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Business headlines in recent weeks have announced retailer woes from declining sales to bankruptcies. Forbes estimates that at least 21 significant retailers are closing 3,591 stores, which will result in layoffs of about 50,000 people.

Business Insider put it in more dramatic terms, describing this year’s store closings as a “retail apocalypse” that has been unfolding since 2010. While industry analysists are quick to blame the rise in e-commerce as the culprit, there is more than one paradigm shift at work.

For example, BI reports that the U.S. has more retail stores per capita than any other industrialized country. As a nation, we have 23.5 square feet of retail space per person. Canada comes in second place with 16.4 square feet of retail space per person. Some of the attrition in U.S. retail occupancy is an overdue market adjustment.

Consumer spending habits have also changed. Americans are spending more of their disposable income on electronics, travel, restaurants and entertainment, and less of it on clothing and accessories.

This is why e-commerce cannot shoulder the entire blame. Entrepreneur magazine cites supporting comments for this view by Marshal Cohen, chief retail analyst of the NPD Group. Cohen states that 30% of technology sales are conducted online, compared with only 16% of apparel sales. Why then, are so many retail stores struggling?

In some cases, retailers have cannibalized their own in-store sales by promoting their online shopping. Cohen points to Macy’s online sales representing 15% of their business – and now they are closing 13% of their stores. Online sales will not improve the bottom line if they come at the cost of your physical location, where impulse purchases help generate profits.

Meanwhile, clothing retailers like T.J. Maxx and Nordstrom Rack have found a successful niche by delivering frequently-updated inventory with discount pricing and convenience. And as more big-box retailers and mall anchors close, innovative retailers like these will have less competition for foot traffic.

Another change facing retailers are demographic shifts towards urbanization and walkable communities, where specialty retailers with smaller square footage thrive. This is one reason why the Boston Metro continues to add retail space in mixed-use developments.

The future of retail does not belong exclusively to e-commerce. However, consumers may be growing weary of the typical business model of national retailers, where focus on the customer experience has been lost. Department stores that once featured well-trained salespeople have evolved into get-it-yourself warehouses, where even finding a staffed checkout register is a challenge.

Retail is not an easy business. Some long-time brands will eventually fail. Others will successfully adjust and capitalize on evolving consumer trends. Retailers who augment their brick-and-mortar sales with online shopping, while giving customers a reason to return to their physical locations, have nothing to fear from e-commerce.

Boston Metro retailers who choose their location wisely, and feature interesting, frequently-updated inventory while making their customers feel welcomed and appreciated, will be among those who remain viable.

When you are ready to begin, relocate or expand your business in the Boston Metro, team up with the Jay Nuss Realty Group! Whether you are thinking of buying or leasing Boston Metro commercial real estate, we can help you find the ideal property. Contact us today for expert guidance!

Jay Nuss
Jay Nuss Realty Group, LLC

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