For 25 years, Adobe Books served San Francisco as a community hub and host of literary happenings.
But in Spring 2012, Adobe's landlord told the bookstore, then paying $4,500 per month, that it was time to renegotiate their lease. Adobe offered $8,000, an increase of some 78%, and turned to the community it had served for years for support.
- 5th & Pacific is in the business of pushing what they call “global lifestyle brands” including Juicy Couture, Lucky Brand, and Kate Spade, a sub-brand of which is Jack Spade. And business is good: last year, the fashion conglomerate brought in some $1.5 billion.
Formula Retail Rules
City regulations exist to balance the interests of big businesses with those of the existing community. Chain stores, defined as businesses with consistent branding that have 11 or more locations in the U.S., “are typically better capitalized and can…pay more for lease space,” reads the City’s Planning Code. If allowed to spread, chains can “limit or eliminate business establishment opportunities for smaller or medium-sized businesses, many of which tend to be non-traditional or unique.”
- In July 2012, Jack Spade went before the City, trying to convince the Planning Department that it is not, in fact, a chain store. In its official application, a Spade rep assured city officials that “[b]eing affiliated with a parent company should not imply that the store can or will pay above market rent.” She also stressed Spade's closeness with the surrounding community:
- Abiding by Spade's claims, and without factoring in any of the resources of Spade's parent company, the City granted the menswear line status as a non-chain store.
What’s important to note is how the City's formula retail rules work. Certain San Francisco neighborhoods, including the Mission's Valencia Corridor, do not out-and-out ban chain stores; what they do require is for chain stores to submit to a public approval process, which involves a hearing and requires approval from city officials. It’s an opportunity for community members to make sure their concerns are heard, something that Jack Spade was able to sidestep.
Most of the time, chain stores are approved. In fact, of the 93 chain stores that have applied for conditional use permits since 2004, 70 have been approved, according to Planning Department statistics. The wisdom of the process is that, rather than banning formula retail, it requires businesses to gain the support of the surrounding community before moving in. The fact the City's chain store regulations are widely seen as some of the "most influential anti-chain legislation in the United States" speaks to the healthy balance they have helped to foster.
But in notable cases they are not, including an instance in 2009 when American Apparel eyed a new store on Valencia Street, a few blocks from where Spade now wants in. Because it was classified by the City as a chain store, American Apparel had to submit to a public hearing, which after spirited testimony from the community, resulted in the San Francisco Planning Commission voting 7-0 to deny the Los Angeles-based chain the permit they needed to open.
A week after the hearing, the company released a statement:
The Valencia Corridor Merchants Association, an organization of neighborhood businesses that includes Spade's potential 16th Street location, is speaking out. Despite multiple attempts to connect with Spade, for months the VCMA was met with “radio silence.”
- In early July, the VCMA lodged an official appeal with the City.
- The VCMA wants the City to label Jack Spade a chain store. They want an opportunity for citizens to engage with Jack Spade at a public hearing, and know their concerns are not being ignored.
A Spade is a Spade
The VCMA points out that both Jack and Kate Spade share: (1) headquarters in New York; (2) distribution software and distribution center in Ohio; (3) IT, HR and legal departments; (4) staff and payroll; (5) and a parent company, 5th & Pacific.
According to 5th & Pacific’s public filings, Jack Spade is considered a sub-brand of Kate Spade, which has 94 locations in the U.S., well above the threshold to trigger a public hearing. From 5th & Pacific's most recent 10-k filing with the SEC:
Since filing its appeal, the VCMA has broadened its base of support, with a number of Mission District-based community organizations signing on to a Letter of Support, including Causa Justa :: Just Cause, PODER, La Raza Community Resource Center, Harvey Milk LGBT Democratic Club, Shaping San Francisco, Center for Political Education, and the Western Regional Advocacy Project. Supervisors David Campos and John Avalos have also submitted Letters of Support for the VCMA’s appeal.
While the VCMA has pointed out that Jack Spade may serve to push out local businesses by increasing rents in the neighborhood, advocacy groups and residents have found common cause in the idea that the community should have a chance to speak out when big business wants in.
The push to oppose Jack Spade comes as the debate around chain store regulations in San Francisco heats up. Six of San Francisco's 11 supervisors—including moderates London Breed, Mark Farrell and Scott Wiener—have either introduced successful legislation or proposed ordinances that would bring the controls to new neighborhoods or define more businesses as chain stores, the SF Examiner reported. Meanwhile, the Planning Department has commissioned a city wide study on the effects of formula retail, slated to be published in the fall.