Ida Presentation The Future Of Downtown Retail

Insight and Inspiration for Community Vitality

INTERNATIONAL DOWNTOWN ASSOCIATION NATIONAL CONFERENCE

The Future of Downtown Retail

Michael Stumpf, AICP, CEcDPrincipal, Place Dynamics


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


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


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


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


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?


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


We are bored with the same old stores

A genuine downtown experience…


Downtown vs. the mall


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


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


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


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

Real Estate

Ida Presentation The Future Of Downtown Retail