Mom-and-pop stores could be prime for a renaissance
Great article on the impact of local small businesses on the retail landscape. Much of this is focused on higher-rent shopping districts, but the principal for our properties is the same: well run, locally owned and operated stores have some real staying power in the market. They are turning out to be "Amazon proof" ... almost all of our retail tenants are service based businesses and fall into this category as well.
From the article:
For years, pundits have predicted the continued demise of independent retailers. The arrival of shopping malls and power centers drew foot traffic away from the neighborhood Mom-and-Pop stores. Next came the axe wielded by e-commerce giants, notably Amazon. And finally, we saw rents rise to levels beyond affordability for the independent retailers as bank branches, drug stores, fashion houses and other national and international chains competed for space. These factors pressured many of our beloved independent proprietors to shut their doors. ...
Changing demographics and consumer preferences are signaling increasing desirability of smaller, curated and customer-service-oriented retail outlets. As rents return to more-affordable levels, smaller, nimbler and more-creative operators are likely to prosper.
Today, many millennials, retiring baby boomers and senior citizens want a more urbanized lifestyle in neighborhoods that offer mass transit and a range of services. A recent study by the Urban Land Institute indicates that 48% of all millennials — which now represents the largest cohort in history — live in walkable “city neighborhoods.”
These factors have very positive implications for the rebirth of urban neighborhood retail. Lower operating costs will attract smaller stores and restaurants — as independent retailers target these urban locations, which boast pedestrian-oriented, street-front retail environments. At the same time, successful retailers will adapt approaches to attract the shopping public — creating unique shopping experiences that cannot be found online.
Retail strength is increasingly found in services-based, rather than goods-based formats. In addition to “Amazon-proof” entertainment and recreation venues, stores offering unique in-person experiences are positioned to compete effectively. Today’s consumers view certain types of shopping as a leisure activity, relegating basic purchases to online transactions.
As a result, environments in which shopping is treated as an experience in its own right, will come to dominate the bricks-and-mortar landscape. Staff in independent stores are highly knowledgeable, ready with product information on suitability, materials and the production process. Increasingly, shoppers are once again looking for life beyond their computer screens — and this can only benefit the independent retailer, who is more inclined to offer a high level of interaction with the customer.