A noted expert on retail and development trends brought a challenging message to the City of Falls Church last Sunday that included insights into a forward-thinking approach that may determine what will work for the City’s accelerating downtown commercial and residential growth.
Bruce Leonard, a managing principal leading the architecture and urban design studio for the cutting-edge Bethesda-based Streetsense told a large gathering under the auspices of the Falls Church League of Women Voters Sunday that the nation is currently undergoing “the most transformative shift in retail in 100 years.”
Grasping this, the trends it represents, and moving ahead with working solutions will be vital to future success, Leonard spelled out.
The Wall Street-driven trend that dominated American retail up until 2008 is no longer operative, he said. That trend involved Wall Street pushing major retailers to massively overextend their reach with big box stores far greater in number than their returns actually merited.
But the combination of the Great Recession of 2008, the rise of the Internet and the emergence of the Millennial and X-Y generations have shifted that emphasis dramatically and we’re now into a phase of a sharp contraction of traditional retail.
The recession triggered a two-year pause, followed by a cannibalization of over-development, and anything but the highest-end malls are now experiencing contraction and not growth. “We are grossly over-retailed as a nation,” he said. Whereas there is 25-30 square feet of retail for every person in the U.S., in Canada the number is half that, and it is half of Canada in Europe.
But the new generations that are now shaping the U.S. retail market are “harder to target,” they are “less into stuff, “ and like to spend more of their dollars on food and beverages, he noted.
Meanwhile, since 2008, when Internet sales were three percent of the total, they’ve risen to eight percent and some are predicting they will rise to 25-30 percent in the next decade.
New trends that will be successful in the future will focus on “experience” over “things,” where people come for an “immersive experience” over simply the pursuit of commodity retail. “It’s about lifestyle, it’s about experience over things,” he said.
He cited the contrast between the highly-successful Bethesda Row in Montgomery County, Maryland, to the Wisconsin Place, located only a couple of miles away. The more successful model focuses on “the cool, the local, the hip” as opposed to national brands, he noted, with about 80 percent of the revenues coming from food and beverages.
In this context, he noted that “critical masses” of residential unit dwellers in proximity to the locations are also indispensable to their success.
Leonard’s remarks Sunday came as one member of a panel assembled by the League of Women Voters on the subject of what generates revenue for the City of Falls Church.
F.C. City Council member Phil Duncan followed Leonard’s presentation and noted that when people ask why there is so much change occurring in the City’s retail and commercial sectors, it is due to the need “to transform in line with the Streetsense model.”
Duncan said that “buyers want a more walkable, bikeable experience, they need to know there is a ‘sense of place’ being developed here that may help drive their decision to move here.”’
The kick-off speaker was Dr. Robert Young of the Young Group, a Falls Church-based developer who provided an overview of how the development process works in the City, including the hoops through which a prospective developer must jump through at City Hall to get plans to where they might be considered for approval.
In addition to Young, Leonard and Duncan, the fourth speaker was Keith Thurston, a former member of the F.C. Planning Commission and a citizen activist for the Village Preservation and Improvement Society who spoke of the long tradition of Falls Church citizens’ “sense of place.”