Most summers, swarms of kids attending specialty camps and other programs at Northwestern University keep sales brisk at Campus Gear, a 28-year-old purveyor of purple-and-white apparel and souvenirs. This year, with Covid-19 canceling all activities, business is off 90 percent at the store's main location in downtown Evanston, Illinois. Two other Campus Gear outlets, by Ryan Field stadium, remain closed. Owner David Haghnaji doubts things will look up much before March.
Haghnaji has been trying to open a fourth store for two years. Had construction problems not delayed it, then that one--selling products from colleges around the country and Chicago pro teams--might have fared better. Area students who may be unable to physically attend other schools in September at least want to wear their brands. "I have had so many calls for items from University of Illinois, Michigan, Stanford, Harvard," says Haghnaji. "I have the merchandise. But it is in storage and I can't go find it."
In college towns like Evanston, fall is normally a big season for small business as campuses roar back to life. This year the return will be more measured. Like many universities, Northwestern has not yet set dates for resuming full campus operations. It has rolled out a phased approach, subject to change, that includes a compressed fall schedule with most programs starting early and everyone out by Thanksgiving. Many faculty and staff will continue to work remotely into the quarter.
The university's annual economic impact on the city is around $350 million, says Roger Sosa, executive director of the Evanston Chamber of Commerce. Some businesses derive 60 percent to 70 percent of revenue from students, faculty, and staff. In addition Northwestern attracts around 50,000 visitors annually for events on campus. This year, the prospects for fall traditions like Family Weekend and Homecoming remain unclear. In-person class reunions must wait for 2021.
The golden goose for Campus Gear is, not surprisingly, football. There, too, plans are in flux. The Big Ten will restrict the season--if there is one--to conference games. The number of spectators will be limited. That's very bad news for Haghnaji, whose two stores near the stadium make virtually all their sales on game days.
Other businesses will suffer if the Wildcats can't escape their cage. On top of tickets, the average visiting football fan drops somewhere between $30 and $60 a day in Evanston. "We are certainly going to miss the days when schools like Wisconsin and Notre Dame are in town," says Daniel Kelch, who operates four restaurants--LuLu's, Taco Diablo, Five & Dime, and Blue Horse Tavern--out of one large property about four blocks from campus. "People travel here to see the game. But before and after they are visiting restaurants and bars."
Sosa compares trying to generate more revenue from a reduced population--or a population in town for shorter periods--to squeezing blood from a stone. "We are going to limp along until the students are all back," he says. "We rely too heavily on the student population for us to survive without them."
Less gown: more town
With its two hospitals, office buildings, and new condos, Evanston has a more diversified economy than, say, Penn State, which is in the central Pennsylvania town of State College. That provides a buffer as the Northwestern community temporarily declines, says Paul Zalmezak, economic development manager for the City of Evanston. Still "our city is as big and urban as it is, in large part, because the university is here," says Zalmezak. "It has driven that growth."
For many business owners, Northwestern's presence weighed heavily in the decision to locate here. When Kelch opened LuLu's in 1992, "we looked at Northwestern as being a stable anchor that would help us live through recessions and things of that nature," he says. The pandemic hasn't changed his mind. "As they bring students back," says Kelch "our recovery will be quicker and better than places that are not attached to universities."
For now, Kelch's restaurants are down a collective 35 percent--much better than the 75 percent drop in March. The loss of graduation week smarted. "We were booked solid, and it went away," he says. On weekends, the wait for roof-deck seating can be two hours. But this is the Chicago area. Winter is coming.
To maximize revenue from both the community and the gradually repopulating campus, Kelch transformed LuLu's--an Asian-food concept--into a 100 percent catering, carryout, and delivery operation. Meanwhile he has turned Lulu's dining space into Blue Horse Tavern. "LuLu's had very low alcohol sales:" about 8 percent of checks, says Kelch. With Blue Horse he expects that number will rise to 30 or 35 percent. "So for the customers that are there, we expect to have higher ticket averages," he says.
Sandy Chen is counting on more business from locals to buoy Koi Fine Asian Cuisine and Lounge, which she founded in 2004. About 40 percent of Koi's revenue is Northwestern-related, from the dozens of lunchboxes ordered almost every day by campus groups to the recruiting dinners and other events that bring together 50 or more people in a private room 15 or 20 times a month. With the campus quiet, "we are losing a huge chunk of revenue," says Chen. "We used to be so booked. Now there is nothing going on."
Chen's ace-in-the-hole is her reputation in the community. For over a decade, she's run a philanthropy called Table 23 that donates to almost two-dozen local causes, ranging from an arts center to the Rotary Club. Even with business down 50 percent, Koi distributes 60 meals a week at a homeless shelter. "People are ordering from us a little more as a way to say thank you for giving back," says Chen.
