K
Klaus Philipsen
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- Thread Author
- #1
The Struggling Downtowns and Main Streets
On my travels this year I found that downtowns are struggling to fill storefronts or getting people to walk the streets, not only in Baltimore, Atlanta, DC, San Diego and Denver but even in parts of Boston which is otherwise teaming with tourists. In Europe the situation is also dire in many, especially smaller cities.
The Main Street of my quaint medieval childhood town of Heidenheim is only a faint image of what it once was, now with so many vacant stores. Even Paris has plenty of shops for lease. I noticed a few exceptions, Vienna and Berlin, and to some extent Munich, cities which not only see many tourists downtown but also have still functional neighborhood shopping districts with smaller specialty stores but also shops for the daily needs. In Vienna I went with a friend to those neighborhood treasures, a woodshop that sold tools but also custom fabricated wood pieces per the client's specifications, a pharamacy where they no the family and their medications, a flower shop where they advised on how to best assemble a bouquet. Munich, Berlin, Paris and Vienna all have residential densities that allow retail to persist.
In the US Business Improvement Districts (BIDs) - often called Downtown Partnerships or similar- are employing everything they can think of to fill vacant stores. Methods range from night markets to electronic billboards and from free streetcars, bus shuttles, -even boats- to incentives for start -ups. Planning departments and economic development agencies develop the requisite visions, plans and design guidelines. Baltimore's downtown revival plan is called Baltimore Rise and focuses on the public realm, using cutting edge language to create more attractive spaces by de-throning the car which reigned sovereign for so long. Implementation of the lofty goals can't come too soon.
The consensus seems to be, without prospering retail, no lively downtown.
The Big Uncertainty
All these efforts suffer from a deep uncertainty about the future: Will there be a recession, will interest rates stay so high and with it inflation that blows beyond budgets that were created years ago. What will happen with remote workers, will they come back to their physical office soon and for which days of the week? Or will they be fired anyway, replaced by AI? What turns will eating out take with all the Door-Dashes and GrubHubs? Will online shopping continue to grow?
Can those midcentury modern office towers with their massive floors, curtain walls and lousy energy efficiency be converted into apartments as those older historic office buildings with masonry walls and less depth have already been? Will young upwardly mobile people continue to cherish urbanity in the way how Jane Jacobs and later Richard Florida described it? What will AI mean for retail? AI has already taken a hold in retail in that bots or agents frequently guide the consumer's online experience, frequently adding just another level of frustration. Retail organizations also predict shopping agents deployed by consumers which may without too many prompts from the customer in a semi autonomous fashion upending personal relationships or brand loyalty.
In a presentation to real estate professionals the retail consultant and expert Nick Egelanian of SiteWorks pointed out that before the pandemic when online shopping hovered at 9-10% of all shopping and that even now it has only a 20% share, far less than most people estimate. This is not to say, this share won't grow more and potentially double again in the coming five years. The numbers prove, though, that the impact of online shopping is usually overestimated.
What is Retail?
Egelanian explained that retail is a broad category which encompasses all major sectors of the economy from finance (banks) to communication (phone shops), food (grocery stores and restaurants), energy(gas station), entertainment (cinemas, kid's zones etc) and transportation (car dealerships). Overall retail sales represent $5.4 trillion of the $30.7 trillion US GDP (about 18%), which highlights that the US economy is a consumer economy.
He also distinguished between "commodity retail" (everything that includes daily needs) and specialty retail ("discretionary or aspirational goods and services purchased using the consumer’s discretionary funds"). It is especially commodity retail that has fled the downtowns of cities, in part because they needed much more space than traditional storefronts provided (not to mention parking) but to a larger part because the people that they need no longer live or work nearby. Egelanian also pointed to the demise of the department store as a category, first in the cities and then in the suburbs. Their business model was based on fixed prices, brand recognition and offering everything. Price fixing is now illegal, today's game is discounting and specialization, frequently in "category killer" superstores. Half of all consumers buy "private labels" (store-brands). The traditional department stores, which first anchored downtowns and later malls are only a shadow of what they once were. The remaining ones will only survive if they become decidedly upscale, not by competing with discounters or those selling surplus goods.
