In recent years, major retail chains like Walmart, Starbucks, Nordstrom, Whole Foods, and CVS have been closing stores in major US cities, sparking concerns about the future of retail in prominent downtown areas.
To reinvent downtown retail, it is imperative to embrace significant changes and create an environment that fosters economic growth.
So, why are we seeing so many large franchise stores close in big cities?
The Glut of Stores: One of the primary causes of store closures is the oversupply of retail spaces. The phenomenon popularly referred to as the “retail apocalypse” has seen more stores closing than opening. Chains like Walmart, Nordstrom, and CVS have been implementing nationwide closures, with big cities merely being a part of this trend. To thrive in today’s retail landscape, a new approach is required, one that goes beyond traditional big-box stores.
Crime: Some policymakers, including leaders from both Republican and Democratic parties, have highlighted crime as a significant factor contributing to the closures of retail stores. In recent times, videos depicting brazen shoplifting incidents have raised concerns about public safety and its impact on businesses.
The visibility of these incidents has led to the perception that crime rates have skyrocketed, resulting in a loss of confidence among retailers.
However, it is worth noting that crime rates in some cities have remained stable or even declined in recent years, despite the closures of retail stores. This suggests that crime alone cannot be the sole determining factor in the decisions made by major retail chains.
The Rise of Remote Work: The shift towards remote work, particularly accelerated by the COVID-19 pandemic, has significantly impacted downtown shopping areas. With a substantial increase in the number of people working from home, the typical office worker spends less money in city centers. This has prompted retailers to redirect their focus towards suburban areas, where consumer spending has shifted. As a result, cities like San Francisco, New York, and Los Angeles have witnessed a decline in retail establishments.
The Influence of Online Shopping: The continuous growth of e-commerce has also put pressure on brick-and-mortar stores. Online sales have steadily increased, accounting for a significant portion of retail revenue. In particular, clothing, shoes, accessories, vitamins, and electronics stores have been adversely affected by the rise of online shopping. Although crime isn’t the sole contributing factor, increased incidents of shoplifting and other losses have impacted retailers.
Challenges in Hiring Workers and Exorbitant Rents: High labor costs and punishing rents in major cities have added to the challenges faced by retail stores. The average rental prices in cities like San Francisco, New York, and Los Angeles far exceed the national average, making it financially burdensome for retailers to operate. Additionally, the struggle to recruit workers at higher wages has further exacerbated the situation.
Sprawling Suburbs: As suburbs continue to grow and house more businesses, folks’ reliance on big cities decreases.
Conclusion: The closure of major retail chains in big cities is a multi-faceted issue, influenced by factors such as oversupply, remote work, online shopping, high rents, and hiring challenges. However, by implementing comprehensive strategies, cities can revitalize their downtown retail scenes.
Creating vibrant neighborhoods, embracing placemaking initiatives, offering flexible leasing options, improving public transit, repurposing vacant spaces, collaborating with business improvement districts, and leveraging innovation can all contribute to a thriving downtown retail environment.
It is crucial for policymakers, city planners, and stakeholders to work together to reimagine city centers as dynamic, inclusive, and experiential destinations. By adapting to evolving consumer preferences and harnessing the potential of technology, cities can foster economic growth, attract businesses, and provide a compelling retail experience for both residents and visitors.
