What can save retail?
Much has been said about Amazon destroying traditional retailers and later today, we will find out what progress the company has made in that respect. Barnes & Noble bookstores are all but gone, Sears Roebuck and HMV have filed for bankruptcy and other iconic retail brands are struggling as well. Companies are trying to change their approach to retail in reaction to the onslaught of online retail with US department store chain Nordstrom opening up a store in Los Angeles that has no inventory. The idea is that people shop online and then drop into the store to pick up their goods. Why would anyone do that if you can have it shipped to your home? Because the store features free wine and beer and consultations with personal stylists.
In fact, the secret to surviving in retail these days seems to be to provide services that are hard or impossible to copy online. Everyone can buy books, clothes or furniture online these days and as a result the number of storefronts per person in the US has declined by 46% since 1990 for bookstores, 44% for hardware stores and 33% for furniture stores.
What has grown, however, are personal services such as nail salons (+247%), pet grooming salons (+162%), restaurants (+54%) and gyms (+46%). After all, it is hard to get your nails polished with your computer or your dog trimmed by sending it in with return mail.
This trend is particularly relevant for investors in retail property. Traditional anchor clients for shopping malls and retail parks were supermarkets or department stores, but with these businesses struggling, better anchor stores that attract customer traffic might be branded gym chains, restaurants or beauty salons. Come to think of it, there is no chain of nail salons and beauty parlours that has a national brand recognition either in the US or in the UK. Maybe that is the business opportunity for the future?
Change in storefronts per capita
Source: Axios.