"Retail Evolution: Return to the City" a thesis submitted to the Graduate School of the University of Cincinnati in partial fulfillment of the requirements for the degree of Master of Community Planning in the School of Planning of the College of DAAP by Regan Noppenberger BSBA Marketing, University of Cincinnati March 2019 Committee Chair: David Edelman, PhD Committee Member: Vikas Mehta, PhD i ABSTRACT: ICE CREAM SHOP SECRET This thesis is especially interested in the next era of retail. Successful stores provide a larger tax base and more jobs, as well as community spaces for residents, but many of the storefronts in America’s downtowns still sit vacant and void of activity. What impact will e-commerce and increasing urban populations have on vacant and decaying space in urban areas? Will physical retail disappear in lieu of a world where all needs are met with door to door delivery service; where people work from home, order what they need, socialize virtually, and never need to leave their homes? Some types of stores have managed to make it through the many eras of retail history. For instance, take the commerce staple, the ice cream shop. There is a universal joy associated with going to an ice cream shop. What is it that makes these spaces so desirable? Why do ice cream shops still exist when you can purchase your favorite ice cream at the grocery and eat it in pajamas at home, or order it online to be shipped directly to your couch still cold? Why are ice cream shops such highly preferred neighborhood amenities? Is it possible for other urban retail stores to replicate the “ice cream shop secret” to create a similar level of desirability among residents? Ice cream shops evoke emotion. They are places people go to spend time with people they love. They bring back memories and evoke excitement; they are entertaining! These are all experiences that online shopping can not deliver, and if brick and mortar stores can replicate this recipe for success, they might survive. This paper seeks to identify ways in which urban retail can generate desirability to survive in a post-Amazon world. Which physical, social and economic factors influence success? Certainly not all stores will make it out of the “retail apocalypse” alive, but how can planners, city leaders and developers create an environment that fosters brick and mortar retail success? ii iii RETAIL EVOLUTION: RETURN TO THE CITY Figure 0.1: A Secret Forest Richmond iv PREFACE I am an 8th Generation Cincinnatian. My great-great-great-grandpa owned a butcher shop in Over-the-Rhine, and eventually the family owned another grocery in East Walnut Hills. Like my family, many families come to new cities looking to build a living, and for thousands of years opening physical retail stores has provided that opportunity. Small shops like these are what make cities special. They are the economic and social drivers of urban life. I have many childhood memories of shopping in downtown Cincinnati, small shops along 4th or 7th streets, at Tower Place, seeing Santa at Carew Tower, but I also have many memories Figure 0.2: Noppenberger Family at their Butcher Shop of shopping malls: the smell of the pretzels and department store perfumes, hiding under clothing racks, and trying to be good to hopefully earn the treat of a Great American Cookie. Today, most of the shops I visited downtown, and the malls I frequented in the suburbs, are closed. In fact, I once lived in an apartment inside the former Shillito department store building. I’ve witnessed many transformations of the retail environment in my hometown over the course of my life, and right now I’m witnessing another. Figure 0.3: John Noppenberger Grocery v Prior to attending the University of Cincinnati for my masters in Community Planning, I was working in brand management for consumer products. It was my job to understand consumer motivations and behaviors, as well as changing market dynamics. Right now, behaviors and market dynamics are evolving rapidly. Consumers purchase more of their daily needs and wants online, and expect things to arrive quickly and effortlessly. People have new preferences about where and how they want to live, namely with more people choosing to live in urban areas. These mounting changes are all contributing to a monumental shift in the retail environment. My interest lies in the role that urban retail environments will play in the coming decades… until the next inevitable swing. Figure 0.4: Photo of Author vi TABLE OF CONTENTS