Saturday, December 23, 2017

The Atlantic Even More Devoid Of Solutions Than Its Protege Ta-Nussy....,

theatlantic |  It isn’t just chain stores in economically distressed suburbs that are going belly up, but high-end luxury-goods purveyors along the retail corridors of America’s leading cities, such as New York’s Madison Avenue, Rodeo Drive in Beverly Hills, and Chicago’s Miracle Mile. All told, roughly 100,000 retail jobs were lost between October 2016 and April 2017. In the next five years, one out of every four malls is projected to close, according to an analysis by Credit Suisse. The square footage of America’s already dead malls covers more land than the city of Boston.
But painful as this retail retrenchment may be, it creates real opportunities that cities and suburbs can take advantage of.

First things first: Brick-and-mortar retail is not going away. Even as it sheds workers, the sector is still growing at a rate of 3 percent per year. The IHL Group, a research- and advisory-services firm, estimates that retail sales are up by more than $100 billion this year, and 4,000 more chain stores will have opened than closed in the U.S.

Much of the retail apocalypse is in fact a long-overdue correction. The United States devotes four times more of its real-estate square footage to retail, per capita, than Japan and France; six times more than England; nine times more than Italy; and 11 times more than Germany.

The way Americans shop is also undergoing a fundamental reset. As more and more people shop online, the stores that are drawing in customers are those that emphasize experiences. Customers want to sit on that new sofa, feel the weight of a stainless-steel skillet in their hands, and try out new gadgets.

In fact, the line between e-commerce and physical retail is not as traceable as most people think. The most successful virtual stores are currently increasing their physical presences. Amazon is opening up bookstores, and with its acquisition of Whole Foods, it has gained a footprint in hundreds of affluent cities and suburbs. As the physical embodiment of Apple’s brand proposition, Apple stores showcase cutting-edge designs, provide service and advice, build community, and are a big part of what differentiates the company from its competition.

While there can be no doubt that the lost jobs and diminished tax bases that accompany the retail retrenchment hurt, the shift has an upside as well.

WeWork’s takeover of Lord & Taylor could be a good portent for urban economies. Work, not shopping, is the key to urban productivity and growth. When asked why rents are so high in cities like New York and Chicago, the Nobel Prize–winning economist Robert Lucas famously answered that it had nothing to do with the availability of high-end shopping; higher urban rents, he said, are a function of higher urban productivity.