MBAs to the rescue
One advantage of college towns for small business is that there are plenty of smart people to help them. In May, the Kellogg School of Management launched a small business advisory service that matches local merchants with student and alumni counselors. More than 60 business owners have participated in the free service.
"At first they mostly talked about basic financial planning," says Linda Darragh, professor of entrepreneurial practice and a founder of the program. Soon, though, companies turned their attention to digital media and ecommerce. "There are pockets that have seen their businesses expand in new ways," says Darragh, citing a spice store and a small yoga studio as digital exemplars.
Steven Papageorge Hair Salon, a 37-year fixture in Evanston, was an early advisory client. At least 28 percent of its customer base is affiliated with Northwestern, and Ellie Papageorge, general manager and the founder's daughter, assumes the number is much higher. "Those are just the ones I know for sure," she says. "A college is a very social setting and wonderful for word of mouth. We love those guys."
A Kellogg alumnus recommended that Papageorge adjust the company's pricing to recoup some losses when it reopened. She took that advice and also developed her own strategy. Assuming that the campus will be empty during the salon's busy season--between Thanksgiving and Christmas--Papageorge is redirecting all her marketing efforts towards the weeks before that when more students will be around.
Since the business reopened to limited capacity on May 30, Papageorge, who is considering the salon's first paid ads on Instagram, has been taking pictures of returning clients to show off their "quarantine-proof hair." "It's amazing--like they just walked out of the salon instead of just walking in," she says. The message: Even if you're absent from campus for long periods, you can hold off on that cut and color until you're back in Evanston.
Nicolas Gerst approached the Kellogg program for help with Laboratory Equipment Services, a startup that calibrates pipettes and balances for laboratories. Northwestern comprises 20 percent of the business. The rest is schools within reasonable driving distance of Evanston, like Purdue and the University of Wisconsin. "In March, we had full calendars. But then they said we are not comfortable or the university does not want outsiders," says Gerst. "Then everything stopped."
When Gerst and his partner launched the business last August, they targeted universities because purchasers are easy to find. School websites post news about research and grants, including scientists' names. Student and faculty directories then provide the contact information.
But with little prospect of university labs that are not working on Covid-19 reopening any time soon, the company took Kellogg's advice and began pursuing businesses. Gerst's strategy: attend Zoom presentations by corporate scientists and snag their email addresses from the slides. He has landed one new client that way and is speaking to several others. "I'd like to have 30 percent to 40 percent private companies as a fallback," says Gerst. "But I love the university labs. There is so much more energy."
A new page
Evanston businesses may also benefit from social distancing, as more students occupy off-campus apartments, closer to their storefronts. The university "has told freshmen and sophomores who are coming for the fall that they are free to find housing other than dorms, to reduce the density," says Sosa.
Others believe the importance of students to local merchants is somewhat overblown. "It is an added bonus if they come into your store, but they are not going to keep you afloat," says Annie Coakley, executive director of Downtown Evanston, a non-profit that provides the city with marketing and management services. "Because they are still college students. They don't have a lot of money."
Coakley wants stores to focus more on local residents and, beyond that, on other ZIP codes. Downtown Evanston is promoting the city as a day-trip destination for Chicagoans, with a campaign that includes social media, radio ads, and a billboard on the Edens Expressway. The organization has crafted a suggested itinerary "and we are working with the restaurants and the retailers on any specials or deals they might have," says Coakley.
Of course not all local businesses are equally affected. You'd think a bookstore in a college town would languish when the campus empties out. But revenue at Bookends & Beginnings is off just 18 percent year-to-date, says owner Nina Barrett, an author and journalist who opened the store with her husband in 2014. In March, customers bulked up on books in anticipation of a lengthy sequester. Since then the company has significantly expanded web sales. A subscription service, which mails out themed boxes containing, for example, a book on bread baking, some bread mix, and yeast, became popular as gifts for the housebound.
Bookends & Beginnings, which is tucked away in an alley, has also made lemonade from someone else's lemons. A nearby storefront was empty, its windows papered over. Barrett asked the landlord if she could tear down the paper and set up a book display, with a sign directing people to her shop. "Now we have visibility on the street, which is something we never had," says Barrett.
Although just 15 percent of Barrett's clientele are affiliated with Northwestern, the university loves Bookends, which the campus newspaper named "best store" several years in a row. And Barrett returns the school's affection.
"There are these three Northwestern undergraduates who used to come in all the time before the pandemic," she says. "They egg each other on to buy classic books that they might otherwise be too intimidated to read." When Bookends opened its doors for the first time in July, those students were among the first customers through. "It made me want to cry," says Barrett. "This is the reason we exist."