Meanwhile the retail industry websites are fretting about AI and how retailers would deal with AI agents doing the shopping for the customers or how AI agents could do cutumer care for the retailer. (The dreaded bots who offer "chats" when one looks for a phone number to speak to a real person). The technology based retail revolutions aren't going too well, neither Amazon's brick and mortar stores nor Whole Foods online shpooing through Amazon Prime. An exception are the Apple stores which are more like museums or galleries where the purpose is that objects on display can be touched and used but the actual shopping may well occur online. Tesla is also experimenting with this type "retail".
Opportunities for Urban Retail
This makes it logical that cities and towns with their main streets and neighborhood commercial strips should try to bring in specialty retail with their focus on experience and service rather than price and convenience. A downtown store that wants to attract customers from further away than the immediate walking radius around it can't compete with the suburbs over size, easy parking or a quick in and out. It has to do it via "authenticity". It needs to compete with the offer to touch merchandize, try on clothing or shoes, get expert advice from a real person and have an exciting shopping experience in the process.
The retail consultant's presentation didn't mention that his line between the two categories of retail can shift and that commodity shopping can become specialty shopping in a different setting.
An example would be the difference between a big box toy-store in a power center and a toy store on Main Street. Of course, one could argue that toys are not a necessity and therefore always specialty retail, but with its mass merchandise the big-box category killer toy-store catered to grab and run convenience shoppers and not to those who shop for quality, service and the experience of seeing and touching a toy, ideally with a child in tow to see the child's reaction to an enticing display.
An example where necessity is less debatable would baked goods. A "bakery" in a 100,000 sf grocery store with prepackaged industrially produced goods versus the stand alone bakery on Main Street with a built in coffee shop and crusty artisan bread baked locally. Even when grocery stores increasingly imitate specialty retail by having bakeries, fishmongers, a deli, butchers and flower shops inside their stores, grabbing a premade and wrapped bouquet of flowers in a supermarket is borderline commodity shopping whereas getting advice on a custom bouquet in the local flower shop is certainly specialty retail shopping.
These examples which are oscillating between the categories of necessity and discretion are not only of academic interest, they have very different spatial needs (from the retailers point of view) and cater to such different expectations (from the shoppers point of view).
Will a Shift from Bigger is Better to Small is Beautiful be a Solution?
I have long argued that especially the US will eventually turn from simply "more and bigger" to "less and smaller" in a transition from quantity to quality necessitated by limited resources, health and environmental problems and the insight that amassing huge amounts of stuff (consumerism) doesn't provide happiness. This isn't something that happens overnight and it isn't something that everybody does at the same time. There is certainly evidence of some of this shift from quantity to quality is happening in retail: Just take the coffeeshop which has revived so many main streets, either as the corporate Starbucks or as the quaint local start-up. The large variety of specialty coffee now available in even small towns is a far cry from the refillable diner coffee served from pots sitting on a warmer. I mentioned bakeries: Crusty European style bread, croissants and rolls were foreign to most of America until the late 1990s. Same with beer. The onslaught of local micro breweries brought not only a lot of more offerings to the beer scene than Coors Light and Milwaukee's Best but also brought plenty of life to Main Streets across America in big cities and small ones.
Applications of carefully curated smaller scale retail can be found in Cincinnatti's Over the Rhine or, on a much smaller scale in Baltimore's Cross Keys re-development, originally conceived by Jim Rouse and eventually falling on hard times until a recent renewal was successfully completed. Now the mixed use node is thriving again.
In the bigger picture, the bulk of consumer spending will still be in the big chains and their big boxes cities are not necessarily excluded from this type retail Whole Foods, Target and others have several examples of a careful urban insertion in dense mixed use structures where the large scale store may extend over two levels and parking is placed under the store. Even open air shopping centers can be successfully grafted into the periphery of city centers with well landscaped parking lots, potentially a parking deck, and stores offering attractive fronts in a pedestrian friendly setting with transit access.
