Tagged: online shopping

Urbanism Next Research Papers Series – Re-Imagining Retail

While we have been compiling research and articles on this blog for the last few months, we have also been working on our own research.  Today marks the start of our publishing a series of brief papers on issues related to Urbanism Next.  The intention is to introduce you to some key topics that will be affecting how cities develop as they face ongoing and transformative changes in technology.

The first paper is co-written by Galen Carlson and Nico Larco and is focused on Re-Imagining Retail.  Building on earlier posts about the challenges retail is currently facing, we look at the transformation retail is currently going through and the shift from brick-and-mortar, to e-commerce, to omnichannel approaches.  The paper describes trends and includes data and resources that can help you understand where we are at, where we are heading, and where you can learn more.

Look for additional papers on residential preferences, warehousing, and the effects of urbanism next issues on municipal budgets – coming in the coming weeks.

Mall Foreclosures Up 11% – Due in Part to E-Commerce

Mall foreclosures continue to rise as retailers face more and more competition from E-commerce and a large rush away from enclosed malls.  Many owners are letting their loans default instead of trying to restructure as they see no easy future in a shifting economy.

These declining/failing properties not only cause problems for tenants, but also for the surrounding properties.  “If a mall closes or goes into decline, you’re going to see declining property values in the area,” commented Arthur C. Nelson, professor of Urban Planning and Real Estate Development at the University of Arizona. “The mall is a marker.”

One of the early casualties in the shift to E-commerce.

Warehouses Will Be Everywhere

As we continue to trend towards e-commerce and a range of delivery methods for products, warehouses – one of the key infrastructure elements of delivery – are going to both shift and proliferate.  A report from Colliers looks at these shifts broadly, but pertinent to this blog, there are sections on First Mile and Last Mile of delivery that outline the changes we will be seeing in the built environment.  Some takeaways:

  • Large consolidation of distribution facilities is happening as this facilitates logistics and the implementation of automation
  • Due to this consolidation, the size of facilities is greatly increasing – ‘First Mile’ facilities (these are distributions centers that are first accepting parcels from suppliers)  greater than 1 million square feet are becoming more commonplace. — Picture a single facility as large as 4-5 New York City blocks or 16-20 Portland blocks.
  • ‘Last Mile’ facilities (distribution centers that ship directly to customers) – on the other hand are locating in order to shorten and speed up final deliveries.  This is leading to smaller distribution centers (50-75,000 square feet) scattered around urban areas.

A great graphic that shows the complexity of new shopping and delivery methods is below.  Many forms of delivery and each has its own land use and transportation implications.

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E-Commerce?? – Depends on What you Are Shopping For

A new study in Transportation Research Record by Zhen et al. looks at the relationship between online versus in-store shopping based on the types of good you are shopping for.  Based on a survey of shoppers in Nanjing, China, they differentiate between experiential goods (ones with “traits that cannot be determined until the product is used” – such as clothing) and search goods (ones  “that consumers can ascertain fully before use” – such as electronics).  Unsurprisingly, they found more online purchasing happening with search goods than exchange goods.  A few other takeaways:

  • Cost consciousness is related to lower in-store clothing and electronics purchases
  • Shopping enjoyment increases in-store purchases for daily goods, but not for electronics – so “a particular shopping attitude does not always affect purchasing behavior for different products in the same way.”
  • More education is related to less in-store shopping and more online shopping for books and clothing

In terms of the effect on the overall transportation system, the results are not clear cut.  They state that “If returns of unsatisfactory products and freight transportation are considered, online purchasing generates even more travel demand. Therefore, transportation planners should expect growing challenges associated with the proliferation of Internet sales.”

E-Commerce: Brick-and-Mortar Slide Continues – 12% Drop in Store Trips This Past Holiday

A recent article in the Wall Street Journal documents the continued rise of e-commerce coupled with the inevitable slide of brick-and-mortar stores.  A few key numbers:

  • Overall, online holiday sales increased by 11% over the previous year while brick-and-mortar sales increased only 2.7%
  • JC Penny brick-and-mortar sales dropped by nearly 1% while its online sales grew by double digits.
  • Amazon was the clear leader in online sales with 38% of all online revenue

Probably the most striking number for the subject of this blog, brick-and-mortar shopping traffic (as in the number of times people went into stores) declined by 12%.  That number – if it continues – will inevitably lead to a drop in the amount of brick-and-mortar stores and major shifts in land use and transportation demand.  This will potentially also decrease the vitality and activity around commercial areas.

Online Shoppers Outnumber In-Store Customers

In the continuing trend of the growing online shopping market-share, online shoppers (109 million) outpaced in-store shoppers (99 million) on Black Friday this year.  Some of these shoppers actually did both on the same day, but the data shows a significant increase in online shopping activity from last year (2015: 103 million online and 102 million in-store).  Actual expenditures online also surged ahead to $3.34 billion – a 21.6% increase over last year. And this does not include the online shopping high point of Cyber Monday that is happening today.

As we have discussed in previous posts, this trend – if it continues – will lead to a significant change in the number, location, and design of bricks-and-mortar stores.  A large change to the organization of cities and the ways we live in them.

AV’s, E-Commerce and Retail

This article talks about how the combination of AV’s and E-Commerce will create havoc for the retail industry.  More of our shopping will go online while bricks and mortar stores will start to act more like distribution warehouses as AV’s are sent to run errands and pick up things we need.  This will have large implications for how retail works in urban areas – where it is located, how much of it we need built, and a shift (already occurring) from retail being based on a need to retail being proposed as an experience.

Large implications for activity centers throughout urbanized areas as many of them have retail as a core vitality generator.