Speaking of urban retail

the trade magazine Retail Merchandiser has an article in the current issue entitled "Hitting the Streets." From the article:

Urban markets present unique challenges. Retailers must contend with the cost and availability of suitable real estate. They must also deal with traffic concerns, finding a suitable labor pool and issues related to distribution, delivery, rapid replenishment and, in many cases, tailoring merchandise to fit the community. But if an urban store is well planned, it can yield very high turn rewards. “An urban store can actually make or break a retailer’s overall annual profits,” notes one urban retail developer. ...

Space is not only a concern for retailers. In the case of The Container Store, space-starved apartment dwellers often have a greater need for the company’s storage and organization item than suburban ones. “Much was made of how different urban shoppers would be,” says Kip Tindell, CEO of the Dallas-based retailer. “I think urban consumers may like us better.”

Tight squeezes have forced many retailers to forego the preferred freestanding store and single level layout in favor of other styles. ...

Real estate is also of great value in urban areas from a community/quality of life standpoint. Local governments play a major role in deciding the best uses of available land. City hall wants to know if a retailer will provide jobs, understand the community’s needs and be a valuable neighbor. Often, retailers must build stores that use existing infrastructure and blend into the neighborhood’s architecture.

Major retailers have even restored historic buildings. ...

This type of upfront investment can be high. Resulting profits can take time to be realized. This has prompted many local governments to help retailers develop real estate while providing them with tax and other incentives. In urban renewal zones, retailers are even allowed to slice state sales tax in half to lure customers. But the road can be long and hard.

“Finding the right site, acquiring it economically, obtaining government approvals and zoning and constructing the building cost effectively are more difficult in an urban area than a suburban one, by a factor of 10,” remarks Harvey Gutman, founder and president of Brookside Advisors, which specializes in retail consulting and real estate development. Retailers need flexibility in location, store layout/design, and size. ...

Retailers cannot just take the single-level suburban model and plant it on a city street. Multi-level urban stores, such as Wal-Mart’s locations in downtown Los Angeles and Massapequa, NY, are common. In addition to being the retailer’s first enclosed mall store, the Massapequa location is leased—Wal-Mart prefers to own its stores. Kmart’s locations in Manhattan and the Bronx are also multi-level, as are Home Depot’s and Best Buy’s.

At first, many retailers resist the two-level model, believing that customers do not venture beyond the first floor. But if the store is well merchandised, customers come. “It was a lot of drama, but it out worked great-product is selling well on both levels,” says Tindell of the chain’s two-level San Francisco store.

Index Keywords: urban-retail