Is retail dying? And what happens then?

[UtterlyUrban]

A few things to consider:

 

1) an increasing amount of retail traffic is moving to the web

2) I rarely go to a store anymore

3) coworkers indicate the same thing

4) I am seemingly reading more and more articles from sources like the Wall Street Journal highlighting retailers with "woes" (the most recent is J Crew).  They are struggling with their digital platforms as consumers increasingly shift away from stores, and its showing up in lower profits.

 

So, the question:  assume that 35% of purchases for clothing and dry goods are online in a generation.  What becomes of places like the average strip center? Or Rice Village?  City Center?  Post Oak? First Colony Mall?  Galleria?  ROD?

 

how does the landscape change?  With fewer sales at stores, tenants won't be able to pay as much and/or will want smaller spaces/fewer locations? What happens to retail and how does that change the city?

 

 

[H-Town Man]

I guess it becomes more about showing off the latest products and less about keeping everything in stock. Big box stores will likely hurt the most. Department stores are already in bad shape. The shopping experience is likely to matter more and more, casual shopping combine with dinner and a movie in an attractive setting. Shopping because you must buy a list of items will fade, thus fewer giant parking lot centers, more ROD's or Woodlands Main Street, or revival of places like 19th Street in the Heights. The latter will be slower because of fragmented property ownership but more lasting when successful because people crave authenticity.

 

There may be across-the-board rent declines with less demand, which will ultimately hurt landlords more than tenants and make development less profitable (hence less common). 

[UtterlyUrban]

H-Town:

 

i am thinking along the same lines..... fewer and smaller stores, less overall store traffic.  I am also thinking that many malls will start to fade as will many strip centers.  Showpiece malls like the Galleria will stay but store footprints may shrink there too.  Will there be huge anchor tenants?  Very highend areas like ROD may be fine but places with little more than J crew or banana or Gap-type store may suffer.  

 

It will be very interesting to see how the landscape of retail changes.  Will entire commercial streets like Post Oak be changed at a fundamental level?  Places like City Center?  Rice Village?

 

The next generation of shoppers will decide and property owners will follow.

[mollusk]

It's ironic that Sears, which started out as a mail order catalog, is getting creamed by the internet.  OTOH, a good chunk of that is self inflicted by some insanely ideological management that's torn the company up from within.  

 

My guess is that brick and mortar is going to survive by selling things that people want or need to physically look at and touch, plus the things where personal service is needed, while on line is going to take over the commodity items either from Amazon, etc., or from local consolidators that can deliver quickly and cheaply.  Also, online can't be beat for the really oddball stuff such as bits and pieces for things like the incomparable Hillman Minx.  

[mkultra25]

2 hours ago, mollusk said:

It's ironic that Sears, which started out as a mail order catalog, is getting creamed by the internet.  OTOH, a good chunk of that is self inflicted by some insanely ideological management that's torn the company up from within.  

 

Sears could certainly have been a far healthier company with the prospect of remaining a going concern into the future, if they'd had ownership and management that was actively working to make it so, as opposed to a loathsome hedge-fund asset-stripper. 

 

This piece is about a year and a half old, but the overall trend certainly hasn't changed since then, and its conclusions are on the mark. The first chart pretty much sums it up:

 

Why Sears Holdings Corp. Investors Should Hate Eddie Lampert 

[placoors]

I could care less about shopping and would rather sit around and watch sports but my wife and (teenage) daughter love to go to the Galleria and the Woodlands and buy tons of stuff.  I usually get dragged out to the stores when I need them to stay on budget.

 

I would actually like it if they stayed home and ordered more stuff online so that I could nip a lot of unnecessary purchases in the bud.

[Montrose1100]

I love going into a store to look & physically touch items before purchase. The issue is that everyone else likes to as well. Why buy a plate or a decorative piece with a thousand nicks & scratches when you can order it fresh online? Keep it in your "shopping cart" for a week or longer to receive discounts or sales via email.

 

Clothing can be tried on in store for sizing, makes it easier to pick out online.

[Subdude]

I don't really trust buying clothes online, but other than that there is little that I still go to stores to buy.  There will always be physical retail, but it's obviously a tough business unless the retailer has a well-defined niche.  Given how many people shop online, I wonder how the market can support all the new retail clusters:  River Oaks District, Kirby Collection, potential Regent Square, etc.  Isn't there bound to be a shakeout at some point?  It does help explain why the Galleria and Rice Village are undergoing major revamps.  

[UtterlyUrban]

1 hour ago, Subdude said:

I don't really trust buying clothes online, but other than that there is little that I still go to stores to buy.  There will always be physical retail, but it's obviously a tough business unless the retailer has a well-defined niche.  Given how many people shop online, I wonder how the market can support all the new retail clusters:  River Oaks District, Kirby Collection, potential Regent Square, etc.  Isn't there bound to be a shakeout at some point?  It does help explain why the Galleria and Rice Village are undergoing major revamps.  

My line of thinking too.

 

under the hypothetical I proposed at the start of the thread (35% of retail sales online in a generation), the shakeout in brick and mortar retail might be immense.  How would places like the Galleria and Rice Village adapt?  What would they do to still bring foot traffic?  The next 30 years will be amazing to watch.  For those of you in your 20's, the next 60 years may fundamentally dislodge the commercial and real estate structures of the  last 400 years.

 

 

[Montrose1100]

3 hours ago, UtterlyUrban said:

My line of thinking too.

 

under the hypothetical I proposed at the start of the thread (35% of retail sales online in a generation), the shakeout in brick and mortar retail might be immense.  How would places like the Galleria and Rice Village adapt?  What would they do to still bring foot traffic?  The next 30 years will be amazing to watch.  For those of you in your 20's, the next 60 years may fundamentally dislodge the commercial and real estate structures of the  last 400 years.

 

 

I'll post in this thread in 60 years from now to let the world know how it unfolds.

 

I don't think stores will disappear, at least not until a drone can deliver an item within 30 minutes. If the clothes are expensive it's best to try on & tailor.

[Ross]

7 hours ago, Montrose1100 said:

I love going into a store to look & physically touch items before purchase. The issue is that everyone else likes to as well. Why buy a plate or a decorative piece with a thousand nicks & scratches when you can order it fresh online? Keep it in your "shopping cart" for a week or longer to receive discounts or sales via email.

 

Clothing can be tried on in store for sizing, makes it easier to pick out online.

It's OK to size at the store if you buy from that store's online site. If you go to a physical store, then buy from some random site with a better price, you have effectively stolen time and effort from the physical store.

 

At some point, I hope they start charging sales tax on all online purchases, just to level the field a bit.