets. Tourism along watercourses is ever popular. The great lakes inland waterways provide the allure and draw of the sea, and offer safe Harbour and protection from the ever brewing coastal storm.

    In summation, sharing the limelight does not necessarily entail giving up existing identity. Embracing a non competitive sector resonates good vibes all around by virtue of brand extension.

  2. Mark Barbash

    August 31, 2011

    The next question is HOW a region makes the change that Pittsburgh has experienced. The linked posting by Melanie Harrington provides probably the two most important first ingredients: A common acknowledgement of the problem and Leadership that charts the couse, defends it against the doubters while still remaining open to innovation. One of the biggest challanges with this type of transition is that many key decisions are made by elected officials, who need support for their reelection. And politics, almost by it’s definition, is short term focused. As such, a set of community leaders that understands the long term nature of the transition, and the need for cultural changes, is critical.

  3. Jeffrey Hirono

    August 31, 2011

    As per the author’s shopping mall analogy: an ‘anchor store’ has quality merchandise to attract and retain business within the mall. However, Metro Detroit is run down. Nevertheless, the people are extremely resilient, but infrastructure and other industries (i.e. BioTech) is lacking. In an economic development context, I would say Metro Detroit as an anchor in order to attract foreign direct investments and/or domestic is not exactly the correct analogy. Detroit right now isn’t much of an attraction. Ann Arbor is leading Michigan’s post manufacturing collapse in new industries, along with other smaller cities in Michigan. I believe perhaps Metro Detroit needs to renew its image with new industries. However, I wouldn’t write-off Detroit just yet! Perhaps Detroit needs to have incentives for investments. Haven’t really researched this much; wanted to only give my two cents. I love Michigan!

  4. Brad Evanson

    September 3, 2011

    As an auto enthusiast and former Michigan resident (Battle Creek), I want Detroit to succeed. As Jeffrey and Al have noted, Michigan does have a more diverse economy, environment, and populace than a lot of people realize. That being said, Detroit is not unreasonably perceived as the center of gravity for economic activity in Michigan. Towards that end, I think Jim’s concept is a move in the right direction. Instead of waiting until the star player is gone, why not bring in the rookie young guns and have them work with the veteran to learn the game while offering new ideas and new momentum? For what it’s worth, two of the few bright spots in the economy (transit and energy) play right into Detroit’s area of expertise, while the focus on green jobs gives Detroit the opportunity to not so much replace its core economic engine as to “convert” it (sorry, can’t help the automotive analogies!) to run on a different fuel. The automakers may not have fully recovered to pre-2008 business levels (nor may they ever), but they have definitely been making progress in backing away from the edge of the abyss. Chrysler has rediscovered how to make cars that generate interest. Ford is leveraging new technologies with the SYNC/MyTouch infotainment systems and the efficient yet powerful EcoBoost engines. And among other successes, GM brought out the Volt. Find ways to make cars more efficient. Find ways to make cars effectively run on different fuel sources. Discover new fuel sources. These are relevant, “here and now” actions that Detroit as an entity can embrace and employ to take part in the new economic model while still playing to their existing strengths and assets.

  5. Al Jones

    September 3, 2011

    It’s an interesting question and one other states have faced before when their largest city went into a long steep decline. At most any city only dominates a portion of the state’s economy, i.e. Michigan’s Upper Peninsula has always been a different world from urban Detroit and as Jeffrey points out, Ann Arbor and it’s top 10/20 university on most rankings is a significant hope for Michigan. For that matter it’s massive, pure copper deposits lakeside, timber resources, access to the Great Lakes as both international ports (especially with the Northwest Passage truly opening up in the Arctic Ocean), and deep mix of both engineers and small to medium sized fabricators for just about any physical object…Michigan has tremendous resources compared to most states for changing focus.

    The auto industry converged and then scattered back out from Detroit so many decades ago it’s just a reflection of how abysmal most business reporting in the media is that it seems like a new thing (as a Fortune writer pointed out GM’s been losing market share since 1962.)

    Detroit is in rougher shape than most yet, Governing magazine talked about a third of the buildings (residential and commercial) in Detroit reverting back to the government on back taxes over the past decade.

    On the other hand a third of the houses and commercial buildings put up in the U.S. during the Savings & Loan Crisis of the 1980’s (when lenders made dumb and corrupt choices and had to be bailed out by the government, good thing we made sure that didn’t happen again) were in Texas and that new but wildly underpriced and readily available housing, office and other commercial space was a very significant factor in Texas’s subsequent economic boom. Without readily available and attractive housing, more than very incremental growth is just about impossible to sustain since people like sleeping inside and are really spoiled with flush toilets, electric lights, paved roads, home heat.

