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SF Economic Report Finds Restrictions On Chain Stores Would Hurt Local Economy

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Walgreens store in San Francisco (Justin Sullivan/Getty Images)

Walgreens store in San Francisco (Justin Sullivan/Getty Images)

BarbaraTaylor_KCBS_0001r Barbara Taylor
Barbara Taylor is the long time San Francisco City Hall Bureau Chief...
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SAN FRANCISCO (KCBS) – A new report from the San Francisco Office of the Controller has found that limits on chain stores would not help the city’s economy or consumers.

The report was commissioned by the Planning Department in response to an ordinance proposed by Supervisor Eric Mar last summer, which would expand formula retail controls in San Francisco.   That includes expanding the definition of formula retail to include businesses that have 11 or more outlets worldwide and also requiring an economic impact report as part of the formula retail conditional use application.

Compiled by the Office of Economic Analysis, the report found that the economic benefits of favoring independent businesses over chain stores are outweighed by high consumer prices, and that formula retail controls limit the growth of chain stores within San Francisco. But Mar called the findings flawed.

“They’re not looking at how much displacement of small businesses there are when larger, big box stores and chain stores, or formula retail come into a commercial district,” he said.

Mar said chain stores push out local businesses, drive up commercial rent, and turn neighborhoods into strip malls.

“Smaller stores that are independent, sometimes you may have to pay a little bit more,” said Mar. “But I think it’s worth it for maintaining a character of communities.”

The controller’s study agrees that chain stores can be unpopular with some residents, but it found that in general, they charge lower prices and make the city more affordable.

Research by the OEA suggests local retailers may spend up to 9.5 percent more within the local economy than chain stores, but charge prices that average 17 percent more.

The study recommends considering the relative prices and local spending by proposed chain stores and existing businesses and that the Planning Commission explicitly consider the view of residents, and whether a proposed store could prevent blight.

According to the Board of Equalization, in 2012, formula retail establishments made up 16 percent of San Francisco’s 28,000 sales tax payers, while accounting for 32 percent of all retail sales in San Francisco that same year.

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