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Oska stirs chain store fight on Fillmore

Photograph at Fillmore and California by Dickie Spritzer

By Barbara Kate Repa

SPURRED BY CONCERNS that the local shopping district is losing its charm and uniqueness as corporate labels gobble up real estate on Fillmore Street, some business owners are now attempting to block a newcomer — Oska, a German-based clothing company — from moving into the neighborhood.

The charge is being led by Miyo Ota, owner of Mio, the women’s boutique at 2035 Fillmore. She has filed an appeal of a building permit issued earlier to refurbish the space at 2130 Fillmore just left vacant by Jet Mail, where Oska intends to open a boutique. The action suspends the permit until the San Francisco Board of Appeals hears testimony on the issue at City Hall on March 20.

UPDATE: At its March 20 hearing, the Board of Appeals allowed the landlord’s permit to make upgrades to the building’s foundation to go forward. A second permit allowing Oska to build out the interior, which was also challenged, will be heard by the board on May 15.

FURTHER UPDATE: At its May 15 meeting, the Board of Appeals ruled 4-1 that Oska is a chain store and must go through the city’s conditional use process before it can open on Fillmore Street.

Ota’s resolve to act against the retailer, which boasts more than 50 stores around the world, was stoked while on a recent buying trip to Paris, where she was strolling through the formerly quaint Marais district. “I was shocked at what I saw there — it feels like Soho on weekends,” she says. “Now there are the same old chains there you see everywhere.”

The disputed permit was issued to Alan Tan, the property owner of 2130 Fillmore. Eduardo Izzo, who for many years owned and operated Metro 200 in the same building, recently shut his doors. The longtime occupant of the space at 2130 Fillmore, Jet Mail, moved to a spot off the beaten track on Sutter Street.

“I’ve decided I’m not going to let this slide by,” says Ota. “We need to make realtors and landlords more honest.”

Tan and Ota have a history. He was her landlord from 1978 to 1988, when she says he tripled the rent, forcing her to relocate her boutique a block south on Fillmore between California and Pine.

In her appeal, Ota has invoked a provision in the city’s planning code that limits chain stores, or “formula retail” stores, in some neighborhoods — including Upper Fillmore — unless they obtain special permits to operate. Formula retail is defined as a business operating 11 or more substantially similar stores in the United States.

In a letter to the planning commission and board of appeals, Ota tallied 13 Oska stores within the U.S. listed on the company’s websites and in its catalogs.

The contest may turn out to be a matter of timing. The Board of Appeals will determine whether the permits needed to build out Oska were approved before the retailer had 11 stores up and running in the U.S.

“It is my understanding that at the time of the first building permit (October 31, 2012), Oska was operating fewer than 11 stores in the U.S.,” says zoning administrator Scott Sanchez. “If Oska was operating fewer than 11 stores in the U.S. on October 31, 2012, then they are not subject to the Formula Retail Use controls.”

The controls were expanded by the voters in 2008 to the Upper Fillmore Neighborhood Commercial District — which extends from Jackson to Bush Streets — and other districts in an attempt to limit chain stores in San Francisco’s neighborhoods.

“San Francisco needs to protect its vibrant small business sector and create a supportive environment for new small business innovations,” reads a preamble to the code provision. The ordinance also notes that “the standardized architecture, color schemes, decor and signage of many formula retail businesses can detract from the distinctive character” of a neighborhood.

Locally, Polo Ralph Lauren was the first large retailer to confront the chain store ordinance when it set its sights on coming to the street in 2008, soon after the ordinance was extended to Fillmore Street. After initially being rejected, Polo was granted permission to occupy 2040 Fillmore after the company president committed in writing that his company would become engaged in neighborhood activities and support local causes, including adopting a local school to help students learn about fashion, actively participating in the merchant association and maintaining a community board informing the neighborhood of local events. The promises have largely been ignored.

“In the Fillmore, we need to clamp down on formula stores and say ‘No more,’ ” Ota says. “I’m afraid small businesses will be forced out. Despite the neighborhood’s reputation as catering to small independent stores, when you really scratch your head and think about it, there are very few left.”

Ota says her longer-term plan of attack is two-fold: to change the definition of a formula store to six domestic and 12 foreign-based stores and petition for commercial rent control in the neighborhood. “I want rent control because without it, we’ll lose our essential services on the street,” she says.

