The Future of Downtown Retail Michael Stumpf, AICP, CEcD Principal, Place Dynamics
The bad and the good The golden age of retail has come to an end Demographics do not support the same levels of retail growth Consumers no longer have access to easy credit and asset-funded spending Retail formats and practices are changing Consumer desires and interests are changing Downtown is in a better position to capture future development
Consider 150 years of retail evolution Catalog Sales Lifestyle Centers Self-Service Power Center Mall Downtown and Neighborhoods ? 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Independent Business Chain Stores Mega Chains ? Walmart, Kmart, and Target Open First Stores First Chain Stores
Are we on the verge of a fundamental shift? Perhaps the recession is a transition to something new… Demographic trends Baby boomers retiring, spending less Generations X and Y rising Growing ethnic population Urban growth and sustainability Sprawl and affordability, environmental limits on growth Retail consolidation Shoppers are bored and dissatisfied Watch for the counter-trend The Internet Increasing threats and opportunities for small retailers
How is the shopper changing? Shoppers are making permanent lifestyle and consumption changes… A shift from “aspirational” shopping Luxury, quantity, and conspicuous consumption are out Value, quality, and simplicity are in – cash only Shoppers have a growing interest in community Post-recession spending will return to only about 85 percent of pre-recession levels Shoppers will indulge on fewer but more meaningful items These findings are consistent across all income levels and they are global
People are interested in “buying local” Why are people buying local products? Desire for something unique Perceived higher quality / freshness Community-supportive purchasing Centralized purchasing makes it difficult for chains to source local Attempt to redefine the meaning of “local” Promoting shopping at the “local” mall Do “shop local” campaigns really work?
The product selection dynamic is changing Discounters, big box specialty stores, and grocery stores are scaling back on size and SKUs – reversing a trend Top brands gain shelf space at the cost of less popular brands Private label brands are surging, taking up more space in smaller stores Loss of major outlets will make smaller retailers more important to the suppliers who are “left out” Independents and small chains have a greater chance to differentiate themselves based on selection
We are bored with the same old stores A genuine downtown experience…
Downtown can put the excitement back Downtown can retain unique character Authenticity - downtown is “the real thing” A history and a story to tell Architectural and design variety Downtown has shops and restaurants that people will not find elsewhere Downtown houses a diversity of uses and people
There is a need for neighborhood retail Urban residential is a growing trend Demographic preferences Emerging economics Downtown populations tend to be underserved Smaller, non-competitive stores closed Large stores locate where traffic counts are high Land assembly costs work against downtown DOWNTOWN
In a nutshell… High quality, low price, unique or very special Downtown is tied to independent retail Downtown serves a neighborhood area that is gaining residential share Mall malaise and chain saturation are causing people to look elsewhere for variety Reduced chain SKU counts will create an opportunity for small retailers Shopper interest in community and local buying favors small retailers
We are bored with the same old stores Shopping is a favorite activity Consolidation has drastically reduced regional brands and is gaining momentum Malls are no longer in fashion Lifestyle malls are losing their luster Some possible threats Will the independents be lured to the malls? Will the chains come downtown? Are we making the same mistakes as the developers?