San Diego: sunny outlook for retailers in sprawling, growing city - Special Report on Discount Retailing in San Diego

Discount Store News, April 23, 1990 by Pamela Meek

SAN DIEGO

Sunny Outlook for Retailers In Sprawling, Growing City

SAN DIEGO -- A comfortable lifestyles, pleasant weather and a friendly populous, combine to make San Diego a favorite haven for many of the nation's most influential retailers.

Price Club, the pioneer of the highly successful membership warehouse club industry, is headquartered here, and in recent years, new stores operated by such chains as Target, Marshalls, and Silo have opened.

Although the sun shines here some 70 percent of the time, and outdoor activities are popular, San Diegans and tourists alike also take time out to shop. Not surprisingly, discounters, membership clubs, specialty shops and department stores are located throughout the county's sprawling 4.261 square miles.

Retail sales in 1988 hit some $13.7 billion, an increase of 7.9 percent over the previous year, according to the California State Board of Equalization. The county's retail sales rank third in the state behind Los Angeles and Orange Counties, but San Diego's retail volume growth rate is actually the highest in the state. This volume is projected to have continued its upward pace in recent times.

Much of the retail growth can be attributed to the area's increasing population and its spread into new neighborhoods. As of last year, some 2.42 million people filled the county, up 3.7 percent over the previous year, according to the California Department of Finance. While the bulk of San Diegans were at one time within about 15 miles of downtown, today the populace is much more spread out from the city center.

New growth is taking place in what were once outlying areas. However, much of the interest has been centered on North County. While San Diego County's population growth rate was just 2.8 percent from 1980 to 1988, the gain in the North County East Metropolitan Statistical Area was 4.3 percent during the same period, and in the North County West MSA there was a 4.1 percent population increase. Leading areas within these two regions included Vista, San Marcos, Valley Center, Escondido, Carlsbad, Oceanside and San Dieguito.

Growth was also strong in the county's North City MSA, where the population increased by 3 percent from 1980 to 1988. Here, North San Diego, Del Mar/Mira Mesa, University and Poway were the leading growth markets.

The spread northward has come as both the population and the county's overall housing prices have shot up. Although not as high as the Orange and Los Angeles Counties' average, San Diego County's median housing cost as of 1988 was $144,500, according to the San Diego Chamber of Commerce's Economic Research Bureau. This figure represents an 8.4 percent increase over 1987's level of $133,300.

Yet while many people have gone northward in search of more affordable housing, it is this populace that actually has the highest income average, San Diego County's median household income in 1988 was $28,550, but in North City it was $36,692, in North County West it was $31,133 and in North County East it was $31,266.

Not surprisingly, retailers have followed the masses into North County. Although older regional malls were built in both Escondido and Carlsbad in the '60s, there had been little new retail growth in this portion of the county until the mid-'80s when the population boom started.

A key development was the opening of North County Fair in 1986. The center contains Sears, The Broadway, Nordstorm, Robinson's, JCPenney, May Co., and countless speciality stores.

Discounters, off-price chains and membership clubs have also shown interest in the area. In 1985, Marshalls entered the area with a store in Escondido's Plaza Las Palmas center, and it was followed two years later by the opening of Escondido Promenade, a much larger strip mall, which features Target, Mervyn's, Linen Warehouse, T.J. Maxx, Stroud's, and The Men's Wearhouse.

The following year witnessed the opening of a Price Club, Silo, Home Club and other retailers in San Marcos' Vallecitos Town Center. This Price Club site has been so successful that the San Diego-based company actually looked at replacing the warehouse with a larger one in a nearby community. Also in 1988, Target opened a new site in the Twin Peaks Plaza in North City's Poway.

Price Savers, the first membership warehouse club set to challenge Price Club in its home market, has opted to open its initial site in North County this summer.

North County was home to the first Electric Avenue opened by Montgomery Ward, and the Escondido Montgomery Ward store was one of the first to switch to the chain's new focus approach.

Beyond North County, San Diego has also seen considerable new growth in its downtown market. Although the rundown city center was once able to attract few visitors and locals, a massive redevelopment plan has since considerably changed the appearance.

One of the first major steps in the change came in 1980 with the opening of Seaport Village, which contains various restaurants and specialty shops in an atmospheric and park setting. The next key move came in 1985 with the opening of the Horton Plaza shopping mall. The architecturally unique center replaced numerous rundown shops, businesses and a small park that was a favorite for street vagrants.