David Fishbein, an agent with Innovative Retail Partners, has been responsible for bringing many new corporate businesses to the street — including Peruvian Connection, Le Labo, Roberta Freymann, Curves, Alice & Olivia, Joie, Aesop and Nars, the cosmetics company opening soon at 2050 Fillmore, the longtime home of Mrs. Dewson’s Hats.

Fishbein maintains he’s doing the neighborhood a favor. “I’m most interested in getting the right mix on the street. I go out to people who are good fits for Fillmore,” he says. “I think that if anything the street having more and more specialty designers continues to add to the appeal here.”

Ironically, the ordinance limiting formula retail stores may actually have caused a rush of new corporate owners to the street, especially established labels launching their own stores or introducing international lines into the United States.

Fishbein acknowledges that retailers make the formula retail ban part of their acquisition strategies. “People are definitely aware of it, especially the large brands,” he says. “If they see themselves as street retail-focused, they aim at securing a store on Fillmore first, before they get too many stores.”

A number of the new retailers on Fillmore Street who came to the neighborhood before they had 11 stores have since grown considerably, their websites suggest.

• Joie, newly opened at 2116 Fillmore, says it has “a long roster of store openings slated for 2013” and promises “Joie’s unparalleled growth will only strengthen as it increases the brand’s global reach.”

• Steven Alan opened its 11th shop at 1919 Fillmore in May 2012; it now boasts 14 stores in the U.S., along with two annex stores in New York.

• James Perse opened at 2028 Fillmore in October 2010; it now has 21 boutiques.

• Athleta opened its second retail store at 2226 Fillmore in January 2011; its website now touts 35 stores nationwide, with seven more “coming soon.”

Many of the new brands coming to Fillmore were formerly sold in department stores or independent boutiques. Now they are taking their merchandise directly to consumers — cashing in on the cachet of the street and customer base the small independents have built up over time.

For example, Ota has offered the Oska line at Mio for the last seven years, and says she has been one of its top independent retailers in the U.S. She previously carried clothing by Eileen Fisher and jewelry by Alexis Bittar until those two retailers opened their own stores on Fillmore just blocks away from her shop.

“From personal care and ownership to the corporate way of doing business, a certain panache is lost,” says Beverly Weinkauf, longtime owner of Toujours, the lingerie shop just off Fillmore at 2484 Sacramento. “If you want the money, the bling, the street’s name, you have to contribute. You have to show up at merchant meetings, have to show you’re engaged, have to participate in the street strolls — because you care about the community, whether a corporation allows or doesn’t allow it.”

She adds: “The complexion of Fillmore is changing. Mio is alerting people they have to act.”

“What’s happening with Oska is just part of a bigger picture,” says Laura Horton Porter, business manager of the three HeidiSays stores, all on Fillmore Street. “The bigger retailers are finding ways to skirt the law. They’re able to get in on the street by calling the store by a different name.”

She points to Evolution Fresh, recently opened at 2201 Fillmore and offering cold-pressed juices, which is owned by Starbucks.

“We should learn from the example of Union Street, which became a mass of chain stores, and not let that happen here,” she says. “But it’s really about greed. If the landlords were more reasonable about what they’re asking for rent, we wouldn’t have this problem.”

Horton Porter noted that HeidiSays stopped carrying Alice & Olivia merchandise when it opened its own shop last year on the corner of Fillmore and Clay. HeidiSays also stocked Joie before it arrived the street.

“You build up the brand for them, and then they bite you in the butt,” she says.

But Vasilios Kiniris, owner of the furniture and design store Zinc Details at 1905 Fillmore, says he’s firmly on the fence about chain stores in the neighborhood.

“The glass is still at least half full on Fillmore Street. The quality is still here,” he says. “And I’m happy that the businesses coming here are high-end boutique chains.”

Kiniris, whose business has been based on Fillmore for 22 years, says he experienced the sting of the chains firsthand when Jonathan Adler moved to the street after Zinc had established its line here.

“But when something moves off your plate, it makes room for something else — and sometimes that’s an impetus to force you not to rest on your laurels,” he says. “As businesses, we all swim in the ocean. But we’re the independents, the small ships that can maneuver quicker than the big corporations. That’s what we have to do.”