Shopping Habits Re-Shaping Traditional Retail Centers

Wonder why you still see business closures and empty space? Are you questioning what is wrong with the landlords of the neighborhood shopping centers? Here is some food for thought.

Take a look around the average shopping center. I will guess 85% of the center is made up of either: service based business, restaurants, or large shopping stores (Safeway or Target). What happened to the mom and pops and single point retailers? The internet.

The stock market seems to point to a better economy, but that really gives a false barometer of where our small business and “mom & pop” shops now lie. With sales down a half or even more (in most cases) since the downturn in the economy, retailers such as clothing, shoes, and accessories have yet to bounce back. Sadly, we may not ever see them come back.

Struggling to get customers in the door, the internet has reduced any profit margin and the overhead of leases, inventory, and just keeping the lights on has made keeping a small retail shop profitable almost impossible.

The large-scale restaurants are scarce, and still closing. As we become more health conscious, people seem to be turning away from these concepts. Perhaps, the lagging sales and big rent for the larger format restaurants can no longer turn a profit. Whatever the reason, the demand for small restaurant space (1,000 to 3,000 square feet) is higher than ever. The price tag associated with space over 3,000 square feet seems to be a huge red flag for restauranteurs. Even prime restaurant locations seem to be dissolving, and the most recent trend line shows banking institutions sucking up these pad spaces. Concerning? A bit.

Take a look at your spending habits. Where do you buy your clothes, shoes, kids soccer jersey, or even car wash soap? Do you compare prices online and at the big box stores before you even consider a local shop? Everyone is guilty of it but until we all take more pride in our local businesses we are all to blame for the stall in leasing activity and the ongoing fight that our local merchants face day-to-day.

Bottom line, we have all become tighter with money and changed our spending habits in the past few years. Some more than others. In the midst of this, the internet has made purchasing goods that much easier so we rely less and less on store to walk into. The end result is a lack of new small businesses ( in previous downturns this sector helped fuel the economy) and struggling existing businesses. The corporate stores that offer one stop shop have only gotten stronger in the meantime. Our landscape will never be the same and the direction of new retail shopping center construction will at some point reflect this.

When you only shop at your “favorite” store once a year and you question why they are closing, instead of blaming the greedy landlord, perhaps you could have done more to support your local business. It is as simple as telling a friend of your hidden gem.

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About thestorefront

Commercial Real Estate Broker in the San Francisco Bay Area specializing in retail sales and leasing.

One thought on “Shopping Habits Re-Shaping Traditional Retail Centers

  1. Hard to argue Jessica, with many of the points you make in your blog. It reminds me of the Larry Downes article in Forbes depicting the slow demise of “Best Buys” stores. Much of Larry’s reasoning for his thoughts on Best Buys problems stem around the issues that seemed to be self-inflicted, notably the “lack of customer service”.

    I wonder how many retailers, many with great ideas, products and offerings also fail from the lack of this same age old quality, “customer service” ?

    Remember when it was actually fun to take a plane ride? Or visit your favorite restaurant for the umpteenth time and have someone actually remember your name?

    The internet and on-line shopping as you correctly point out is taking a huge bite from the small and large retailer; i.e. Borders and Barnes & Noble. This “click” mentality for shopping and services, I fear, is only increasing as advertisers become more and more savvy as they track one down, with “location” apps on our ever present mobile phones.

    Dare I suggest that perhaps we may need to go back in history and rediscover why people leave their homes, navigate through busy traffic, search to find the elusive parking space, to shop for a merchants wares in the first place? Is it to ultimately be “served”…? I don’t remember ever receiving a warm “smile” from “Amazon”, as I clicked for my latest book purchase :).

    I wonder how many of our local merchants have forgotten about this long lost art of CUSTOMER SERVICE and could that also be part of the demise of many of our small businesses…?

    Cheers!
    Carter

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