The Downtown Curmudgeon vs The Retail Contrarian

Here’s the most recent post of The Downtown Curmudgeon vs The Retail Contrarian column Mike Berne and I write for The American Downtown Revitalization Review –The ADRR:

Will Retail Drive The Recoveries In Our Small and Suburban Municipalities?

MJB: So David, last time we went back and forth on the prospects for retail recovery in the more intensely-developed Downtowns of our larger metros.  How about, this time, we focus more on suburbs and small municipalities?  First, I’d like to give a shout-out to the recently retired Bill Ryan at the University of Wisconsin Extension Center for Community and Economic Development — he and his shop have done such great work over the years on these sorts of Downtowns.  Indeed, I’m eager to see what Bill has to say in response to our conversation.  O.K., so let’s get to it.  Earlier in the pandemic, there was this presumption that many of them would benefit from the rise of hybrid work and the flight from the cities to both suburban as well as second-home communities.  Certainly, there have been some high-profile brands — like Starbucks, Chipotle, Sweetgreen, Parachute Home and Faherty — stating explicitly that they would be skewing more towards such opportunities than they had in the past, but speaking more broadly, have you been seeing much evidence of this benefit on the ground?

NDM: Mike, I strongly join your shout out to Bill Ryan at UWEX!!  The State should declare him a WI Treasure!

And, of course, I also strongly agree on the small rural and suburban municipalities as our focus in this conversation. As for what I am seeing on the ground, it’s not been much since we have not traveled much outside of NYC since the beginning of the pandemic because of health reasons. That said, I have been looking via the internet into some of these towns I know around the nation and some of their managers and stakeholders, and at the store location functions of the websites of the internet born retailers like Warby Parker and Bonobos, etc. What I am seeing from those sources are that Central Social Functions venues such as food, beverage, entertainment and pamper niche operations – e.g., hair and nail salons, dance and yoga classes –are opening at a faster and larger clip than retail, and that the admittedly small sample of eight or so internet born chains I looked at still are looking at very primo suburban locations, and still not in smaller independent rural cities, in the 25,000 to 75,000 range.

Let me then jump to noting that when we start off by talking about retail chains, we immediately narrow our focus to a much smaller group of downtowns and Main Streets that have any real chance of attracting them. That in turn raises the point that knowing and accepting if your downtown can or cannot attract comparison shopping type retail chains is one of the most important things the leaders in these downtown can do. I know that for me, and I suspect for you, working with these downtown organizations when they have not accepted this reality can be very frustrating. And then even if they can attract chains it will be likely for some kinds and not others.

What I am looking for these days, more than info on the chains, are: 1) if small merchants are really learning how to utilize omnichannel marketing strategies and tools that can enable them to better connect with customers in their traditional trade areas, and to attract e-shoppers from much larger market areas, and 2) the demographic shifts in population, and creatives, to smaller towns and cities, and even some rural areas. While the media and academic focus has been on how the pandemic generates remote workers who may or may not have fled to sparser regions, I think that for retail the far more important trend is that the pandemic really accelerated the adoption and use of omnichannel strategies and tools, and filtered out a great number of operators who were deficient in these skills.

MJB: When I’m presenting on the subject, I always make sure to point out that these expansion-minded DTC’s, along with the still-healthy legacy brands, are only willing to consider a tiny subset of Class A locations.  This includes a few suburban Downtowns, though they’re almost always ones that have long been shopping destinations, and in many cases, anchored by an institutionally-owned lifestyle center, like Bethesda, MD (with Bethesda Row) or Walnut Creek, CA (with Broadway Plaza).  It is a trend with little to no relevance to 99% of the suburbs and small towns out there.

It is, as you say, all about analyzing and understanding what is and is not realistic for your retail mix.  I do think that the Downtowns in these suburban and small municipal settings — which I’ll abbreviate as SSM’s for the purposes of brevity — will be very hard-pressed to support commodity-based businesses which consumers generally patronize on the basis of convenience.  Larger cities, with their much higher population densities within walking distance and their much higher tolerance for hassle, have a greater chance of sustaining storefront grocery and drug stores, but in SSM’s, most such tenants — with the exception of Dollar General or a legacy ACE Hardware — will need their on-site parking along high-traffic arterials. In some cases, they might be able to find such opportunities on the Downtown periphery, but more likely, they’ll look to the strip corridor further out, nearer to the freeway interchanges.

A specialty positioning is even more essential in these SSM’s, then.  I’m less bearish on the potential for boutiques than most — such shops can and do exist even in the absence of fashion co-tenancy, but only when the merchant is well above-average in sophistication, savvy and resourcefulness.  This is also where your comment about omnichannel comes in — it is certainly not a silver bullet but at this point, it is table stakes.

What has struck me — though not entirely surprised me, given how these things generally work — is how so many main streets of smaller towns these days have been adopting the retail forms that originated in and are still primarily associated with the urban core.  Driving through Kansas and Wyoming last summer, I saw a lot of them with say, a third-place coffeehouse, a craft brewpub, a denim boutique,  a co-working space, maybe a parklet or two.  If the community is large enough, there might even be a small-scale food hall.  I’d be curious to know how such concepts are received in these places, as I’m not one to believe that what starts in cities necessarily reflects the preferences and sensibilities of every consumer.  Then again, there is a Central Social District (CSD) component here that seems universal…


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