Abstract Preface ii v PART ONE PART TWO 1. Introduction 01 6. Potential for an Urban Retail District 55 1.1 A History of Retail in the US 03 6.1 Diagnostic Assessment 57 1.2 The Return to the City 07 6.1.1 Set the Boundaries 58 1.3 Research Objectives 09 6.1.2 Inventory 60 6.1.3 Demographic Data 62 2. Brick and Mortar Retail Apocalypse 11 6.1.4 Accessibility 64 2.1 Amazon and E-Commerce 15 6.1.5 Visibility 65 2.2 Luxury and Discount Paradox 18 6.1.6 Retail Mix 66 2.3 Economic Impact of Retail 19 6.1.7 Civic and Cultural Uses Audit 68 2.4 Social Impact and Behavioral Drivers 21 2.5 Classifying Retail 23 7. Proposal 69 3. Methodology 24 8. Caveats and Conclusions 81 4. Trends in Brick and Mortar Retail 27 Bibliography 84 4.1 Convenience 29 Figures Cited 87 4.2 Experience 34 5. Success Factors for Urban Retail 41 5.1 Physical 43 5.2 Social 51 5.3 Economic 53 vii LIST OF FIGURES Figure 0.1: A Secret Forest Richmond Figure 4.14: Merci Concept Store Figure 0.2: Noppenberger Family at their Buther Shop Figure 4.15: Pop Up Figure 0.3: John Noppenberger Grocery Figure 4.16: Story NYC Figure 0.4: Photo of Author Figure 4.17: Shinola Flower Stand Figure 1.0: Bakeshop New York Figure 4.18: Urban Outfitters Figure 1.1: Macy’s Herald Square 1903 Figure 4.19: Battery Park Book Exchange and Champagne Bar Figure 1.2: Sear’s Catalog 1908 Figure 4.20: House of Vans Figure 1.3: Amazon Fulfillment Center Phoenix Figure 4.21: Late Night Chameleon Café Figure 1.4: Miami Design District Figure 4.22: Bygones Richmond Figure 2.0: Detroit Storefront Figure 4.23: Blue Bones Richmond Figure 2.1: Closures by Square Footage Figure 4.24: Broad Street Figure 2.2: Headlines Figure 4.25: Skate Shop Richmond Figure 2.3: Goods Bought in Store Figure 5.0: Record Shop Detroit Figure 2.4: Commercial Sq Ft Per Capita Figure 5.1: Nordstrom Men’s NYC Figure 2.5: Amazon Fulfillment Center Locations Figure 5.2: Rapid Bus Line Richmond Figure 2.6: Top E-Commerce Companies Figure 5.3: Quirk Hotel Broad Street Figure 2.7: Digital Natives Go National Figure 5.4: Soap Bar NYC Figure 2.8: Offline vs Online Growth Figure 5.5: Bakery NYC Figure 2.9: TJ Maxx vs Macy’s Growth Figure 5.6: Clementina Detroit Figure 2.10: Big Box Taxes per Acre Figure 5.7: Street Art Richmond Figure 2.11: Dark Stores Figure 5.8: RVA Painting Figure 3.0: Oculus New York Figure 5.9: West Elm Carytown Figure 4.0: Stores in Carytown Figure 5.10: Saks Fifth Avenue NYC Figure 4.1: Sugarfina Columbus Circle Figure 5.11: Trees in Miami Design District Figure 4.2: Amazon Go Figure 5.12: Shopping Street in Richmond Figure 4.3: Bodega Figure 5.13: Jo’s Austin Figure 4.4: Kate Spade New York Figure 5.14: Winter Market NYC Figure 4.5: Diesel Berlin Figure 5.15: Solita Richmond Figure 4.6: Benefit Cosmetics Vending Machine Figure 5.16: Flower Boxes Near Quirk Figure 4.7: Applestone Meats Vending Machine Figure 6.0: West Fourth Street Figure 4.8: The Refill Shoppe Figure 6.1: Historic Department Store Locations Figure 4.9: Pursuit Store on Wheels Figure 6.2: D.C. Vibrant Retail Streets Toolkit Figure 4.10: Universal Standard Figure 6.3: Boundaries Figure 4.11: Trunk Club Clubhouse Figure 6.4: Historic Fourth Street Figure 4.12: Shinola Watches Figure 6.5: Street Frontage Figure 4.13: Starbucks Roastery Milan Figure 6.6: Demographic Profile viii LIST OF FIGURES CONTINUED Figure 6.7: Development Map Figure 6.8: Accessibility Map Figure 6.9: Visibility Figure 6.10: Retail Criteria Figure 6.11: NG&S Figure 6.12: F&B Figure 6.13: GAFO Figure 6.14: Civic Uses Figure 7.0: View of West Fourth Figure 7.1: Fourth Street Character Figure 7.2: District Ownership Figure 7.3: Current Status Figure 7.4: Street Rendering Figure 7.5: Sidewalks Figure 7.6: Sidewalks of Fourth Street Figure 7.7: Benches by WMBstudio Figure 7.8: Seating San Francisco Figure 7.9: Historic Lamp Post Figure 7.10: Painted Canopy Miami Figure 7.11: Street Art NYC Figure 7.12: Neighborhood Banner Figure 7.13: Conceptual District Banner Figure 7.14: Vacant Storefront on Fourth Figure 7.15: 435 Elm Street Figure 7.16: Second Sunday on Main Figure 8.0: Greene Street Figure 8.1: Aritzia ix INTRODUCTION Figure 1.0: Bakeshop New York 1 INTRODUCTION Shopping: routine, leisure activity, form of therapy, chore, social “The retail sector provides goods and services to urban residents and outing, bonding ritual, treasure hunt; whatever the motivation, the act of visitors; employs a substantial share of the workforce, generating income shopping is one of the most prevalent human activities.