Whole server racks (the equivalent of whole forests in the print era) have been sacrificed to stories about “The Retail Apocalypse” and the “Death of Retail.” All the stories present a binary view: retail is dead; retail isn’t dead.
The truth lies somewhere in between.
Retail, broadly speaking, is doing well. But retail covers a wide array of vendors and products, from restaurants and grocery stores to consumer products like drug stores, auto dealerships, shoe stores, clothing stores, book stores furniture stores, pet stores, and too many other kinds of stores to count. And don’t forget that retail includes department stores like Macy’s and e-commerce from giants like Amazon to individual vendors and small businesses who sell on Etsy. Finally, retail includes brick-and-mortar retailers with physical stores selling to customers in-person, as well as e-commerce, like Walmart and Target.
The Risk of Retail’s Decline
But it seems clear that there are challenges to traditional retail and that it presents a challenge to the resiliency of urban centers and even suburban commercial districts. Those, in turn, could present severe fiscal, political, and managerial pressures on cities.“To understand cities, we have to deal outright with combinations or mixtures of uses, not separate uses, as the essential phenomena ... A mixture of uses, if it is to be sufficiently complex to sustain city safety, public contact, and cross-use, needs an enormous diversity of ingredients. ... How can cities generate enough mixture among uses—enough diversity ... to sustain their own civilization?”
Jacobs’ theory is well-supported. In Manhattan, where I live, for example, specialty retail districts like the “Design District” near the 59th street bridge, which sells furniture, and the Lighting and Restaurant Supply District on Bowery, had been mostly little-used retail wastelands, save for a few people shopping for furniture, lighting, or restaurant supplies. They were especially barren and unwelcoming after the stores located there closed for the day. The Bowery has seen somewhat of a commercial renaissance in the last decade or so with restaurants, hotels, art museums, and boutiques springing up, effectively proving Jacobs’ assertion that a “mixture of uses” “sufficiently complex” are necessary to maintain an inviting environment.The New Retail Marketplace Is Boxes, Not Box Stores
Anything I need I can get from Amazon, delivered to my door in a box. I even purchased a 300 pound leather convertible couch, custom built to my specifications on color, materials, and style delivered to my home over the internet! I have a Barnes & Noble book store just a five minute walk from where I live but have not bought a book there in at least five years. For me, it is a convenience store for last-minute Christmas “stocking stuffers.”All this leaves surprisingly little room for retail to prosper.
But the city as workplace has changed and so, too, has the workweek. Work from home (WFH) is still popular, well after the pandemic has subsided, and the four-day—or even three-day—“in-office” work week for hybrid workers continues with no end in sight. Here in New York City, for example, there is a dearth of foot traffic—the foot traffic that sustains street-level retail in Manhattan—on Monday and Friday.
In New York, Leaders are Turbocharging the Retail and Urban Decline
In New York City, the Metropolitan Transportation Authority (MTA) helps to turbocharge the retail decline by enforcing rules that encourage people to stay out of town. First, the MTA imposes higher fares on so-called “peak” travel periods, when people are going to and returning from work from outlying areas. The MTA is also set to impose an absurdly high “congestion pricing” fee to drive below 60th Street in Manhattan. Subway and bus fares are $2.75, whether you go a single stop or traverse the city from far Rockaway, deep in Brooklyn, or Wakefield, the northernmost stop in the MTA.Adding another hurdle for New York retailers to overcome, recent legislation adopted by the city and state will require massive, costly, structural building retrofits to achieve the city’s overly ambitious climate goals in an effort to be “first in the nation” in some imagined “race” for “climate leadership.” Failure to do so will cause the building to fail its “emissions score,” thereby triggering costly fines.
The Rest of the Nation
New York City is unique in the nation in that it is horribly mismanaged and embraces absurdist, socialist, naively altruistic, and catastrophically costly policies like a “‘right’ to shelter” and “sanctuary city” that I believe will ultimately drive it in to bankruptcy. But the overall decline in healthy local retail and WFH threatens other cities, too.Federal and state policymakers should undertake efforts to counter the retail decline and avoid following New York City’s policies.
- targeted federal tax credits (i.e., a dollar-for-dollar reduction in taxes) for:
- wages for workers who work from offices 100 percent of their workdays
- on-site free employer child care
- commuters and ride-sharers
- homestead tax credits for recent graduates who take residence in urban areas requiring a resurgence
- grants to maintain and supplement urban first responders, like police, fire fighters, and paramedics to ensure manpower needs are not depleted
- a lower business tax rate on brick-and-mortar retailers of every type, including theaters, museums and restaurants so that they can lower the prices they charge customers
Summary
The cost of not maintaining cities—the risk that centers of civilization like New York, Los Angeles, and countless locales in between—could become Gary, Indiana, is enormous and not just for those localities, but for the entire economy. It could ultimately cost several percentage points in GDP and leave some of the nation’s largest banks and lenders bankrupt.Saving cities will be politically unpopular, but will be absolutely necessary to maintain the American civilization.
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