“If you do what you’ve always done, you’ll get what you’ve always gotten.” Tony Robbins
The coming retail restructuring or reset is well underway and every community, both small and large, is going to feel the pending fallout. What many are calling the “Retail Apocalypse” isn’t only a small community or small retailphenomenon; it impacts all forms and sizes of retail across the board. Mall and retail closings aren’t limited to smaller communities exclusively; cracks are showing in places such as the Chicago’s Miracle Mile and other high-end locations. Credit Suisse, one of the premier retail sector analyzers in the country reported recently that one out of every four Malls will shutter their doors in the next five years. This is on top of the previous closings across the country that account for a square footage footprint greater than the city of Boston.
In a story in The Atlantic, they indicated: “The United States devotes four times more of its real-estate square footage to retail, per capita, than Japan and France; six times more than England; nine times more than Italy and eleven times more than Germany.” One need not be a rocket scientist to determine that we are in for a major retail correction sooner, if not later.
When trying to rebuild one’s community, specifically their downtowns, the critical decisions your community makes today will be felt for years to come. If you believe you can buck the coming retail correction, you may be vastly disappointed. On the other hand, if your retail base starts to build their business around unique customer experiences, you might still have hope. Unique experiences are the one thing that online shopping won’t provide. In fact, many major online retailers including the largest, Amazon, are opening up bookstores and buying food chains. They are doing thisbecause they understand that customer experiences are vital to their overall long-term success. Apple stores, while selling technology, are selling experiences as well.
Forward thinking downtowns are looking beyond the retail space and adding more work opportunities in their downtown footprints. While retail does add to the downtown ambiance, note that the highest rents paid in places like San Francisco, Chicago or Boston are rarely due to retail, it is due to being in a thriving business district. Yes, retail and restaurants are part of the equation, but by in large, it is driven by the business district rents and occupancy. As your community starts to attract the proper business base, it should then start taking advantage of the younger generations desire to live in a more urban environment. This involves the adding of loft-living, experienced-based retail and unique dining opportunities in the area.
Hardest hit by the current and pending retail apocalypse are the malls. Malls throughout the country are dead man walking in many cases. With thousands of malls and strip malls on the brink, what should small and mid-sized communities do to overcome this massive economic shift? We are seeing malls converted to satellite campuses for colleges, food and ethnic markets, entertainment venues, student housing, office projects, art studios, mega churches, paintball parks, post offices and so much more.
Regardless of whether your community or downtown has a mall to deal with or downtown to revitalize, now is the time for communities to take bold, and might I even say, unprecedented steps. Now is the time to take a chance on your residents and incentivize them to be innovative and daring. Yes, not all the gambits will yield great results. Out of ten, you might get some great successes, a few middle of the road successes and a few failures. All are great classroomlearning opportunities for future endeavors. The worst thing a community can do during the next few years is to play it safe or be too timid hoping for better retail days ahead. Those retail days are likely a thing of the past and we must adapt.
John A. Newby is the author of the "Building Main Street, Not Wall Street" weekly column dedicated to helping local communities keep their consumer dollars local. He can be reached by email at: john@UniquelyUSA.net