The Future of Cities Depend on Solving the Retail Puzzle

A stroll along Michigan Avenue in Chicago’s loop is all it takes to get a sense of the deep blows that internet shopping and the pandemic wrought on the nation’s third-largest city. Nicknamed Magnificent Mile for its many shops and restaurants just steps from Lake Michigan and the Chicago River, the stretch of road now has so many vacant shops that the question of how to bring the retail and office district fully back to life was a top issue in the mayoral campaign.

Far from being a unique problem, Chicago is wrangling with the same questions plaguing cities and towns from the Atlantic Coast to the Pacific: Can brick-and-mortar shops thrive again? Yes, according to a report on the retail landscape by the National League of Cities. But it may require creative thinking and help from local and state officials and from community-based organizations.

According to the report, retail sales have rebounded following the pandemic and 2021 figures show it accounting for 10.5% of all jobs and 6% of the gross domestic product. But while internet shopping remains strong, the shops on the block are still struggling.

“For cities, retail serves as a crucial public space for people to gather and a means by which they experience their neighborhoods,” the report states. “In addition to creating jobs and economic vitality, retail provides an essential piece of social infrastructure.”

The health of many downtown retail districts is linked to the office space that surrounds it and many workers continue to choose to work from home or to work in the office just a few days a week. 

“While the state of the retail sector nationally appears strong, examining retail performance in specific sectors, cities and even neighborhoods reveals a more complicated picture. Small businesses across the country experienced significant setbacks during the first two years of the pandemic, and many neighborhoods have not yet filled storefronts left vacant during that time,” the report states.

Stores in low-income neighborhoods along with those in communities where the population is a majority Black, Indigenous or people of color continue to struggle, the cities report states. 

Co-authors Julia Glickman, senior program specialist for urban innovation, and Lena Geraghty, director of sustainability and urban innovation at the National League of Cities, sat down with Route Fifty to talk about some of their findings while working on the report. Overall, they said, solutions must be highly localized.

“Local leaders are in the driver’s seat for testing innovation and solutions,” Geraghty said. “They have the convening power. They can bring the private sector together with community-based organizations to make sure cities continue to be places where people want to be.”

There are a variety of ways that local and state leaders have the power to change regulations to encourage people to visit downtown areas. For example, city officials can convert parking spaces or streets into places where people dine, enable the continued sales of drinks to-go, or make changes in the types of businesses they’ll allow in retail spaces, Geraghty said. Some of the alterations that local leaders made during the pandemic to help retail stores or to create a vibrant nightlife might be good permanent changes, she said.

Also, Glickman and Geraghty said, since the cost of parking in city retail areas can be prohibitive, some cities around the country are considering making permanent their experiments with providing free buses, light rails or other transportation. Boston, Kansas City, Missouri, Washington, D.C., Tucson, Arizona, and Seattle are examples of cities that are considering free transportation. Offering fare-free transit, they said, could help bring more shoppers and diners to downtown areas as well as bring in workers for stores and restaurants.

Free transportation enables families to go out “without it being a heavy financial lift to explore,” Geraghty said.

The report cites a census statistic showing that in 2022, the total percentage of retail sales that came from e-commerce was 14.6 percent, up from 10.5 percent in 2019. But the authors explained that this figure is imperfect because it’s impossible to tease out the portion of those sales that represent a blend of store-based and internet shopping. For example, shoppers may order items online and then pick them up at their local store. Or they may be shopping in a store and order their purchase online from that store if they can’t find their size.

The report gives statistics of retail areas that have largely rebounded and those that are struggling. Bookstores, for example, are doing better than they were before the pandemic. “After years of decline, Barnes & Noble has announced its largest physical expansion in over a decade, and the number of independent bookstores has also grown since 2020,” according to the report.

Some other sectors that sell items that aren’t easily sold online are also thriving, such as gas stations and garden shops. But electronics and appliance and clothing and accessories stores, while doing better than they were during the pandemic, are not growing as quickly.

The report highlights a number of efforts city leaders are making around the country to improve retail. The Boynton Beach Community Redevelopment Agency in Florida, for example, has provided land for a 17,000 square-foot project that will include restaurant, retail and office space and is offering financial incentives to the developer to ensure that the project will include 300 new apartments, half of which will be workforce housing. 

In Norwalk, Connecticut, the city provides some free marketing for retailers and helped create a “Shark Tank” style competition in which people can pitch their plans to win startup costs for new businesses.

And North Las Vegas, Nevada, used its American Rescue Plan Act funding to open what it calls the Small Business Connector at City Hall where new and existing small business owners can receive license and permitting assistance from city staff, find experts at the University of Nevada for business development advice, and explore funding opportunities through the city’s revolving loan fund for small businesses and small business assistance grants.