The Decline and Fall of Independent Urban Brick-and-Mortar Consumption Sites

I recently blogged about the decline, at least in part because of the explosion in  digital consumption, of brick-and-mortar consumption sites such as shopping malls and various chain stores. However, a recent editorial in the New York Times (“No Shop Around the Corner”, November 20, 2017, p. A22) made it clear that I had failed to mention the decline of small, independent, urban, brick-and-mortar consumption sites. As a native New Yorker, I had noticed that decline several years ago when I stayed in midtown Manhattan. I went in search of the kind of local, “greasy spoon”, restaurants I had grown up with. I quickly discovered that they were nowhere to be found, at least in the midtown area in which I searched. Instead, what I did find were a number of outlets of various fast food chains.

The Times article focused on the “scourge” of store closings in New York City, mostly in Manhattan. While some those stores remain closed, others have been replaced by the outlets of national chains. Both alternatives adversely affect the distinctive nature and quality of life in New York and other large cities. Empty storefronts with large “For Rent” or “For Sale” signs cast a pall over the city (just as they do in shopping malls). Storefronts that become chain stores have a different kind of deleterious effect. Instead of a local shop, consumers are faced with a choice among the same kinds of chain stores found in many other parts of the United States, and increasingly elsewhere in the world. This has a homogenizing effect everywhere. The quite unique Manhattan of my youth is largely gone making it increasingly difficult to differentiate New York from other U.S. cities and even from the remaining shopping malls. The owners of the real estate on which Manhattan’s local shops are built are, at least in some cases, charging exorbitant rents that tend to force out small independent shop owners. The result is vacant shops. The landlords hope that a national chain (e.g. Sephora) that is able to afford the rent (or even to pay more), will open in those vacated locations.

Also worth mentioning in this context is the transformation the sleazy Times Square and 42nd Street of my youth, an era and area that is currently being fictionalized in HBO’s “The Deuce”. Forty-second street between Seventh and Eighth Avenue has been transformed into a squeaky clean, Disney-like theme park with, among other things, a Disney theatre, a large McDonald’s, an Applebees, AMC and Regal multiplex movie theaters, and one of the Hilton’s hotel chain, with a Westin hotel just north of 42nd street. In other words, 42nd street is no longer sleazy, but it is also no longer distinctive. It now encompasses a similar mix of businesses to those found in many other locales.

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Sleeping with the Digital Enemy: Salvation for Brick-and-Mortar Shops?

While many brick-and-mortar consumption sites are going bankrupt (Radio Shack, Payless), dying (Sears), or are long gone (Circuit City, numerous dead malls [see deadmalls.com]), several late 2017 articles in the New York Times suggested that it is premature to sound the death knell for brick-and-mortar stores.

Some brick-and-mortar consumption sites, most notably fast food restaurants, are not dying. In fact, they will continue to exist, if not prosper, at least until the day when technology is advanced enough to deliver burgers and fries to our homes digitally (e.g., that can be produced on our 3-D printers, or by even more advanced technologies of the future).  Many other kinds of stores (e.g. supermarkets) will survive for many of the same reasons. Furthermore, still other brick-and-mortar stores will continue to exist if for no other reason than the fact that many people will continue to feel the need to get out of the house and away from their computers, at least some of the time. Since consumption is, for many people, their major form of recreation, this will undoubtedly lead them to updated brick-and-mortar shops, malls, amusement parks, and the like.

There are also hopeful, but contradictory, possibilities for other brick-and-mortar sites such as, making them smaller (more focused, more personal and intimate) or more multi-functional. However, there is general agreement on the need to make such sites more experiential (for example, malls that have fewer stores and more restaurants and movie theaters; showrooms offering more personalized services and an array of amenities such as manicures and a glass of wine). Beyond that, such sites can move beyond a focus on brick-and-mortar shops and, among other things, transform themselves into “event spaces, classrooms, community centers”. While there is some promise in these changes, they seem, at best, dim hopes. The chief executive of Oscar de la Renta is quoted as saying that brick-and-mortar stores are no longer necessarily advantageous and in the second-tier markets they might be considered “millstones”.

The main source of salvation for brick-and-mortar stores is said to be augmentation with that- digital consumption sites- which have been, are, and will continue to be the greatest threat to them. The major hope for many of the brick-and-mortar consumption sites that continue to exist is in synergistic relationships with digital sites. While this will keep some brick-and-mortar locales alive, they will clearly be subordinated to the digital and on life-support. Further, that which is keeping them alive, at least faintly, is the very digital force that has been killing them and will continue to be fatal to them in the future. Brick-and-mortar stores are eagerly climbing into bed with their mortal enemy. If the alliance with the digital world does not kill brick-and-mortar sites, it will reduce them to insignificant appendages to the digital.

Also not offering much hope to the brick-and-mortar world are the material sites Amazon has created (bookstores, convenience stores) or purchased (the Whole Foods chain of over 460 supermarkets). They are destined to be an infinitesimal part of Amazon’s total business. They may be useful for experimentation, the application of the massive amounts of data collected by Amazon.com, and for new bodies of data on consumers, but they are not going to contribute much to Amazon’s bottom line. On the other hand, Wal-Mart will gain much more by its move away from its massive number of brick-and-mortar stores and in the direction of becoming a greater presence in the digital world.