2023-05-10 CC Packet - Laserfiche WebLink

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LOC CONSULTING Market Analysis for Downtown Redevelopment City of Centerville Economic Development Authority April 3, 2023 4.Retail Market Analysis This section examines the restaurant and retail market in the Downtown Centerville Primary Market Area (PMA). Retail real estate has seen dramatic change in the last 10 years. Even prior to the COVID19 pandemic, shifting incomes, changing consumer preferences, and the growth of e-commerce had resulted in a significant number of store closures and shuttered shopping centers across the country. With the pandemic, many of these trends that were negatively impacting retail have accelerated. Other trends that were trending positive —like the growth of health clubs and experiential retail —have now reversed and slowed considerably. On the other side, many retail concepts have done well during the coronavirus pandemic. Grocery stores, liquor stores, and home improvement all experienced strong sales during this period. And retail concepts that have been able leverage their e- commerce operations and alternative methods of delivery —like curbside pickup —were able to maintain most of their sales. While there have been significant disruptions, the traditional analytic lens of retail has stayed relatively consistent. Based on an understanding of consumer spending in an area and the ability to target the right retail to capture that spend, the framework provides a tool to understand how these shifts drive changes in demand for retail space. Retail and restaurant space can be found in malls, shopping centers, and freestanding buildings —both individual structures and street -front business districts. Mixed -use projects —where retail is combined with residential or office —have also become popular with developers and local planners. Retail is often viewed along a spectrum of convenience versus destination. Convenience retailers are grocery stores, drugstores, liquor stores, home improvement stores, coffee shops, and quick -service and fast -casual restaurants. At the destination end of the spectrum are department stores, apparel and accessories stores, furniture, electronics, sporting goods, higher -end restaurants. General merchandisers and clubs —like Costco, Target, and Walmart—seek to capitalize on spending from both ends of the spectrum. The location of a planned retail development determines which types of retail will succeed. Convenience locations need more frequent trips and generally higher population densities to drive smaller purchases and support lower margins. Destination retail may need higher incomes and proximity to similar types of retail to support the fact that their customers make less frequent trips to their establishments. Key Retail Trends Here are key trends in retail that will impact the amount and types of space that retailers will demand in the Downtown Centerville PMA. 1. Consumer spending has been surprisingly strong. With a tight labor market and the resulting wage growth, purchasing power of households has been strong. Even as the inflation increased in the second half of 2022, households continued to spend at levels comparable to 2 02 1. And, unlike the shutdowns of 2020, consumers spread their spending to both e-commerce and brick -and -mortar channels. This sustained spending has pushed retailers to add new locations and demand additional space at existing locations. 2. The coronavirus pandemic changed the way consumers shop. Buy online and pickup in-store (sometimes called "BOPIS") was already a major trend for retail headed into the pandemic, but COVID-19 put gasoline on the fire. To address safety concerns, retailers quickly developed curb -side pickup, enhanced drive - through, delivery, and online ordering capabilities. Page 162