    Michigan’s got a great quality workforce from the folks I’ve known and is much more at the worldclass level thanks to the auto industry than most states’ actual workforce and far more small businesses with national and international customers than we’re used to thinking of because of that supplier chain of 30,000+ small shops supporting the auto industry alone. Those guys’ machine tools and processes, their machinists’ skill sets, their materials skills and quality control…it’s modern to advanced manufacturing that only happened to be making car parts but could make anything else. Tying inventors (very different from university researchers) to that kind of manufacturing capacity could and typically does grow a lot of national and international companies pretty quickly (it’s how the auto industry got started in Detroit in the first place when you look at Ransom Olds and his local suppliers in Detroit (the Dodge Brothers, the Studebaker Brothers, the Fischer Brothers, Alfred Sloan’s bearings factory, Henry Leland (Cadillac and Lincoln) machine shop, Charles Stewart Mott’s shop, Henry Ford from Western Electric’s plant that like designing cars in his own garage…a few years later Detroit was making hundreds of thousands of cars and then millions. I’m optimistic for Detroit and Michigan if they can use what they already have and not worry about becoming the latest hot thing that everyone’s chasing.

    So Detroit could do really well with what it’s inherited or further collapse into what the State Dept was calling “Failed States” when outside the U.S., but that’s still just part of Michigan.

  6. Ken Wessel

    September 5, 2011

    Ken Wessel • Detroit is not likely to fail; comeback of Ford, GM and Chrysler is creating jobs and causing people to “buy America.” Mayor Bing is using a great deal of initiative to aid education, clean up sore spots and is attracting support from others.

    Ann Arbor and MU, the UP and tourism, Grand Rapids as a growing economy are in place to complement Detroit in its comeback.

  7. Melanie LaPerriere

    September 6, 2011

    Detroit has already failed. It began failing in the 70s and has slowly imploded for the 40+ years since Japan introduced a better solution into the marketplace. Detroit is in the process of re-inventing itself based upon new businesses but this rebuilding will take time. As long as there are people that believe the car giants of yesteryear will return, Detroit will struggle. Michigan will certainly succeed. Agriculture, tourism, health care, and education are the new anchors and significant bright spots for the great state of Michgian.

  8. admin

    September 6, 2011

    Great comments! As a point of perspective, Michigan’s top 5 industries (as measure by contribution to non-farm GSP) are Manufacturing (13%), Trade, Transportation & Utilities (18%), Professional & Business Services (14%), Education & Health Services (16%) and Government (16%). The percentages are rounded. The data is available here – http://www.bls.gov/eag/eag.mi.htm

    Leisure & Hospitality represents 9% of the total. Imagine what might be possible if the Pure Michigan campaign could somehow be appropriately extended to help communicate the benefits of doing business in Michigan?

  9. Ed Roach

    September 8, 2011

    In short I think that Michigan can survive in spite of Detroit, but is better with it than without it.

    Detroit is creeping back. One of Detroit’s problems that keeps it down is entertainment shows and movies that continue to portray Detroit in an unfavorable light. It hasn’t been the murder capital in I don’t know how long, but it continues to be saddled with that violent stigma.

    Detroit’s probably the hardest working city in America. I think that trait alone will allow it to get to the top once again, several generations from now.

  10. Jeff Porter

    September 19, 2011

    Attracting talent to the broader region is an important goal:

    Connect 64 – Regional Employment initiative for Michigan
    http://portablecareernetwork.com/blog/2011/07/connect64-regional-employment-initiative-for-trailing-spouses/

  11. Petrus

    December 2, 2015

    The problem seems to be that rarsgdlees of the geographic location, the lowest end of the income scale has been hit hardest in this market downturn. In San Diego, the inland neighborhoods where the prices have always been lowest experienced the largest price declines in percentage terms. Here this means a drop from around $500,000 to close to $200,000. Coastal neighborhoods like Del Mar experienced a drop more like $1.7M to $1.2M. Unfortunately our hardest working class people had intentionally stretched to get into $400,000 and $500,000 homes at the top of the market. They did it with risky loans and, as a result, the foreclosures in San Diego are skewed toward the poorest neighborhoods.

12 Responses to “Is Your Anchor Sinking or Saving Your Region?”




XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

By submitting a comment here you grant Strengthening Brand America a perpetual license to reproduce your words and name/web site in attribution. Inappropriate comments will be removed at admin's discretion.

SBA Blog