We’ve known for years that shopping is one of the leading destination activities for leisure travelers. No, it’s not usually a motivator of destination selection, but the siren call of tourism-driven shopping has always been a major economic stimulant of a local economy.
It may not be as sexy as the allure of food and beverage or as much of a generator of PR buzz, but retail has always been a major factor in the vibrancy of our downtowns and the tax coffers of local governments.
There’s been lots of attention paid to the fate of restaurants and bars during the pandemic, and with good reason. Brick-and-mortar retail has also suffered, but traditional retail was already in decline before COVID-19 due to the convenience of online shopping, high rents, major chain store failures, and other factors. The pandemic accelerated that decline as consumers gravitated increasingly towards e-commerce. McKinsey reports that 73% of U.S. consumers have changed stores, brands, or the way they shop during the pandemic.
Now communities are faced with even larger numbers of retail vacancies. Along Chicago’s famed Michigan Avenue Magnificent Mile, more than a fifth of retail space sits empty and sales tax generated by retail on the street declined by $90 million last year. A recent UBS analysis found that one in 11 retail store locations may close in the next five years. And national retail chains are no longer rushing to fill vacant storefronts in prized locations.
So what, if anything, will fill these spaces? We’re already seeing a surge in “non-store retail,” businesses operating out of former retail spaces that serve no purpose other than selling merchandise to consumers directly online. That may be good for a landlord’s bottom line, but it does nothing to create a vibrant downtown that locals and travelers alike want to visit. Some locations will be taken by e-commerce platforms wanting physical locations, but those will be relatively few and far between. “Pop-up” stores hold some promise, particularly as incubators of start-up retail, but they’re just that–temporary solutions.
Experiential retail holds promise, but the investment may be too great for some mom-and-pop stores still recovering from the pandemic and struggling to attract and retain staff. Experiential retail isn’t necessarily limited to big brands–new immersive retail venues like the soon-to-open Goo Goo Chocolate Company in Nashville may offer a model for smaller brands and communities with their own homegrown businesses.
Tourism is one proven generator of retail activity for small businesses. This is true for downtowns both big and small; but the need for visitors to replace revenue lost from work-from-home, the slow recovery of international and business travel, and residents still skittish about returning to business as usual is especially acute in larger cities like Raleigh. Travelers will still shop, but there have to be shops for them to keep doing so.
Destination marketing support is critical to the recovery of retail, and driving visitors to locally-owned independent retailers will be important in both traditional tourism destinations and those that are not. Those businesses are once again the future of a healthy retail sector, robust tax collections, and revitalized downtowns. If elected officials are serious about their love of small business, they’ll also support a vigorous destination marketing and enhancement effort. It’s one of the only options cities have left to save retail.
Contact us any time for a discussion, proposal, or quote and we will gladly oblige. We are flexible and pride ourselves in personal attention, no matter how big or small the assignment.
Magellan Strategy Group
P.O. Box 5632
Asheville, NC 28813
Chris Cavanaugh // President
Connie Harrington // Operations Manager