retail news in context, analysis with attitude

Two interesting stories over the weekend looking at the cultural, economic and infrastructural impacts of the changing retail economy.

• The Wall Street Journal has a story about how e-commerce delivery companies are having to get creative in how they approach logistics, doing everything from putting up tents on vacant suburban lots to converting parts of indoor parking garages into staging facilities.

“The explosive growth of e-commerce and the competition among retailers to deliver goods quickly is running hard up against the scarcity of warehousing near population centers, triggering a land grab for distribution space that experts say is accelerating this year,” the Journal writes. “Unlike the sprawling fulfillment centers typically built on the outskirts of cities, the newer, more streamlined handling sites are set up in densely populated areas so that companies can package up orders as close to the ‘last mile’ as possible.”

One example: “In downtown Chicago, real-estate firm JLL is converting a 3.8 million-square-foot parking garage under the city’s famed Millennium Park into last-mile logistics facilities for retailers. The site is right at the center of the city and its population of 2.7 million people, just a few blocks from Chicago’s popular ‘Magnificent Mile’ shopping district.” The irony, of course, is that the growth of e-commerce has meant that fewer people are driving into the city to shop, and so there is underutilized space in parking garages that now can be repurposed.

• The Boston Globe has an excellent story about how the enormous changes taking place in retailing - some iconic chains are shutting down and some malls are desolate, as e-commerce becomes an ever-growing factor and more of the American population moves to cities - are reshaping the urban environment in some fundamental ways.

An excerpt:

“When you can have basic necessities delivered to your door, it means that retail has less power to enrich neighborhoods and nurture the …social world … So, are we building cities based on an obsolete vision of urban commerce? What does a post-Amazon future look like for urban centers whose neighborhoods are defined by their stores? Will e-commerce stunt them — or revive them?”

And, it goes on:

“Today’s retail futurists have ditched pneumatic tubes for visions of drones flying with packages and self-driving delivery vehicles zipping around town. But the problem they’re trying to solve is the same. Stores are an efficient way to transfer goods from manufacturers to consumers. Today, double-parked delivery trucks and porches cluttered with Amazon boxes are the growing pains of an evolving industry … The market for urban industrial real estate is growing as Amazon and other companies race to open small distribution centers filled with all the toothpaste, earphones, and running shoes that customers might be craving.”

You can read the Globe story here.
KC's View:
Wasn’t it less than a week ago that I was talking here about morgue-like shopping malls that couldn’t even generate pre-Christmas crowds? Seems to me that this might be a perfect use for at least part of that real estate … they’re big, empty and centrally located. Gotta use them for something.

As for the Globe story, I think it really deserves to be read, because it points to some fundamental changes taking place in the culture and the economy that need to be integrated into companies’ long-term business plans. While there is focus on Amazon, it is much bigger than that … it strikes me that there are foundational shifts taking place that need to be accepted - even embraced - through public-private partnerships that are customer/citizen-centric.

Let’s be clear. There will be enormous challenges. If the revolution is centered on the streets of our cities, as a culture we have to make sure that people in rural environments are not left behind, lest we exacerbate a divide that already exists. But this is all part of living in an enlightened society. The only alternative is denial, which inevitably ends in obsolescence and irrelevance.