2017 Retail Market with David Ashford
The 2016 retail market report discussed how Birmingham had seen little retail growth that year. That narrative has not changed much. However, there are many trends retail real estate is facing that have many speculating about what the future holds. In this article, I typically site new developments and tenants, but this year I will address two trends affecting the world of retail real estate and how they relate to our market.
The Amazon Effect
I am sure you have read the articles and heard people say that Amazon will do away with brick-and-mortar retail as we know it. Although it has changed and will continue to change the face of retail, it is far from earth-shattering. Online retail sales still only make up less than 10% of total retail sales. This will continue to grow. However, there are some goods that people will still have to visit a conventional retail store to purchase. Most grocery items are and will continue to be sold in brick-and-mortar stores. The only way for Amazon to compete in this $620 billion-dollar industry is to purchase real estate. Online retail has made conventional retailers rethink possible store sizes and inventories though. There are many retailers that are carrying smaller inventories, downsizing from 50,000 square feet to 20,000 square feet stores, and price-matching or ordering from within the store to compete with online retailers like Amazon; e.g. Best Buy. This will be a growing trend- brick-and-mortar stores will carry smaller inventory, allow you to order in store, and have your purchase in a few days, if not a few hours. At the end of the day, there are still many consumers who want the immediacy of walking into a store and leaving with what they came for, which will result in brick-and-mortar stores evolving not becoming extinct.
A growing trend in Birmingham and across the country is an influx of development and growth within our major cities’ cores. Since the Regions Park opened in 2013, downtown Birmingham has seen tremendous growth. Our urban core has seen a swell of apartments, restaurants and even its first Publix grocery store. Entertainment retail, like Birmingham’s new Top Golf, should continue to fuel the already burning flame. This will continue to be a trend that will reshape retail as the urban community grows. However, this is not a foreign concept. In the 1940’s, 50’s and 60’s, downtown Birmingham was a bustling hub for department stores like Loveman’s, Pizitz, Parisian and many others. Although it is unlikely the department store trend will gain a head of steam again soon, the growing population in our urban markets will cause retailers, not just restaurants and entertainment, to figure out ways to capture the community’s attention. An example of this is Warby Parker, the eyeglasses retailer, opening a store in the newly renovated Pizitz Building Food Hall on 2nd Ave. North. As someone who has worked downtown for over 17 years, it has been tremendous to see the changes that have taken place and I hope we can keep up the pace to welcome more retail downtown.