I’m not very good at selling my blog as a product, partly because I don’t try, and partly because I just can’t for the life of me talk things up. And so I begin with this post with a disclaimer on how tiny and inconsequential of a subject it is. At the very least, I recognize its smallness, so that the article doesn’t just come across as navel-gazing. It’s a follow-up on an equally small topic from several months ago, but I feel compelled to write it because I still want to crank out content, even as my computer remains on life support.
My first article on DC’s fancy new riverfront development, The Wharf, generated a reasonable amount of discussion. I assessed its overall viability as a reaction to other mega-developments that had both flourished and flopped, and my final judgment on The Wharf was (and still is) mixed. The microcosm for my study was a less-traveled side street that hosted a single retail space that appeared to be in constant turnaround, perhaps deliberately so–that is, it was dedicated exclusively to small retailers for short-term leases (“pop-ups”). A local chocolatier called Harper Macaw had just departed this quiet spot, no doubt taking advantage of the comparatively economical and flexible leasing conditions compared to most of the rest of The Wharf. A simple review of the company’s online details suggested to me that Harper Macaw was retaining a production facility at a less-than-glitzy light industrial space in a non-touristy, mostly residential part of Northeast DC, no doubt to keep operating costs much cheaper. And, in this era of retail dearth, when both local start-ups and long-standing national chains are feeling the pinch from online shopping, a bricks-and-mortar presence seemed unlikely to prove lucrative to an enterprising indie like Harper Macaw.
Well, despite the evidence suggesting that Harper Macaw’s storefront presence at The Wharf was a bust, it seems to be giving bricks and mortar another try: But unlike the previous effort, it’s not seeking space within a mega-development conceived within the last few years. In other words, not The Wharf. This latest incarnation leases a storefront in an attached commercial building in an older part of town.Much older, in fact. This structure sits at the eastern end of M Street Northwest, the primary commercial artery in Georgetown. And this time it’s a Chocolate Factory and Café–not just a place to purchase this perishable product in elaborate packaging, but to consume it (among other things, presumably) on site.
Harper Macaw’s lease at the obscure site on the Wharf was short-lived, but presumably deliberately so: the company’s website indeed references the space as a pop-up. Meanwhile, the signage announcing a café suggests at least some rudimentary food preparation will take place on site, indicating the storefront will involve a more elaborate enterprise–the sort of undertaking one expects when taking on a long-term lease. And M Street in Georgetown has long been one of the most celebrated dining, shopping, and entertainment destinations in the entire District. Having gentrified as early as the late 1960s and remaining a premier address during DC’s perceived nadir in the 1980s (when it was both the epicenter of the crack epidemic and the nation’s murder capital), Georgetown’s association with prestige has gone unchallenged across numerous presidential administrations. It’s quite likely the single most famous neighborhood in the nation’s capital.
But recent analyses of the economic activity in Georgetown suggests it is losing ground not just from online shopping but from the growing visibility of other emergent retail destinations, like The Wharf, Dupont Circle (Connecticut Avenue), Logan Circle (14th Street), and the ritzy department stores of Friendship Heights and Bethesda are just a few miles away in the Maryland suburbs. Multiple analysts have noted some high-profile closures within Georgetown, and local councilmembers are growing increasingly worried that the Business Improvement District (BID) has lost sight of what might distinguish M Street in the face of escalating competition. (Even worse is the intersecting Wisconsin Avenue NW, which features additional shops on an uphill slope, but analysts believe it has been hit the hardest.) Among the most recent and devastating departures was the summer closure of Dean and Deluca, a mainstay along M Street for a quarter century. The upscale grocer’s departure seems more like a harbinger of the company’s profound financial troubles: it closed its flagship SoHo location a few months later, and, as of November 2019, has reduced its portfolio to a mere two locations in Honolulu. While Georgetown can hardly blame its diminishing luster to the loss of this neighborhood anchor, it’s still devastating for the perception of vibrancy in what had long been one of the premier shopping streets.
Nonetheless, Harper Macaw has chosen to rent a space at one end of the corridor. I’d suspect that this decision indicates one of two things: that this local confectionary has greater hopes of strong performance in Georgetown than in The Wharf (in other words, the Wharf’s desirability isn’t what it’s chalked up to be), and that property managers in Georgetown, desperate to lure new tenants, have started lowering leasing rates to the point that ambitious mom-and-pops can give it a try, while the coveted national brands continue to flounder. Or, possibly, it’s a bit of both. Regardless, I hope to follow the prospects of Harper Macaw at its Georgetown location intently over the next year, as it becomes increasingly difficult to find any good rules of thumb to help the viability of both long-term retailers (like Dean and Deluca) as well as the promising upstarts (like Harper Macaw). The Harper Macaw approach–keeping its primary manufacturing in an obscure, cheap location while it hopscotches around various tiny storefronts for its high-profile showroom–may be a shrewd solution. It reveals an enterprising retailer’s need for hypersensitivity to subtle differences between sub-districts (Georgetown versus The Wharf) or even micro-districts (the east end of M Street versus the west end). On top of it all, these nascent small businesses must develop the nose of a bloodhound for any technological advancements that could shift the already persnickety market even further away from conventional shopping–and must adapt the best practices to their websites posthaste.