The US are Over-Retailed But There Are Many Retail Deserts
The US is vastly "over-retailed", so much so that new retail construction has slowed to a crawl. Depending on definitions the US has more than 1.5 the square footage of retail per person than Canada and about five times as much as European countries. Much of retail that has been abandoned along the vast suburban arterials that are the trademark of suburban sprawl will never come back. The same is true for many once thriving urban "main streets" in neighborhoods.
Yet, in spite of all the surplus of land devoted to shopping, vast parts of urban and rural America are retail deserts while others have every retail category in spades. Overburdened and underserved communities may have liquor stores, vape shops and gas stations, convenience stores and increasingly dollar store chains. All these establishments are either overpriced (Convenience stores) or are lacking produce and fresh healthy foods or they are both overpriced and unhealthy. The underserved communities will also not be helped by high and specialty stores that may be the result of a shift to quality because that type of retail tends to be way more expensive. When a coffee costs four or five bucks and a loaf of crusty bread $9, or a special microbrew $10 for a pint, then much of this remains out of reach for working class people.
The Quality Discounter
But help could be on the way in form of higher quality discount stores such as Lidl and Aldi which typically ask for smaller footprints than standard grocery chains and provide fresh meats, produce and organic food options at discount prices. Aldi currently is the fastest growing grocery chain in the US and has begun to penetrate into urban food deserts. The success of these German imports have also caught the attention of the infamous "dollar stores" which typically didn't seel anything edible that was fresh or healthy. Sometimes by order of urban health departments but also by market forces, these traditional discounters are now upping their game in competitve markets. The retail deserts are less the result of lacking demand but of latent racism and a fear of crime. Target left an urban loaction in Baltimore conveniently located at a subway and transit hub after the riots in 2015 and what they say was rampant shoplifting. It is a remaining puzzle on how the huge gap between what people in distressed communities buy outside of their neighborhood or district versus within can be closed beyond groceries.
Restaurants
Eating out is also subject to changing habits such as food halls and online food ordering but restaurants remain one of the game changers when it comes to revitalizing main streets. A few destinations restaurants can draw crowds large enough to give adjacent retail a chance. Just as authentic small scale retail can be a local attraction so can local restuarnats sourcing food locally, catering to local events or serving exceptional local fare. For a while chain eateries with drive throughs penetrated every corner of the city and suburbia. Increasingly, though health concerns and the re-orientation from quantity to quality make one of a kind pizzerias, ice cream stores, coffee shops and breweries an attraction. And, of course, food halls. Baltimore's food hall "R-house" is intentionally a "third place"where people can hang out all day without buying anything an incubator for restaurateurs and a place that has put an entire neighborhood on the map. Similarly, the Stanley Market Place at the edge of Denver’s Central Park became a draw that wasn’t part of the Stapleton masterplan and brought a different vibe to the otherwise all new area.
Place-Making and Architecture
This discrepancy between abundance and scarcity in retail plagues big cities and small towns alike with the important difference, though, that large cities have at least the potential to fill smaller vacant stores with specialty retail where purchase power is high whereas small towns would need specialty establishments to be so attractive, that they have a regional draw.
This is where the quality of the public realm and the quality of architecture makes a big difference. A small town such as Shepherdstown, WV can maintain a decent amount of small retail and restaurants because of its regional and national draw as a historic downtown with a well preserved assembly of historic buildings and a historic college campus. Hampden and Fells point in Baltimore can maintain vibrant main street type stores and restaurants for the same reasons. On the suburban strips place-making is frequently a foreign word and hard to achieve. here the offered product or service has to provide the draw. But here, too, there are opportunities for authentic local retail that is not a duplicate of the large national chains.
Immigration
The immigration waves from Latin America, India and Asia have brought tiendas, fish stores, and specialty foods to many corners occupying spaces left behind by furniture, hardware, wallpaper and paint stores that once occupied them. Ethnic concentrations such as Baltimore's Highlandtown (Latino) can also succeed in the same way San Francisco's Chinatown has always been an attraction. Ethnic specialty retail works best where it is supported by historic buildings and streets, but it also breathes new life in some suburban shopping centers which lack any type of place-making charm.
