Ida Presentation The Future Of Downtown Retail

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Presentation to the International Downtown Association on "The Future of Downtown Retail"

Presentation to the International Downtown Association on "The Future of Downtown Retail"

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  • 1. The Future of Downtown Retail
    Michael Stumpf, AICP, CEcD
    Principal, Place Dynamics
  • 2. 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
  • 3. 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
  • 4. 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
  • 5. 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
  • 6. 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?
  • 7. 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
  • 8. We are bored with the same old stores
    A genuine downtown experience…
  • 9. Downtown vs. the mall
  • 10. 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
  • 11. 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
  • 12. Where will the growth be in retail formats?
    • Pet products and services
    • 13. Home and garden
    • 14. Health / alternative health products
    • 15. Products for the reluctantly aging
    • 16. Goods from / targeted to ethnic groups
    • 17. Green/sustainable/organic/local products
    • 18. Experiential retail environments
    • 19. Ready to go / anytime
  • 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
  • 20. 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?