A company like Harper Macaw may indeed fulfill an untapped demand for a chocolate café, particularly in light of the success that craft coffee shops, distilleries, and microbreweries have enjoyed in recent years. And, if the leasing rates are cheaper than in the past, Georgetown’s M Street may be the optimal pilot location. Then again, it might make the same missteps as local hot-drink purveyor Capital Teas–from approximately ten locations at its 2017 peak to an online-only establishment two years later.
12 thoughts on “Harper Macaw, a local chocolate biz, hopes to flavor DC’s M Street. Will the partnership end up bittersweet?”
This was a great read
thanks! My tendency for over-analysis yet again got the best of me. Maybe someday I’ll actually try the chocolate…
If they’re offering an “experience environment” that is as sophisticated as a chain but clearly “local”, they may have a chance.
(This is a generic observation about upscale branded experience purveyors in upscale neighborhoods.)
Yep, that’s probably the secret. And in order to do that, they have to have either considerable equity, some great equity partners, or the amazing capacity to make it look like they have one of the first two. And the stakes get raised in a high-cost city like DC.
Without ever having tried the product (and I’m hardly a chocolate connoisseur) I can at least assert that they’ve taken a wise, cautious approach of working slowly to build their name up exclusively as a wholesaler that offers tours and sells at other upscale retailers in the greater area, then tried a pop-up space at the Wharf (albeit an obscure location), before venturing on to Georgetown. Certainly smarter than breaking right in from the get-go with a high-risk concept.
PS. From Wikipedia: “Since 2014, Dean & Deluca has been owned by Pace Development, a Thai luxury development company.”
So Dean and DeLuca has been owned by private equity for a number of years now. Founders may be able to take lower financial returns than “private equity” investors who have mostly financed a business with debt.
I think part of it was Pace’s expectations of massive growth, which didn’t pan out…and so they are basically bailing.
Another venerable business done in by the spreadsheet diddlers and (my favorite perjorative) Vampire Squids.
Interestingly enough, the Dean and Deluca store in St Helena, CA (chi chi wine country town) didn’t stay vacant long. A NEW JERSEY retailer took over the space. Great prices on local wines (unlike D&DL). Maybe the better deals will attract customers? Although Chinese tourism is down a bit, so we will see. 🙂
I specifically didn’t write “vampire squids” but was thinking it when I wrote “private equity” 😁
I use the term too often myself! 🙂
Some economists argue that financial nonsense results when all of the wealth is concentrated at the top of the economic spectrum, as the rentier class desperately seeks paper returns and the private equity people appear to offer up their various ponzi schemes and profiteering slash and burn approaches to running a company and an economy.
California is literally burning due to neglect at least in part caused by private equity extraction from the local utility (there are multiple reasons, of course). sadly, it is likely that ANOTHER group of pirates will take PG&E out of bankruptcy.
Thanks for your comments. Sorry that my own reply is so delayed; at the moment I have no functioning computer. Just curious your thoughts on PG&E: I have no doubt that many of this company’s problems are due to incompetent management. Is there at least some truth that many of the fires could have at least been more easily contained if PG&E and other utilities enjoyed greater freedom to engage in strategic tree and brush removal in the areas most susceptible to the spread of fire? I’m sure this isn’t the only factor in the current conditions in California (possibly not even the primary one), but for much the same reason that Natural Resource Departments often allow expanded hunting season for the culling of deer (to prevent habitat destruction through overpopulation) there usually is some advantage to either controlled burns (probably pretty risky in California) or targeted forestry to fend of wildfires. I’m not that well-schooled in the matter, but it seems possible that would have some impact.
I think the wildfires are such a multifaceted problem that it is hard to propose “solutions” per se. Your argument may be partly true, except PGE, when it bothers! can remove dangerous vegetation with little opposition in most cases. They just…neglected to.
I would note that the prevalence of tree trimming trucks on the roads in northern California this month has been amazing. Even though we are now getting (finally) serious rain!
Controlled burns would be very difficult given the propensity for people to live in the middle of dangerous fire-prone areas. Should Paradise have even been a town? I know living among the trees are beautiful, but… I actually read a cri de Coeur from one former resident stating firmly that she refused to live all crammed together in a (gasp) city, and that taxpayers should SUBSIDIZE these heartland Americans for their lifestyle preferences. This area, I might note, went hard core for the Great Fraudster in 2016. But Paradise residents DESERVE the subsidies, unlike THOSE people.
(Sorry for the politics, but geez, the amazing hypocrisies of people!)
Thanks for the clarification on PG&E. While I definitely don’t believe we should subsidize people for living in the middle of dangerous fire-prone areas, that argument was made for residents of the Lower Ninth Ward of New Orleans as well…it was a reasonably dense neighborhood built on essentially a 25-year floodplain. Despite all recommendations otherwise, homes had sprung right back within a few years after Katrina, including Brad Pitt’s LEED-Platinum white elephants. It’s rare that a population fully bears the cost for risk, and hazard mitigation nearly always elevates prices…but there are examples of this both rural and urban. At the very least, does living in forested areas–particularly rural ones–result in proportional increase in home/rental insurance premiums? Especially if, due to the rural nature, they depend on remote, tucked-away volunteer fire departments?
Insurance companies are refusing to renew policies in some fire-prone areas.