Conclusion
Retail's future rests with features that can't be had online: Touching, testing, human service, atmosphere and experience. In summary, carefully curated, authentic small local stores, grocery discounters, immigration based ethnic retail, restaurants, breweries and food markets combined with placemaking through excellent design of the public roam seem to be the solutions that together can save our ailing downtowns.
Klaus Philipsen, FAIA
Prior articles on this blog and on this topic:
On my travels this year I found that downtowns are struggling to fill storefronts or getting people to walk the streets, not only in Baltimore, Atlanta, DC, San Diego and Denver but even in parts of Boston which is otherwise teaming with tourists. In Europe the situation is also dire in many, especially smaller cities.
[td]
[/td]
[td]
Boarded retail, Paris France (Photo: Philipsen)
[/td]In the US Business Improvement Districts (BIDs) - often called Downtown Partnerships or similar- are employing everything they can think of to fill vacant stores. Methods range from night markets to electronic billboards and from free streetcars, bus shuttles, -even boats- to incentives for start -ups. Planning departments and economic development agencies develop the requisite visions, plans and design guidelines. Baltimore's downtown revival plan is called Baltimore Rise and focuses on the public realm, using cutting edge language to create more attractive spaces by de-throning the car which reigned sovereign for so long. Implementation of the lofty goals can't come too soon.
The consensus seems to be, without prospering retail, no lively downtown.
The Big Uncertainty
All these efforts suffer from a deep uncertainty about the future: Will there be a recession, will interest rates stay so high and with it inflation that blows beyond budgets that were created years ago. What will happen with remote workers, will they come back to their physical office soon and for which days of the week? Or will they be fired anyway, replaced by AI? What turns will eating out take with all the Door-Dashes and GrubHubs? Will online shopping continue to grow?
[td]
[/td]
[td]
Boarded up retail Baltimore (Photo: Philipsen)
[/td]In a presentation to real estate professionals the retail consultant and expert Nick Egelanian of SiteWorks pointed out that before the pandemic when online shopping hovered at 9-10% of all shopping and that even now it has only a 20% share, far less than most people estimate. This is not to say, this share won't grow more and potentially double again in the coming five years. The numbers prove, though, that the impact of online shopping is usually overestimated.
[td]
[/td]
[td]
Modern Walmart Super Center Tysons Corner VA
(Photo: Philipsen)
[/td](Photo: Philipsen)
What is Retail?
Egelanian explained that retail is a broad category which encompasses all major sectors of the economy from finance (banks) to communication (phone shops), food (grocery stores and restaurants), energy(gas station), entertainment (cinemas, kid's zones etc) and transportation (car dealerships). Overall retail sales represent $5.4 trillion of the $30.7 trillion US GDP (about 18%), which highlights that the US economy is a consumer economy.
He also distinguished between "commodity retail" (everything that includes daily needs) and specialty retail ("discretionary or aspirational goods and services purchased using the consumer’s discretionary funds"). It is especially commodity retail that has fled the downtowns of cities, in part because they needed much more space than traditional storefronts provided (not to mention parking) but to a larger part because the people that they need no longer live or work nearby. Egelanian also pointed to the demise of the department store as a category, first in the cities and then in the suburbs. Their business model was based on fixed prices, brand recognition and offering everything. Price fixing is now illegal, today's game is discounting and specialization, frequently in "category killer" superstores. Half of all consumers buy "private labels" (store-brands). The traditional department stores, which first anchored downtowns and later malls are only a shadow of what they once were. The remaining ones will only survive if they become decidedly upscale, not by competing with discounters or those selling surplus goods.
