Insight and Inspiration for Community Vitality
INTERNATIONAL DOWNTOWN ASSOCIATION NATIONAL CONFERENCE
The Future of Downtown Retail
Michael Stumpf, AICP, CEcDPrincipal, Place Dynamics
Insight and Inspiration for Community Vitality
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
Insight and Inspiration for Community Vitality
Consider 150 years of retail evolution
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
PowerCenter
MallDowntown and Neighborhoods
Independent Business Chain StoresMegaChains
?
?
Catalog Sales
Self-Service
First Chain Stores
Walmart, Kmart, andTarget Open First Stores
Lifestyle Centers
Insight and Inspiration for Community Vitality
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
Insight and Inspiration for Community Vitality
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
Insight and Inspiration for Community Vitality
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?
Insight and Inspiration for Community Vitality
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
Insight and Inspiration for Community Vitality
We are bored with the same old stores
A genuine downtown experience…
Insight and Inspiration for Community Vitality
Downtown vs. the mall
Insight and Inspiration for Community Vitality
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
Insight and Inspiration for Community Vitality
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
Insight and Inspiration for Community Vitality
Where will the growth be in retail formats?
Pet products and services Home and garden Health / alternative health products Products for the reluctantly aging Goods from / targeted to ethnic groups Green/sustainable/organic/local products Experiential retail environments Ready to go / anytime
Insight and Inspiration for Community Vitality
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
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