By Sharon McCormick, Director of Business Attraction & Marketing
Retail isn’t dying as some headlines read. It is certainly changing, though, and retailers, landlords and developers have to “adapt or die.” Understanding that change and adjusting for it is a critical factor for attracting new business to your city and creating or continuing to have thriving downtown and commercial corridors.
Some landlords in your city may not be recognizing this change quickly enough, though. No one really wants to acknowledge that their asset may be less valuable, or even functionally obsolete and consider lowering the price of vacant space to generate new leases and soak up what’s coming on the market. They are letting the space sit unoccupied while their “thinking adjusts”. What you’re currently beginning to see in more and more cities and towns is vacancy; something that is never good for a downtown core. In the future, landlords and cities may need to be more flexible about the price, and about how space is used.
“Out with the old and in with the new,” is the new motto that is changing our communities, large retailers, and local vendors. Technology is forever evolving and adapting in the way consumers shop from retail goods all to the way to how we shop for our groceries. In today’s society, we are seeing more online shopping from the comfort of one’s living room. Is this a cause of concern for retail shops and restaurants? This is a fair question that we should consider. Retailers can stay afloat but will have to change with the times and advancing technologies. The reality is though, that online shopping still only accounts for 5% of all retail sales, and it is the retail experience that has pushed customers online, because of things like bad service and variety. Think about it. Why has Nordstrom’s thrived while Penney’s and Sears struggle?
That is part of the reason that we are seeing this rapid decline in large retailers compared to mom-and-pop shops. According to Price Waterhouse Coopers, “We found that the consumer now craves personalization, and that “niche products, experiences, and services uniquely suited to individual tastes, interests, and aspirations have become ‘the new consumer indulgence.”
With 88% of U.S. shopping centers still being classified as neighborhood/community centers, it’s important to note that almost half of these are occupied by locally-owned businesses.
Smaller stores are gaining market share by specializing, being nimble and offering the “experience” that consumers crave.
We do not want to see our smaller vendors ending up like their larger counterparts, but how do they continue to survive? The answer is adaptation in all aspects; maintaining what is currently working and adapting their brand’s selling capabilities to match ALL of the consumer’s needs (i.e. online conveniences, personalization and unique experiences). Even though expanding into the immense world of the Internet may be scary and challenging, it could take a local mom-and-pop shop to much greater heights of success and creating new consumer experiences will keep the social connection to shopping alive.
Finally, as an expanding menu of uses look at vacant retail space, cities will need to focus even more on external issues, public spaces and connectivity. New uses can include uses that drive vibrancy, such as craft breweries, or can include uses that create jobs such as call centers and medical offices, but which provide limited vibrancy beyond their property lines for community revitalization. Additionally, quality design and design standards will become that much more important. Part of the fallout from the Great Recession is that customers are much more value conscious today that they were previously, which has driven growth of uses such as dollar stores and thrifts shops. Demand for these uses will continue (after all, why go back to the supermarket and buy $3.50 milk when the dollar store has it for $2.25), so cities must identify opportunities to mitigate negative impacts to their brand and aesthetics.
So, what is the solution to attracting retail to your City today? The answer is thoughtful planning and a defined targeted strategy.
- Minimize regulatory issues and establish consensus.
- Be proactive and understand the desired retailer’s business models including demographics, psychographics and for restaurants, the day parts (meals) each concept can expect.
- Provide context through relevant market research.
- Understand the required parking for the desired uses and the accessibility.
And make sure that your City is seen in the best light and rolls out the red carpet!
Rendering by Amber Lewis, Urban Design Assistant &
Cody Gosier, Urban Design Assistant