I was surprised by the number. One fifth of all retail space is underutilized and is going to have to be repurposed, said Dr. James Tompkins, CEO Tompkins International, at the mid winter meeting in Paris.
While part of the reason is due to economic conditions, another part of the explanation according to Tompkins is the increase in Online shipping and the related need for less space in physical storefronts. This trend is expected to accelerate. What’s going to happen to all these empty stores?
One insight caught the attention of members, including Pat Callaghan, founder and CEO, Urban Renaissance Group LLC in Seattle: the empty space may end up repurposed as small warehouses serving nearby retail. In the future, we may be seeing more urban warehouses. In his highly informative speech, Tompkins explained, among other things, that even as online shopping takes the place of traditional buying, companies will still want a physical presence for branding purposes and opportunities for customers to touch products before they purchase. Space will also still be needed for store inventory to meet minimal onsite purchases or to manage returns. The most cost efficient solution may be to separate out the distribution and fulfillment functions from the retail space and locate them nearby in space that could serve both purposes for one or more stores. Vacant urban strip malls could be ideal candidates for just such space. Surprising to think that e-commerce may be a catalyst for revitalization for those declining commercial corridors.