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 20^th 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?

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