Retail 2020/2021: What The Future May Hold
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FEATURE Review
by John Brancaglione
Retail 2020/2021:
What The Future May Hold
A c ons iste nt u r b an pl an n i ng than 15 years. U.S. retail space was, and survive by stealing market shares from
and development question from still is, overbuilt. The U.S. has, for many others selling the same merchandise.
municipalities focuses on retail years, had more retail square footage per This ultimately meant some would fail.
businesses that generate sales taxes. capita than any other developed nation. The advent of online shopping (the
This source of revenue has become the How did we get here? Amazon phenomenon) has accelerated
life blood of many municipalities and The overbuilding was spurred largely on an annual basis with current estimates
state governments. We must remember by liberal bank and institutional financing indicating that online retailing is
that many other types of development for retail development that accelerated in accounting for more than 15% (although
that are entertainment-related (sporting the late 1990s and early 2000s. This was these estimates vary depending on the
events and concerts for example) and further fueled by competition among source). The COVID-19 pandemic has
restaurant and drinking establishments cities in metro environments that made more people aware of what they
are significant sales tax generators as handed out sizable financial incentives could buy using that method. Among
well. The thoughts that follow are based for retail developments to locate in retailers, the “old line” department stores
on years of watching and tracking these one place versus another. Many of the have been the most impacted because
trends. metro markets were not rapidly growing they were slowest to embrace the online
Changes in how people shop for goods populations, so when a new retailer trend or to recognize the necessity
and services has been occurring for more located in a market, they could only of a user-friendly website. Although
12 theReview January/February 2021
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previously seeming to avoid financial venues into the mall environment and in some cases institutional uses, in
impact, even the high-end department have had limited success. The most a sort of “town-center” environment. It
stores are struggling, with some going successful re-creation of mall properties should also be noted that restaurants are
out of business. For example, Lord & has focused on mixed-use scenarios really part of the retail sector and they
Taylor is going out of business, Neiman combining multi-family residential, were, and still are, overbuilt as dining
Marcus is in bankruptcy, JC Penney office, retail, entertainment, restaurant preferences have changed.
is emerging from bankruptcy with
significantly fewer stores, and others
are temporarily hanging on, although
more bankruptcies are expected. Macy’s
is one that seems to be surviving. As
the anchors for enclosed malls, the
department stores generated the traffic
for many of the other mall retailers
that are now falling like dominoes as
department stores close.
The mall as a “gathering place” has
been fading for years, in part as a DEEP BENCH. COMPLETE FOCUS.
result of demographic changes and
preferences. The department store
bankruptcies and store closures have A law firm dedicated to the practice
had a cascading effect on the relevancy of municipal law.
of mall properties as they were originally
conceived. Malls that catered to high-
income demographics seemed to be
“safe,” but now are struggling as even
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suffering or dying, as noted above.
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www.mocities.com 13
Retail closures have been occurring
at an increasing rate. According to
an October 2020 Wall Street Journal
article, a record 9,500 closures occurred
in 2019. By mid-August of 2020,
announced closures have exceeded
10,000. According to the global market
research firm Coresight, retailers are
likely to close as many as 25,000 U.S.
stores in 2020. For real estate markets,
the fact that some of the retail space will
be repurposed and/or demolished for
other uses is actually a positive trend,
as this will reduce the overbuilt square
footage. Of course, COVID-19 struck
a significant blow to brick-and-mortar
retail sales when most of retail was shut
down. Although, retailers that were
considered “essential” (grocery stores, People do not want to purchase some a typical Target (about 40,000 square
home improvement stores, Costco, Sam’s items online. They want to see and feel feet). Wal Mart tried the neighborhood
and Walmart) actually have experienced some things before they buy. Retailers market concept, although they probably
year-over-year sales better than in 2019. will develop smaller store formats that discovered this was impacting sales at
Also, retailers that recognized the power will begin to be more like “showrooms” their supercenters in the same market
of online sales early and previously and not everything will be stocked at areas and shut down this expansion.
developed a robust online presence the store. Consumers will be able to see Essentially, retailers have learned that
faired very well (e.g. Target, Walmart, their options and touch the merchandise they do not need mega stores, if they
Macy’s, Costco, Sam’s), competing with and your selection will be sent home or have their online market act together.
