28 August 2012

What are some strategies for local governments when big box stores leave?

abandoned Walmart and parking lot

It is certain that many big box stores will soon be fading from the urban landscape, after being a fixture along arterials for decades.  In some areas, this has already started.  
In the aftermath of their departure from arterials, there will be large areas of vacant land, unless local governments take the initiative to investigate alternatives for reuse of these areas.   In addition, the departure of big box stores mean unemployed residents, reduce sales and property and negative symbols for the community.Therefore, this should be a priority for local governments.

The following are some suggestions for strategies of reuse of the vacated land. :

1. Use them for public facilities.
With many local governments strapped for funding to build new facilities, there is an opportunity  to transform these areas for public uses. They could also be reused for indoor recreation facilities such as ice rinks, indoor tracks, public libraries and community recreation centers..  Their use as museums, auditoriums, schools, adult education centers and parks could also be considered. The latter suggestion of conversion to parks would require partial or complete reconstruction of a site.

2. Convert them into incubators for start-up small businesses and light industry
Many start-up small businesses and light industries have the need for facilities with low rent so that they can start production for innovative products. The big box stores should be very appropriate for this with flexible space, loading zones, parking, outdoor storage possibilities and access to an arterial. .

3. Rezone them for mixed-use developments or Planned Unit Developments.
The concept of planned unit developments (P.U.D’s)-an individually planned development which is a overlay zone over the existing zoning- has a long history of success in creating areas with a mix of commercial, industrial, institutional  and residential area.  The problem with these big box stores is that they have been a visual blight to the urban strip arterial. P.U.D’s realize the opportunity for creating an area that will be an improvement over the existing facilities with appropriate landscaping, traffic control and other elements that will make the arterial shopping strip more attractive.

The impending departure of big box stores does not have to be a problem, but an opportunity.  Arterial shopping strips have often been an eye sore in many communities, which big box stores contributed. With a move toward urban development that is oriented toward: public transportation, mixed uses, neighborhood oriented, pedestrian friendly and sustainability, this may be the needed impetus to address the design and future of arterial shopping strips. As referred in an earlier blog entry, this needs to part of a cooperative and relational based planning process.

If some of my readers have further suggestions, please leave your comments below. All comments will
be reviewed and posted if appropriate.

In an upcoming blog entry, I will provide online references for further exploration of this issue by those interested.

The author of this blog entry, Dr. Michael A. McAdams, is an independent consultant specializing in urban planning, spatial technologies and transportation planning.  He can be reached at michaelamcadams@yahoo.com .

25 August 2012

The collapse of big box stores may be opportunity for local business

The urban landscape is changing due to the growth of e-commerce.

In the past, the arrival of Big box stores in cities and regions, particularly Wal-Mart, meant the demise of many local businesses.  They could not compete with the prices or the variety of goods offered by big box  stores. Even further back, we witnessed the virtual elimination of the local grocery stores being overtaken by large retail supermarkets and convenience stores. 

Looming now on stage right  is the specter of e-commerce , which I assert will lead to the collapse of many Big Box stores as mentioned in my earlier blog entry (http://mcadamsfatih1.blogspot.com/2012/08/collapse-of-big-boxdepartment-stores.html  .)  It has the potential to also further add to the decline of local business.

We can all bemoan the demise of local business or their favorite Big Box  or department store  (i.e., Circuit City, Montgomery Ward). The reality is that e-commerce is changing the local landscape and its influence will not decline, but grow.  

 It not mere speculation to anticipate that there will be the vacant spaces where Big Box stores once stood and isolated local business locations which could not compete with e-commerce will vacate their locations  This is also set in the background of an economy where wages are stagnant or declining.

The fact is that no physical store can compete on price basis with the Internet.  Internet ‘stores’ do not have the need for local employees, buildings or onsite inventories to serve their customers. They need only a website, warehouses and employees to facilitate the movement of goods from the warehouse to the customer.  Amazon.com is the best example of an Internet store that has prospered in this new environment. 

Should it be a surprise that Big Box and department stores will soon be history in cities? No.

In the midst of the competition from other stores, the growing e-commerce and more efficient communication/transportation, Big Box stores started a decade or more to cut costs  by only hiring part-time (who were often unknowledgeable about the store’s products) and relying only on the variety of merchandise and prices ignored that they were becoming increasingly vulnerable to a entities that could offer lower costs and the same variety of goods—the Internet.   By eliminating service, they have lost the last element that would make them locally competitive.

Who will survive and what will be the opportunities?

Similar to other economic shifts, some remnants will survive and new entities emerge.  For example, there are still blacksmiths, but only for those that are recreational horse owners and  who own horses for racing.  

The litmus test for those big box/department stores that will survive and the element of new local retail establishments?  Service!

Service has become the hallmark of many national big box stores and surviving local business  This is apparent in Lowes, Home Depot, Office Depot and others.  These entities will survive, but those that do not focus on service will not.

For local entrepreneurs, this means opening up businesses that straddle both the world of e-commerce and their local connection.  

What goods do people want service to help them make purchase decisions?  Cameras, clothing, computers, washing machines, refrigerators, automobiles, home improvement, tires etc. .  Customers have shown in the past that they value stores which have employees  with expertise to help them make decisions in these purchases.  

Local independent business which are not attached to a product line could interact with customers directly or indirectly through the Internet or mobile devices to ascertain their needs. They could search for the best prices, deliver the good and offer service in the future on a local basis. The key is a local personal assistant in purchasing. 