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[/td]
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[td]
Failing mall: Security Square Mall, Baltimore County
[/td]Meanwhile the retail industry websites are fretting about AI and how retailers would deal with AI agents doing the shopping for the customers or how AI agents could do cutumer care for the retailer. (The dreaded bots who offer "chats" when one looks for a phone number to speak to a real person). The technology based retail revolutions aren't going too well, neither Amazon's brick and mortar stores nor Whole Foods online shpooing through Amazon Prime. An exception are the Apple stores which are more like museums or galleries where the purpose is that objects on display can be touched and used but the actual shopping may well occur online. Tesla is also experimenting with this type "retail".
Opportunities for Urban Retail
This makes it logical that cities and towns with their main streets and neighborhood commercial strips should try to bring in specialty retail with their focus on experience and service rather than price and convenience. A downtown store that wants to attract customers from further away than the immediate walking radius around it can't compete with the suburbs over size, easy parking or a quick in and out. It has to do it via "authenticity". It needs to compete with the offer to touch merchandize, try on clothing or shoes, get expert advice from a real person and have an exciting shopping experience in the process.
[td]
[/td]
[td]
Toy store, Idaho Springs, CO
[/td]The retail consultant's presentation didn't mention that his line between the two categories of retail can shift and that commodity shopping can become specialty shopping in a different setting.
An example would be the difference between a big box toy-store in a power center and a toy store on Main Street. Of course, one could argue that toys are not a necessity and therefore always specialty retail, but with its mass merchandise the big-box category killer toy-store catered to grab and run convenience shoppers and not to those who shop for quality, service and the experience of seeing and touching a toy, ideally with a child in tow to see the child's reaction to an enticing display.
An example where necessity is less debatable would baked goods. A "bakery" in a 100,000 sf grocery store with prepackaged industrially produced goods versus the stand alone bakery on Main Street with a built in coffee shop and crusty artisan bread baked locally. Even when grocery stores increasingly imitate specialty retail by having bakeries, fishmongers, a deli, butchers and flower shops inside their stores, grabbing a premade and wrapped bouquet of flowers in a supermarket is borderline commodity shopping whereas getting advice on a custom bouquet in the local flower shop is certainly specialty retail shopping.
These examples which are oscillating between the categories of necessity and discretion are not only of academic interest, they have very different spatial needs (from the retailers point of view) and cater to such different expectations (from the shoppers point of view).
[td]
[/td]
[td]
Saint Sauveur, Quebec (Photo: Philipsen)
[/td]Will a Shift from Bigger is Better to Small is Beautiful be a Solution?
I have long argued that especially the US will eventually turn from simply "more and bigger" to "less and smaller" in a transition from quantity to quality necessitated by limited resources, health and environmental problems and the insight that amassing huge amounts of stuff (consumerism) doesn't provide happiness. This isn't something that happens overnight and it isn't something that everybody does at the same time. There is certainly evidence of some of this shift from quantity to quality is happening in retail: Just take the coffeeshop which has revived so many main streets, either as the corporate Starbucks or as the quaint local start-up. The large variety of specialty coffee now available in even small towns is a far cry from the refillable diner coffee served from pots sitting on a warmer. I mentioned bakeries: Crusty European style bread, croissants and rolls were foreign to most of America until the late 1990s. Same with beer. The onslaught of local micro breweries brought not only a lot of more offerings to the beer scene than Coors Light and Milwaukee's Best but also brought plenty of life to Main Streets across America in big cities and small ones.
Applications of carefully curated smaller scale retail can be found in Cincinnatti's Over the Rhine or, on a much smaller scale in Baltimore's Cross Keys re-development, originally conceived by Jim Rouse and eventually falling on hard times until a recent renewal was successfully completed. Now the mixed use node is thriving again.
In the bigger picture, the bulk of consumer spending will still be in the big chains and their big boxes cities are not necessarily excluded from this type retail Whole Foods, Target and others have several examples of a careful urban insertion in dense mixed use structures where the large scale store may extend over two levels and parking is placed under the store. Even open air shopping centers can be successfully grafted into the periphery of city centers with well landscaped parking lots, potentially a parking deck, and stores offering attractive fronts in a pedestrian friendly setting with transit access.
