Tuesday, January 3, 2017

Will Retail Be The Death Of The Piedmont Triad?

Or Just Greensboro?

Yesterday I read A giant wave of store closures and more layoffs is about to hit Greensboro, North Carolina by EzGreensboro.com's own Abner Doon, in which he pointed out some interesting figures:

"The US has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia — the next two countries with the highest retail space per capita..."

Abner's figure is confirmed by the Cushman & Wakefield Global Cities Retail Guide where they write:

"The U.S. leads the world in shopping center Gross Leasable Area (GLA) per capita at nearly 23 square feet per person, well ahead of other countries."

That prompted me to do some research in which I found, according to the 2010 East Greensboro Strategic Plan, Greensboro had roughly 40 million square feet of retail space. Thousands, if not millions of square feet of retail space have since been added in Greensboro alone.

So I did some math, rough figures, and came up with 142 square feet of retail space per person based on a Greensboro population of 280,000 persons. In other words, Greensboro currently has 6 times the national average.

Now in discussing this with others, some said it wasn't a problem, that,

"Demand" for retail space begins with somebody wanting to occupy said space with the thought they can make it as a retailer in this or any other market. Next, the question in a local statistic must include the population of actual consumers - which would be more than within the city limits."

That makes sense, we do have to take the entire region into consideration as people are very mobile here in the Southland, much more so than in Europe where average retail space is "2.5 square feet per capita." according to  Retail in 2015: A Reality Check, published March 17, 2015 in Forbes Magazine.

So here's the figures so far.

Retail Space Per Person

142 square feet
US National Average 23.5 square feet
Canada 16.4 square feet
Australia 11.1 square feet

Europe 2,5 square feet

So what drives the growth of traditional retail spaces in America? Is it retail sales or something else?

According to the
Cushman & Wakefield Global Cities Retail Guide:

"Technology continues to influence consumer purchasing behavior and online purchases continue to grow. In 2015, online retail captured 7.4% share of total retail sales.
Due in part to technological advances in retailing, traditional Big Box retailers are shrinking store sizes and footprints to enhance profitability."

Cushman & Wakefield also write:

"Retailers continue to experiment with formats of every size and shape as they look to better compete. This even goes for formerly online-only retailers that are increasingly going omni-channel as well and opening physical stores to serve as embassies of their brands.

Retail expansion in the U.S. is currently being driven by concepts that don’t compete with online retailers, such as food (grocery or restaurant) and service-related retail."

But as you and I know all too well, when everyone starts doing the same thing it works no more. Innovation remains innovative for only as long as it remains new, different, and better than what everyone else offers. One cannot be innovative by doing what everyone else is already doing.

But taking the region into account I decided to continue my research and here's what I learned.

While I was unable to find a figure for the retail space per person for Burlington or Alamance County I did find the following from the 2008 Downtown Burlington Master Plan:

If you haven't been to Burlington lately, Alamance Crossing has long since been completed and is massive, larger than any other mall or shopping center in the Piedmont Triad. Why I remember when all of Burlington was hardly bigger than Alamance Crossing. And in their report they wrote:

"Burlington itself is a $1.2 billion dollar retail market, which is $544 million over the retail demand of city residents."
They also write:

"Residents of Alamance County spend about $2.24 billion annually on retail goods. Thus the county sales are about $161 million over demand."

Someone might want to look into scheduling shopping buses from East Greensboro to Alamance Crossing. Looks like folks with cars are already going there. And remember, those figures are going on 9 years old, even more Greensboro shoppers are traveling to Burlington these days. Perhaps the Burlington City Council will be so smart as to support their local retailers with bus service from East Greensboro now that they have that new fleet rolling?

Remember, it's only innovation if you're first.

You see, I have family all over the Piedmont Triad and used to be all my aunts, uncles and cousins came to Greensboro every weekend to do their shopping. But none of them do that any more. Why do you reckon that is?

I wasn't able to find such figures for most cities in the Piedmont Triad but I did come across the 2012 Business and Development Plan for Downtown Pittsboro where they wrote:

"There was an increase of more than 1,500 (68%) in the population within the town limits of Pittsboro between 2000 and 2010."

Folks, I can promise you, no one travels from Pittsboro to Greensboro to go shopping, not with Burlington, Raleigh, Durham, Chapel Hill, Asheboro and Sanford all being closer. And honestly, if you think there's anything you can buy in Greensboro that you can't buy in those other cities... You need to get out more. And while it is true that towns like Pittsboro experience leakage:

"The greater Pittsboro area captures about $80 million of the estimated $190 million in retail sales within a ten mile radius and experiences retail “leakage” (lost sales) in most retail categories."

They ain't coming to Greensboro.

So what does drive retail growth? According to Colliers International, a giant South Carolina commercial real estate firm who also happens to be in the megasite business, tourism and residential growth drive retail development.

But Greensboro and the Piedmont Triad are not tourist havens, and while communities all over the Piedmont continue to grow, Greensboro's growth remains basically flat. And at no time has Greensboro ever seen a 68% growth rate as happened in Pittsboro between 2000 and 2010.

Colliers International also says an improving economy drives retail development but they're not talking about Greensboro.  Go ahead, search the Colliers website for yourself. You'll find nothing good about Greensboro.

That's very interesting considering that Colliers International is one of the companies hired to write the 2010 East Greensboro Strategic Plan, I drew my figure from.  Who remembers Robbie Perkins and the whole of the Greensboro City Council pitching this joke of a plan at Dudley High School a few years ago? You might have heard me questioning the plan that night.

And to think, at the last City Council meeting it was decided the City of Greensboro should pursue more retail development as an economic development strategy when we already are at 6 times the national average in a nation that averages far more retail space than it could ever possibly use.

Continue reading Will Retail Be The Death Of The Piedmont Triad? Part 2