In a future blog entry, I will address what local governments can do to mitigate the aftermath of the exit of big box stores and their role in facilitating local entrepreneurs.

14 August 2012

collapse of big box/department stores: a view from the e-commerce sector

I found this interesting blog entry, while searching further on the topic of the collapse of big box/department stores:
“Apparel E-Commerce and Collapse of Big Box Stores”, Apparel Logistics Group:
This blog entry is from a commercial site of a company that provides third party logistics to apparel retailers including outsourcing services and is advocating using e-commerce to off-set the
decline of present retailing.  This blog entry specifically mentions the coming collapse of Big Box stores because they are offering good that do not have to be tested or tried on, such as CD’s, electronic equipment.  The blog author uses this as a pretext to discuss the advantage of e-commerce in apparel shopping. The caveat is the following statement in the blog entry:
Here at The Apparel Logistics Group, our third party logistics services can help your company slim down, gear up, and be ready to ride the leading edge of the e-commerce wave as it continues to develop.

While there are some legitimate claims and assumptions, about the coming retail decline among not only Big Box/department stores, this indicates that e-commerce companies are ‘riding the wave’ and facilitating the move away from traditional retailing. This particular company is facilitating downsizing, but terms it slimming down, a deceptively benign word for laying off employees.

This may be seen as a business opportunity by them and their potential clients, the downside is that people will be losing jobs in urban areas as many retailers switch more to Internet shopping.  It would be an accurate assumption that the downsizing of retailing is certain.  The consequences are not only Big Box stores vacating their facilities, but also some apparel retailers.  This will further decrease the employment base for a local economy.

To  many, it would appear that some of the  services and particularly the one mentioned in this blog entry could be seen as unpatriotic.  To others, it could be seen as a company making money on the present trends.  The ultimate outcome will be people will be losing jobs both ‘on the floor’ and in management.  These are structural changes that local governments must soon mitigate.

11 August 2012

The coming collapse of 'Big Box' and department stores and their urban impact (draft)

(Image found on Business News Daily blog entry. See: http://www.businessnewsdaily.com/2347-big-box-hate-groups.html )
In the latest news, Best Buy is having financial troubles.  The founder and former CEO, Richard Schulze, is attempting to make the company private (see http://money.msn.com/business-news/article.aspx?feed=OBR&date=20120806&id=15416609 .) There is the usual backroom stuff and static. However, this is not an isolated case.

The bottom line is that Best Buy and other Big Box and traditional department stores are out of touch with their customers, have unknowledgeable and even rude employees , have over priced goods and are being used as a ‘showroom’—meaning customers are going to look at products and then buying for less elsewhere, probably on the Internet.  
If you look at the recent past, we have seen giants such as Kmart being absorbed by Sears, then Sears having problems.  Montgomery Ward bit the dust several years ago.  Borders and Circuit City are no more.  J.C. Penny’s is not weathering the storm very well either.  Wal-Mart is not fading, but not exactly growing either. In recent years, most of their profits were made overseas and they were willing to bribe government officials in Mexico, of which they are now paying a hefty fine. These companies are trying refinancing, different marketing techniques, such as using social media etc., but structural forces are working against them such that in a very short time, many Big Box stores will be soon cease to exist. 

What are the causes of the future collapse of some of these Big Box and department stores?  My initial reading on this is that:
1. The Internet oriented companies can offer better prices due to low overhead and ease of use.  Online retailers such as Amazon.com, do not have to worry about building stores, hiring employees on a local basis and transportation of goods to individual stores.  With poor service being offered there is no need to go to Big Box/department stores.  
2. With the stagnating economy, those with middle incomes, cannot afford the merchandize being offered and are going toward alternative measures such as thrift stores , discount stores, garage sales and informal online selling vehicles (i.e., e-bay, craigslist, local internet bulletin boards etc.) In addition, many in the middle income are now wary of using credit cards due to their precarious situation.
The Urban Impact
The outcome of this is not good for local economies. The employees of these Big Box stores will be laid off (many of these stores are doing this already.)  There will be empty stores in local cities and barren locations that once were occupied by the stores.   The local retail market since it has been devastated by these stores will not be able to offer the same goods at these prices. Local taxes will decrease because these stores will not pay property taxes and the former employees will not be paying taxes or very little. These will not help the struggling retail sector, as these people will be either be: unemployed,  in low paying jobs or in school for retraining (if they are fortunate.)  Other connected industries such as trucking, supply companies, and manufacturing will also be affected.  This will cause additional stress to the local labor market and add to unemployment/under-employment and decrease purchasing power for many.

What can urban areas do?
Responsible local decision-makers (elected and non-elected) can bemoan the fate of the Big Box and its impact or can be pro-active.   Urban planners, by the very nature of their profession, are charged to research and make opportunities from a seemingly dire situation. 
There would seem to be a number of measures that could be undertaken to initiate this situation:
1. Initiate a public-private dialog on a regional level via governmental bodies such as Metropolitan Planning Organizations, Council of Governments, planning commissions, Chamber of Commerce etc.

2. Establish a regional task force with the specific charge of looking at alternatives before the Big Box stores have exited.  This regional task force should not be seen as a advisory group, but one that is committed through various measures to bring about a solution.  This can be a networked group that includes all that want to participate, particularly citizens.  There can also be a social media component to it.
3. Before the task force is started, the urban planners being drawn from multiple organizations need to establish an initial structure and dynamics to the process.
4. Once the process is initiated, it should not be considered a ‘window dressing’ group, but one that considers all options from all segments of the region  No option should be over-looked or considered ‘too wild.’