The US are Over-Retailed But There Are Many Retail Deserts
The US is vastly "over-retailed", so much so that new retail construction has slowed to a crawl. Depending on definitions the US has more than 1.5 the square footage of retail per person than Canada and about five times as much as European countries. Much of retail that has been abandoned along the vast suburban arterials that are the trademark of suburban sprawl will never come back. The same is true for many once thriving urban "main streets" in neighborhoods.
[td]
[/td]
[td]
St Juan, Puertto Rico (Photo: Philipsen)
[/td]Yet, in spite of all the surplus of land devoted to shopping, vast parts of urban and rural America are retail deserts while others have every retail category in spades. Overburdened and underserved communities may have liquor stores, vape shops and gas stations, convenience stores and increasingly dollar store chains. All these establishments are either overpriced (Convenience stores) or are lacking produce and fresh healthy foods or they are both overpriced and unhealthy. The underserved communities will also not be helped by high and specialty stores that may be the result of a shift to quality because that type of retail tends to be way more expensive. When a coffee costs four or five bucks and a loaf of crusty bread $9, or a special microbrew $10 for a pint, then much of this remains out of reach for working class people.
The Quality Discounter
But help could be on the way in form of higher quality discount stores such as Lidl and Aldi which typically ask for smaller footprints than standard grocery chains and provide fresh meats, produce and organic food options at discount prices. Aldi currently is the fastest growing grocery chain in the US and has begun to penetrate into urban food deserts. The success of these German imports have also caught the attention of the infamous "dollar stores" which typically didn't seel anything edible that was fresh or healthy. Sometimes by order of urban health departments but also by market forces, these traditional discounters are now upping their game in competitve markets. The retail deserts are less the result of lacking demand but of latent racism and a fear of crime. Target left an urban loaction in Baltimore conveniently located at a subway and transit hub after the riots in 2015 and what they say was rampant shoplifting. It is a remaining puzzle on how the huge gap between what people in distressed communities buy outside of their neighborhood or district versus within can be closed beyond groceries.
Restaurants
[td]
[/td]
[td]
Faidley's famous seafood stall opening a large upscale
restaurant in a converted wallpaper store in Catonsville is
another step in transforming "main street" (Photo: Philipsen)
[/td]restaurant in a converted wallpaper store in Catonsville is
another step in transforming "main street" (Photo: Philipsen)
Place-Making and Architecture
[td]
[/td]
[td]
Le Jardin is a temporary pop-up installation of
food, music and garden in downtown Montreal
(Photo: Philipsen)
[/td]food, music and garden in downtown Montreal
(Photo: Philipsen)
This is where the quality of the public realm and the quality of architecture makes a big difference. A small town such as Shepherdstown, WV can maintain a decent amount of small retail and restaurants because of its regional and national draw as a historic downtown with a well preserved assembly of historic buildings and a historic college campus. Hampden and Fells point in Baltimore can maintain vibrant main street type stores and restaurants for the same reasons. On the suburban strips place-making is frequently a foreign word and hard to achieve. here the offered product or service has to provide the draw. But here, too, there are opportunities for authentic local retail that is not a duplicate of the large national chains.
[td]
[/td]
[td]
Latin festival in Highlandtown, Baltimore
(Photo: Philipsen)
[/td](Photo: Philipsen)
Immigration
The immigration waves from Latin America, India and Asia have brought tiendas, fish stores, and specialty foods to many corners occupying spaces left behind by furniture, hardware, wallpaper and paint stores that once occupied them. Ethnic concentrations such as Baltimore's Highlandtown (Latino) can also succeed in the same way San Francisco's Chinatown has always been an attraction. Ethnic specialty retail works best where it is supported by historic buildings and streets, but it also breathes new life in some suburban shopping centers which lack any type of place-making charm.
Conclusion
Retail's future rests with features that can't be had online: Touching, testing, human service, atmosphere and experience. In summary, carefully curated, authentic small local stores, grocery discounters, immigration based ethnic retail, restaurants, breweries and food markets combined with placemaking through excellent design of the public roam seem to be the solutions that together can save our ailing downtowns.
Klaus Philipsen, FAIA
Prior articles on this blog and on this topic: