5 Ways To Ignite And Nurture A Community's Street-Level Retail

[Editor's Note] Welcome to The Builder’s Daily Bookshelf, a hand-picked reading list with reviews of inspiring books and author interviews about the business of housing and community development shared by TBD contributor Teri Slavik-Tsuyuki. 

Urban and suburban retail has the potential to add more than just economic value for landowners and investors. Done right, good street-level retail anchors walkable neighborhoods, provides access to healthy food options, and offers much-loved “third places”—somewhere other than work or home where life happens. Consumers surveyed in the America at Home Study were asked what community features would motivate them to choose one home or community over another, and “walkable to a coffee shop or casual eatery” was the No. 1 built amenity cited, far outpacing “clubhouse,” which appeared at the bottom of the list by more than 20 percentage points.

Despite strong consumer demand, developing retail as a community amenity rarely gets beyond the idea stage. I recently spoke with Conrad Kickert, who, along with well-known planner Emily Talen, co-edited StreetLife: Urban Retail Perspectives and Prospects, a pithy potpourri of case studies and research on the purpose, value, and meaning of street-level retail. Chapters authored by planners, architects, economists, sociologists, and academics demystify the logic of retail streets and dig into better plans, policies, designs, and innovations to bolster these social, cultural, and economic hubs.

The book, compiled from presentations after a conference organized by Talen at the University of Chicago, is divided into sections that touch on retail trends and transformations, e-commerce, mom-and-pop shop survival, and placemaking. With research citations and a bibliography and nearly as in-depth as the content itself, I suggest diving into the section most interesting to you after a look back at the history of retail for perspective on the future.

A Brief History of Retail

In the 19th century age of industrial urbanization, local food markets evolved into neighborhood corner stores and central urban streets hosted newly mass-produced durables like fashion, luxury, and home goods, fueled by the desires of the new “leisure class.” Discovering the benefits of centralization, these individual stores then clustered into arcades along central business streets, as the forerunners of department stores. Large enough to control relationships with suppliers and manufacturers, they ushered in the first retail revolution. The department store business model reduced the need for people with deep product knowledge, and for the first time separated the relationship between consumers and retailers. Their increased efficiency caused the first wave of independent main street store closures.

Gradually the department store fell victim to the next step in retail efficiency — the national chain store with low prices, high sales volume, and standardized outward appearances that signaled dependability and efficiency, all the while stripping away a unique sense of identity and neighborhood character from ever-widening, car-centric streets. Their ascension coincided with the rise of large self-service grocery stores, an American invention that again reduced operating expenses. Mail-based retail, the precursor to today’s e-commerce, came next, made possible by improvements in the postal service. Driven by Montgomery Ward and Sears Roebuck, it continued to erode independent street-level retail.

As suburban development grew in the mid-20th twentieth century, so did auto-centric suburban malls — often anchored by Sears — and encouraged by public policies and development subsidies. Today, many of these monoliths sit empty, some former end-cap anchors now replaced by discount retailers like the big-box Walmarts and Targets, who also find welcome homes on even cheaper land at the suburban fringes. Just three decades after the shopping mall replaced the urban core, these category-killing discounters themselves are at risk after the rise of pandemic-inspired e-commerce with consumers ordering more everyday merchandise online. And few would categorize this type of basic need, or general merchandise retail, as an inspiring experience.

The Role of Street-Level Retail Today

In today’s omnichannel world, retail can be divided into three categories: “experience economy,” “basic needs,” and “general merchandise.” Chapter 2 of StreetLife uses data from the National Establishment Time Series (NETS) to explore trends in each category by Core-Based Statistical Area (CBSA). The results indicate that across the U.S., experience economy businesses have increased since 2011, while basic needs and general merchandise have decreased. This trend is behind the conflicting total overall decrease in retail stores and the increasing consumer demand for experiences—food and beverage, bars, entertainment, salons, fitness, and wellness spaces.

Dr. Kickert has focused his work on street-level retail, suggesting,

Ninety percent of our experience of architecture is the ground floor of buildings, what I call interactive frontages.” These frontages have a multifaceted role to play, he notes. “First of all, there’s an economic role. Street-level retail is at the heart of the value of a place. It provides jobs. It provides amenities. It provides street life. Love it or hate it, so much of our public life revolves around consumption,” he says. “If you think about our typical image of a vibrant street, it’s retail amenities and nearby walkable amenities. Street-level retail is the heart of a vibrant city and a vibrant street.”

In a chapter on small-business survival, contributing author and professor of urban design Vikas Mehta gets to the core of why so many consumers today rate walkable retail their most desired amenity.

Many businesses act as a public canvas for the neighborhood messages and voices, whether social, recreational, or political,” he explains. “By collectively sustaining a neighborhood commercial space, these businesses create a centeredness in the neighborhood, producing a public space for daily socializing, building a sense of community. By providing a vibrant, ever-changing physical setting that also serves as a social space, local small businesses collectively contribute to the identity and social capital of the neighborhood.” 

The Economics of Street-Level Retail

Nationwide, consumer spending in the U.S. accounts for 70% of GDP, while business growth accounts for only 18%. Chapter 10 of StreetLife unpacks the 70%, noting that goods represent only 25%, and services (the stuff of third-place retail) account for 45% of GDP. One in 10 people work in retail, so store closures, bankruptcies, and job losses because of continued consolidation and e-commerce are similar to the upheavals that followed deindustrialization at the end of the 20th century.

With the “buy local” movement, a greater interest by many consumers in the origin of the goods they purchase, and the remote/hybrid work economy, neighborhood retail stores are in high demand as they service workers throughout the day and give neighbors places to walk and gather both day and night. And as many contributing authors in StreetLife reference, suburban development patterns give preference to national credit tenants with formulas that say 4,000 rooftops are needed to support them, yet these big box retailers generally export a significant share of their revenue out of the local economy. Small is big here—research from the American Independent Business Alliance found that $68 of every $100 spent at a local business remains in the community, providing 3.7 times more local economic benefit than shopping at large chain stores.

What Will it Take to Make it Work?

I asked Dr. Kickert how we can get better at street-level retail since it is what consumers say they want, and it provides a huge local economic impact.

Move from ground-floor retail just as a space of transaction to a space of interaction,” he suggests. “The broader you are in your vision of street-level retail, the more successful you will be. Too narrow a focus on income generation to meet the model of a large credit tenant means you will get a pod no one is going to walk across a busy road for because chain retailers have a model, and they’re not there to fit your vision or desires, they are focused on income and replicability. So, think about co-working office spaces, wellness spaces, daycare spaces, maker spaces, and the adjacency matrix, which means which retail type works next to another.”

That led him to share a valuable, if somewhat unconventional, set of ideas for nurturing street-level retail.

1. Understand the adjacency matrix. Wellness spaces like a pediatrician would work next to a daycare, and maybe an independent pharmacy. Coffee and daycares work well together, and daycares are often the first retail tenant in new communities.
2. Be realistic about your rent expectations. There’s a reason credit tenants are credit tenants, but invest in helping establish early-stage incremental retail and think about it as an amenity for the community. Design it and program it as such, with as much intentionality as the large clubhouses that sit largely empty today. 
3. Be open to non-credit tenants. Think about other uses at the street-level, rather than just waiting for a Starbucks that needs a big pod and a drive-thru. He cited an example in Amsterdam for pop-up artist spaces, not for six months, but for a longer term to establish the character of the place. “They have to promise me they will play nice to the street, open their windows, offer public programming, like a sculptor doing a sculpting class because that’s how most artists make their money anyway, and in return they get their space below market rate. As a result, it really branded the district as cool and edgy.” And it creates an ever-evolving walkable destination and viable adjacency for a coffee shop or bar.
4. Hire a street-level retail manager. Not someone who is sweeping out front, but rather a person who manages the mix of the street-level retail, paying attention to adjacencies and connecting with new potential businesses that have the right profile and service offerings.
5. Entrepreneurship training. It’s unconventional to expect a developer to lead small business training, but business savvy is key for small-business success. “Successful retail business rent is about 10% to 15% of your operating expenses, so let’s say we can get that back to 5%. They still need to be able to run the rest of their shop.” Maybe this is an evolution of the community lifestyle manager role?

Published in late 2023, StreetLife: Urban Retail Perspectives and Prospects is a pithy, in-depth read for anyone craving access to current research, case studies, and examples of street-level retail, and highly recommended for those wanting to crack the code and give people what they want.

As the book’s final chapter sums up,

The responsibility of physical retail stores to spark our imagination and to establish our heartfelt connection to ‘community’ must be a shared one. Perhaps more than any time in American history, the importance of retail spaces as a core, communal aspect of our neighborhoods and our lives has been starkly revealed.”