OAKLAND -- A butcher. That was the No. 1 business coveted by Lake Merritt neighbors and merchants surveyed in 2008. Five years later Grand Avenue residents are still waiting for their admittedly modest goal to be fulfilled.

For now they have to go to Oakland Kosher Foods on Lakeshore. But they may be getting closer with the opening of Penrose & Sons Fine Meats and Spirits at 3307 Grand Ave. Penrose owner Charlie Hallowell also has plans to open more eateries and possibly a full-blown butcher shop.

The restaurant is helping change the face of the avenue, which now offers wine bars, tony boutiques and Chez Panisse-pedigree restaurants like Camino and the epicurean pizzeria Boot and Shoe Service.

Indeed, much of what residents surveyed in 2008 said they wanted in the way of food and clothing shops are now in place along two long parallel blocks of Grand or Lakeshore avenues.

Of the two, Grand faces more challenges. However, the success of stores like Knimble, a trendy buy-sell-trade clothing store, and Oak Common, a California casual lifestyle shop, stand out. The city of Oakland estimates that shoppers spend a billion dollars a year outside the city on clothing, furniture, books and toys.

"We really saw the lack of retail in Oakland and the East Bay in general," Oak Common co-owner Jeffrey Probart said. "People are so happy they don't have to go to the city."

Probart recently hired a part-time worker to help curate the gallery in the back of the store.

A wine bar-store combo, Ordinaire, also opened recently, and Alchemy Bottle Shop (with a gallery on the top floor) is on the way down the street.

The avenue still trends toward the independent businesses that have some twist to make them different, exemplified by Monkey Forest Road cafe and Indonesian art gallery. Owners Arnel Alcordo and Chris Cooper employ a staff of about 20 between the expanding cafe and the gallery.

Like an ecosystem, a business district needs to be conscious of cultivating variety, Alcordo said. "Grand is becoming more diverse," she said. "It has a way to go, but it's getting there."

Like an ecosystem, not everyone will survive the changes. There are holdovers like Smitty's bar, The Alley and a Chinese diner.

But The Star replaced Milano, and Jenny's sandwich shop moved to 14th Street to make way for Penrose & Sons. The latest fatality is the Day of the Dead Cafe at the foot of the street.

Of eight ground-floor storefronts vacant in 2010, all but one is occupied, according to longtime resident Ken Katz, editor of the neighborhood Splash Pad newsletter.

Rents on Grand are still more affordable than Lakeshore but are going up in the district overall.

"Grand Avenue has begun to catch up," said Pamela Drake, director of the Lakeshore Avenue Business Improvement District.

Lakeshore Avenue is noticeably more at home with national chains.

Drake said the chains help bring customers to Lakeshore and support the independent boutiques like the Urban Indigo gift store, whose facade prompted a woman walking by to declare, "The shops are so cute here."

Grand Avenue property owners rejected a business improvement district, and the Grand Avenue Business Association can be sluggish.

The district's success puts it outside the redevelopment and other financial programs designed for struggling areas, said Oakland's business development specialist, Keira Williams. It has a nice range of income, she said.

"And the fact that they have the cinema there is huge," said Williams, referring to the Grand Lake Theater.

Numerous Grand Avenue entrepreneurs attributed their success to foot traffic and an influx of shoppers who have cash and will go out of their way to spend it in Oakland.

"People don't have to work very hard to buy local on Grand," said Kathy Leonard, the owner of Rebooty, a boutique with wildly imaginative repurposed furniture and art.

Leonard, Elida Scola of Galleria Scola and Panorama Framing owner Patrick Cheatham organized the First Thursday gallery crawls on Grand, which have a more merchant-and art-focused feel than the First Fridays downtown.

"It took 30 years for this to happen," Scola said.

Cheatham opened his store on Valentine's Day. He now gauges attendance of the First Thursday gallery shows hosted in the back of the store by the number of empty wine bottles at the end of the night. In May there were two, in October a dozen.

Soon he will begin looking for part-time help.