Amazon. However, as restrictions were delivered to the store. In some instances, The Supreme Court of the United
lifted, brick-and mortar-retail sales the store floor area will be reduced and States’ decision in South Dakota v. Wayfair
improved and will further improve. In the remaining space will become a “last has paved the way for government
some instances, new stores will appear mile” warehouse for some popular items. entities to recoup some of the sales
(for example, Amazon is opening In this case, pickup while shopping in tax revenues previously lost to online
grocery stores (not Whole Foods) and the store may be possible for these items. retailing through implementation of
Macy’s has said that they will begin to Some retailers have tried other use taxes that require online retailers to
develop free-standing stores at non-mall options. Target has developed some pay sales taxes. Unfortunately, Missouri
locations. “urban” stores that are much smaller than has been slow to embrace the legislative
changes that other states have made in
spite of this decision.
All your recycling and waste needs, Where the future of retailing will
go as a measure of places we walk
handled by one provider. in to shop is, by some opinions, an
unfinished book. States and cities that
live on sales tax revenues were impacted
pre-COVID-19 by the conditions and
trends outlined above, but COVID-19
has temporarily altered the story. As
COVID-19 restrictions have been
reduced, we see brick-and-mortar sales
beginning to trend upward and store
traffic increase. Technology today now
allows us to look with some precision
at what was going on, in terms of store
Learn more at traffic pre-, during, and post-COVID-19.
RepublicServices.com As a result, we can track traffic to retail
RecyclingSimplified.com areas or specific stores over specific
periods of time, compare what has
©2020 Republic Services, Inc.
occurred in those time windows and
look at how it is trending as often as
daily. While the information does not
RS-130038 - Municipal services MO Magazine Ad_Piazza.indd 1 12/15/20 1:21 PM
14 theReview January/February 2021
COMMUNITY PLANNING
ECONOMIC DEVELOPMENT
URBAN DESIGN
WWW.PGAVPLANNERS.COM
will be faced with how to repurpose
obsolete retail development. Contrary
to conventional thinking, remaking the
existing built environment is rarely as
cheap as constructing on a green field.
In addition, developers and retailers
will now have greater cost constraints
to remain profitable.
John Brancaglione is senior director
with PGAV PLANNERS based in St. Louis. He
has conducted hundreds of urban, economic
development, and redevelopment planning
assignments during a 50-year career for
municipal, county and state agencies
throughout Missouri, 25 other states, the
Commonwealth of New Zealand and its
capitol, Wellington and New South Whales,
identify the person or the spending, it more on market reality. Therefore, Australia.
does correlate with revenue trends when municipal chasing of retail uses may
compared to known sales numbers. be futile. However, financial incentive
This data shows us that, once retail requests may not stop entirely because
establishments opened again, the level of now the urban development landscape
pre-COVID-19 activity began ramping
upward on what begins to look like a
V-shaped recovery for this economic
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sector.
Bars, restaurants and other eating/
drinking establishments have been the
hardest hit. Consumer dining habits
have been evolving and chain restaurants for Building Vibrant, Resilient Communities
have been failing at a significant rate. The
locally owned unique restaurants have
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COVID-19 situation.
What is undeniably clear is that the
retail landscape has changed, and the
outcome of the change is not complete.
In the past, cities, particularly in metro
environments, have competed fiercely
for retail development. However, current
conditions and future trends suggest
that retailers may make decisions that VisualZoning.com | 800.836.8834
are based less on what government
financial incentives they receive and
www.mocities.com 15
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