With big box retailer Toys ‘R Us liquidating and ’90s trendy mall retailer Claire’s filing for bankruptcy, another round of media accounts bemoaning a supposed “retail apocalypse” resulting from e-commerce and computers is upon us.
Don’t believe it. The stories are mostly hype and the current closures largely a product of changing tastes. Insofar as retail has problems, furthermore, the best solutions involve avoiding actions that will make things worse and taking steps to allow for easy reuse of vacant retail space.
The story of Claire’s, which built its business and brand around free-ear piercings for teenagers and costume jewelry, proves how little e-commerce really has to do with retail’s ills. Pierced ears cannot be delivered by courier and the types of accessories sold at Claire’s are simply the things many want to see in person before buying.
While its corporate history goes back to the 1960s, Claire’s name and approach is largely a product of the 1990s and hasn’t changed much since then. Put another way, changing tastes did it in.
In the case of Toys ‘R Us, far from being destroyed by video games, the retailer relied on them for massive portions of sales and was the second largest video game retailer as recently as the early 2000s. Toys ‘R Us problem: it simply didn’t keep up or move into e-commerce or online distribution as aggressively as it might have.
In any case, there’s simply no evidence that “retail” writ large is in trouble. After all, sales are up — 5.5% in November and December of 2017 alone. Total employment in the sector has dropped slightly but so has the unemployment rate for those who previously worked in retail. This suggests that employment is declining because store owners just can’t find people to fill jobs.
Still, there are some worrisome signs that suggest that the vacancies left by these chains may not be filled: traditional enclosed malls, which have been in decline for decades, are clearly hurting. This is happening because there is just too much space overall. The United States’ per capita income is only about 15% higher than culturally similar Canada’s but we have nearly twice as much retail space per person. Traditional department stores that have long anchored enclosed malls are also hurting, a victim of fast-fashion chains like H&M and big-box discounters.
To deal with this, two policy courses seem to make sense.
First, with very narrow exceptions like encouraging the construction of full-service grocery stores in neighborhoods that lack them, governments shouldn’t offer any special treatment for new retail development. If we already have too much retail space, building more will make things worse.
Second, local and federal officials should change zoning laws to facilitate creative re-use of retail space. Many cities won’t allow conversions at all for old space in hopes of returning department stores and other businesses that nobody really wants anymore.
There are better uses. Around the country, retail spaces have become apartments in Providence, Rhode Island, a church in Lakeland, Florida and a greenhouse in Cleveland. But it’s burdensome and time-consuming to get permission for changes that allow these things. It would be far better to simply relax the rules and allow retail space to be converted for any purpose so long as it meets basic safety codes.
Mandates for parking that might be sensible for a mall preparing for Black Friday crowds may make no sense for other uses and should also go. Likewise, efforts to “landmark” spaces used for shopping deserve extreme skepticism: the places where people buy are rarely truly historic.
The way people buy things has long evolved and will continue to do so. But there’s little evidence of a true retail apocalypse and, insofar as the retail sector might have problems, the solutions to them are relatively simple.
Image credit: photocritical