Take a walk through Manhattan, which is arguably the fashion capital of the USA, and you might feel discouraged about the state of brick and mortar retailing. There are as many empty storefronts and “For Rent” signs as there are thriving boutiques and storefronts. However, the truth is many entrepreneurs, small business owners, and startups are opening physical retail locations, and for a good reason. 90% of retail sales still occur in physical stores. The difference is that many of these new stores are not in the locations you would expect.
There are plenty of retail stores opening up within Manhattan. Take The Shops and Restaurants at Hudson Yards, for example. This “vertical retail center,” which just opened earlier this year, is continuously flooded with foot traffic. The center is architecturally beautiful on the outside, and on the inside, it contains a mix of traditional stores, food vendors, rotating art exhibits, spas and health centers, live performances, and more. As Curbed reports, “All malls aren’t dead—but the ones that are thriving are doing so because they are becoming more like the city. They offer a hybrid retail experience, now centered on food rather than fashion, born of the 21st century.”
Meeting Customers Where They Are
Many business owners are also choosing retail locations outside of shopping centers or mainstreet storefronts. Instead of creating a destination for shoppers to visit, they are setting up shop where their customers are already shopping. One increasingly popular solution is to open stores at commuter hubs and within transportation centers. Or course, airport retail is far from a new concept. However, more retailers are finding success in places like train stations and metro stops, which are typically more accessible to small businesses than an airport retail location.
Grand Central Terminal retail spaces have been a haven for small businesses as well as ecommerce brands looking to set up small-format stores. The success of Grand Central Terminal retail will soon be replicated throughout New York City. The Wall Street Journal reports that the Metropolitan Transportation Authority (MTA) will bring indie food and retail options to its most heavily trafficked subway stations. The authority’s chief development officer, Janno Lieber, told the Wall Street Journal that he would like the focus to be on independent, local stores. Instead of longer leases, the MTA has also switched to month-to-month retail contracts, making these spaces accessible for small businesses and temporary venues.
Earlier this year, we reported on how independent retail stores are tapping into coworking spaces, which are expected to account for 30% of all office space by 2030. Coworking spaces provide retailers a captive audience that will see your brand each day as they come and go from their office. Plus, coworking environments offer the opportunity to meet and collaborate with other entrepreneurs and small business owners who may be working out of those spaces.
College Campuses Incubating Sales and Lifelong Customers
College Campuses are another hot incubator for retail sales. College students are typically strapped for time, and not always able to travel to get to main streets or shopping centers. Retailers are starting to capitalize on this opportunity. Over the past few years, Target has added about 25 small-format stores on or near college campuses. This new change of scenery offers retailers a captive audience of thousands of students and faculty that have specific and direct needs for school supplies, food options, clothing, and basic household products and personal care items. Plus, college students are typically 18 – 24 years old, which means retailers who sell on college campuses have the opportunity to win over younger customers who will be loyal, lifelong shoppers.
Chain stores may be shuttering retail locations. However, that doesn’t mean all physical retail is in hot water. Consumer preferences are changing: retail is diversifying and becoming more localized and specialized. All of this is excellent news for indie stores. In fact, Retail Week reports that commercial rent prices will continue to decrease over the next few years, and that indie stores will become the new anchor tenant of choice.