Axios has a story suggesting that the "wave of defaults, bankruptcies and evictions expected in cities across the US" that is likely to "remake the retail landscape across the country" is not necessarily a bad thing.
"Rather than an overnight descent into a collection of urban wastelands full of Starbucks, Amazon fulfillment centers, Chase bank branches and nothing else, the coronavirus pandemic and resulting retail apocalypse may just mean that, in major U.S. cities, less is more," Axios writes, quoting some experts as saying that "the world after the COVID apocalypse will likely include fewer malls and the end of some American business mainstays. But experts also expect it to bring lower rents, cleaner buildings and the opportunity for companies that have invested in quality to outperform."
- KC's View:
It is, I think, a fascinating hypothesis.
If we start from the premise that America is way, way overstored - and I'm not sure that there are many who would disagree with that - then the cleaning out of the weeds is, in fact, a good thing. The stores that don't bring anything of value to the table, that are undifferentiated, and that can easily be replaced by online operations, are overdue for extinction. But the bricks-and-mortar retailers that do have unique and differentiated value propositions, and that cannot be easily replaced by an online retailer … well, they'll have a much better chance of survival.
This applies to every segment of retailing, I think. Even supermarkets. While a lot of undifferentiated stores and chains have had some strong quarters recently because of the pandemic, that isn't a long-term strategy. It is just being in the right place at the right time, with toilet paper. Long-term, many of these retailers won't do the hard work to maintain and expand their relevance and value proposition, and they'll be as endangered a year from now as they were a year ago. (Yes, I know. This also means jobs could go away. But those jobs were endangered before any of this happened. People were just in denial. Now, they'll be forced tio reposition themselves for the parts of the economy that are thriving, not headed for obsolescence.)
The Axios piece notes: "As stores close, at least some square footage will likely be repurposed for industrial uses, e-commerce last-mile facilities (think Amazon logistics centers) or self-storage companies. Vacant retail sites are already being converted to e-commerce warehouses and fulfillment centers, per commercial real estate giant CBRE — and the pandemic is accelerating that trend."
At the same time, "More living space should be created as people move from big urban city centers to suburban settings and smaller, less expensive cities … Urban buildings will change. More housing could also open up as big box stores and strip malls inhabited by national retailers are razed and rezoned for community use."
Maybe, just maybe, we'll all learn from this. Maybe it'll actually be a brighter future, because we'll have learned from the sins of the past and built a more sustainable economic foundation in which retail is rejuvenated.