Saturday, April 3, 2010

The Future of Urban Retail

By Greg


A recent Philadelphia Inquirer column by Inga Saffron was about a trendy clothing shop that recycled the interior of an out-of-business bathroom fixtures store to create a hip and “eclectic boutique.” Saffron’s point was to encourage retailers to “cherish the design resources that are already here,” especially in a recession when storefronts are changing over on a more frequent basis. What I found most intriguing about the column, however, was a secondary point that Saffron hints at.

Near the end of the column she writes, “Bookstores are not likely to survive when the world is fully Kindle-ized, except perhaps for specialty shops. Ditto for music stores.” This passing remark begs a much larger question: What is the future of urban retail in the Internet age? My father recently pointed out in conversation that the easiest way to find the answer is probably to analyze what we buy online, and what we are less likely to seek on the web. At the moment, the top candidates for the latter seem to be food, clothing and furniture, services (hair/nail salons, medical offices), personal banking, experiences (dining out, theater, clubs, bowling), and items we need right away (toilet paper, toothbrushes, medicine). In other words, the Internet has not only redefined retail, it continues to offer a guide to what retail businesses are good bets for the future.

This is not just an urban phenomenon. The Internet has also changed the retail landscape in the suburbs substantially. I grew up in the Philadelphia suburbs near the Plymouth Meeting Mall. On a recent business trip to a Plymouth Meeting office building, I was shocked to see that the mall’s exterior – once a blank wall, fronting the massive parking lots – was now activated, surrounded by dozens of new chain restaurants and a Whole Foods supermarket. In short, its management determined that the future of the mall was not rooted exclusively (or even primarily) in reviving the interior stores, but in bedecking its exterior with these Internet-resistant business categories.

Before the Internet, suburban-style big-box stores were the biggest threat to urban retail vitality. While some big-box chains that focus on the most Internet-vulnerable categories (like Borders) are threatened, it still seems like a number of national, big-box stores are fairly resilient today. Thus these major retailers are also necessarily part of the equation of figuring out urban retail in the Internet age.

Previously, almost none of these stores would locate in an urban-style context, insisting on building boxes in massive parking lots as their exclusive business model. Some big-box stores still do not have an urban design and won’t go beyond their familiar suburban-style look. But these days, many have wised up and now have urban design templates. Savvier cities have found ways to woo these stores downtown (I was recently in an urban-style Best Buy in Manhattan; Manhattan's Home Depot is shown above).

In today’s economy it becomes more important than ever for cities to figure out how to utilize these stores as anchors for urban commercial corridors. In Philadelphia we have many of these big-box stores, but located far away from the downtown and major commercial corridors. It is well known that big box stores have relatively short life spans in suburban-style locations, often staying open only ten or fifteen years before seeking a new spot, leaving vacant “grayfields” behind. Philadelphia should make it a focus to ensure that when its South Philly big boxes close down that the City provides the carrots and sticks to bring these retail anchors to dense, urban-style commercial corridors. This is something the City should be thinking about proactively, rather than waiting for the not-so-distant day that one of the South Philly mega-retailers is ready to shut its doors and move to the next shopping center down the block.

I would argue that cities still have the strongest chance to keep small, diverse, and privately-owned retailers open, but it depends on their ability to understand the new market forces brought on by online shopping, and the necessity of centralizing their major retailers so as to create the critical mass of shoppers needed to provide the kind of retail we have traditionally come to expect from urban shopping. Small commercial corridors can certainly stay relevant based on the perpetual need for place-based, Internet-resilient businesses. However, downtowns and larger urban commercial corridors continue to need anchors.

7 comments:

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Group 3 said...

Hey this blog was really interesting to read. I am currently in a Urban Studies class in college and to read over this brought out a different side of Urban Studies. I never thought about the internet as having an effect on the urbanization of a city. We talked in class about the location of stores and the design of it have a huge impact on its appeal to people which leads to it's success or failure. Thank you for writing this and I look forward to reading your blog further!
Feel free to take a look at my classmates blog as well http://urbsctmzl.blogspot.com/

Thanks again Lorraine

S. Michael Stofka said...

Greg, while your comment that the future of retail lies in activation (both in urban and suburban contexts) is spot-on, I would suggest that the whole "OMG the internetz are killings retail!" fad is just that...a fad. It doesn't actually have much of a basis in reality. In fact, Amazon.com has an excellent forerunner by a good century or so: the Sears, Roebuck & Co. catalog.

Sites like Amazon.com or Newegg.com do offer one-stop e-shopping, yes, but back in 1900 so did the Sears Roebuck catalog; in fact, the catalog offered a gamut of products ranging from toothpaste through books and fashion, athletic equipment, toys, and so on, clear up to cars and houses! Yes, you could order a house out of the Sears Roebuck catalog, and there are quite a few '20s-era houses around which were. The Sears chain which we know today is, I think, the outgrowth of showrooms of the catalog's products throughout the U.S. (much like how Ikeas are showrooms first and stores second). So the catalog drove the growth of the store.

Now, while it is true that big-box stores specializing in products that are now commonly bought online at e-retailers are in trouble, in the longer term the physical retail won't go away. Border's might fade and Barnes & Noble turn into Amazon showrooms, but the bookstore will remain. When the Sears catalog came out people thought it would mean the death of the department store, especially in the less urban parts of the country, but what happened? Sears turned into one of the major department stores. The innovations the company was built on were rendered obsolete with Wal-Mart and the growth of big boxes, and e-retail is merely the next step--but they all need the physical space. Retail is built on the physical space. In a way, Newegg depends on Best Buy as its showroom, for without the Best Buy to check out a product, Newegg isn't really able to deliver the tangible guarantee of a quality product. In this way, retail has always been a showroom.

I do not doubt there is too much retail, but I do doubt that Internet commerce is going to kill retail the way that people like Inga Saffron think it will.

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Grade A said...

Urban retail has taken a very unique evolution. I found your article to be really interesting. After all, urban stores and urban styles have changed. This is a great outlook. Cool Post. I will be back to visit