Monday, December 7, 2020

Post #13: The Future of Retail and the Impact on Cities, Part 2

 In Part 1 of this series, I looked at trends in the retail industry and at the impact of the ongoing COVID-19 pandemic.  In Part 2, I’m going to examine how those changes might affect the fabric and form of midwestern cities.  While acknowledging the impact of the pandemic, I am largely going to focus on a future where the public feels safe being out in public, and lockdowns and social distancing are things of the past.

If you have read other posts on this blog, you know that I have advocated the idea that cities should move away from the suburban style sprawl that has dominated development in this country for the past six or seven decades.  That style of development was facilitated by government expenditures which may have made sense in the short run but which had long-term cost implications that were conveniently ignored.  Those cost implications are now turning into such a burden that cities are being forced to raise taxes and utility fees just to keep essential systems operational.

At the same time, I am not advocating a return to the past.  The urban forms common a hundred years ago certainly had their merits, but they were not perfect and I would caution against a blind nostalgia for the way things were.  Our society, our economy and our technology have changed dramatically, and we need to find an urban form that can accommodate and embrace those changes.  Retailing is just one component of our economy, social life and urban form, but it is a crucial one because it reflects the impact of our changing society perhaps more clearly than any other.

The Impact on Cities

So what effect will the changing form of retail have on midwestern cities?  It depends.

There are a few general conclusions about retailing that I will discuss briefly below, but these will not impact every city in the same way.  I will try to identify ways for cities to evaluate the local impact of these trends, but each community will need to develop their own strategies for moving forward. Let’s start with the overarching trends that will be nearly universal:

  1.  Brick-and-mortar store closings will continue to outnumber store openings, meaning that the total amount of retail floor area will shrink.  This means that a significant number of shopping centers will need to convert either partially or entirely to some other form of land use.  Enclosed malls are particularly susceptible to failure, but other retail development types are not immune.  It is important to understand that retail businesses will shrink well before retail buildings get demolished, leaving a period of time when empty buildings may lead to blight.

  2. The “bricks and clicks” retail strategy (also known as “omni-channel” retailing) will become nearly ubiquitous, but large retail chains will dominate simply because they will have the resources to develop an easy to use online presence coupled with detailed data on their customers.  Plus, large chains have huge advertising budgets, purchasing power advantages and advanced fulfillment systems.  This does not mean that small retailers will not be able to compete, but they will need some clear way to differentiate themselves from the large chains.  Affluent buyers in particular may prefer small retailers as a way to find unique products and high level service.

  3. Technology will continue to have a huge impact on the future of retailing.  Cell phone advancements and 5G networks will bring incredible computing power to your fingertips.  Ongoing progress in artificial intelligence will allow you to do most of your shopping simply by talking to your phone.  In just the past few years, speech recognition software has made huge strides forward (think Siri, Alexa and Google Assistant).  When that is coupled with the mountain of data that retailers are gathering on your personal preferences, it will soon be possible to do much of your day-in/day-out shopping simply by having a conversation with an online robot that will know what you want almost before you do.  This may sound a bit creepy now, but it will seem totally normal in just a few years.

  4. Shopping districts that enhance the experience of shopping and which cater to the preferences and social priorities of younger generations will continue to prosper, but they will rarely be retail-only environments.  There will almost always be work-play-live components to go along with the shopping component.  It is also likely that any given metro area will only be able to support a handful of these mixed-use, experiential districts.  A sense of discovery, creativity and authenticity are the keys to making these areas successful, but that is harder to create from scratch than most people realize.

All cities will be affected by these trends but the nature and degree of the impact will vary based largely on local demographics and economics.  This variability will even show up within cities, with some neighborhoods being affected differently than others.  A recently released study on shifting consumer behavior by McKinsey and Company highlights the differences between populations that are young versus old, or affluent versus poor. (1)  In general, cities or neighborhoods that are young and/or affluent are shifting more quickly to online shopping, but they are also the groups most likely to be optimistic about their economic prospects and most likely to spend on nonessential goods and services as the impact of the pandemic wanes.  Many stores will do reasonably well in these areas except for those that sell things readily available via the internet, or which have an outdated form, location, or product mix. 

Areas that are older and/or poorer have been hard hit by the pandemic and have reacted by buying less and focusing heavily on value.  On the other hand, these groups have generally been slower to embrace online shopping which means that the limited buying they do tends to go to local stores.  Stores focused on value and on day-to-day essentials are likely to survive but retail chains that are dealing with bankruptcy are likely to target these areas for the early rounds of store closings.  Consequently, residents in these areas are likely to have to travel further to find stores selling higher end products or specialty goods.

Actively Monitor Retail Health

Most cities pay close attention to their retail sales tax collections but don’t take any further steps to actively monitor the retail health of their community.  Given the potential upheaval that could be coming, I think they should.  Not only will store closings and commercial development defaults affect sales tax and property tax revenue, they will affect much broader issues such as community blight, property maintenance violations, and local employment options.

As a way to illustrate the issue, the list below is a brief survey of the current status of the nine large, enclosed malls that were all operational in the Kansas City region just 20 years ago.

Metro North Shopping Center.  Almost entirely demolished, although the Macy’s which anchored the west end of the mall is still operating as a stand-alone store.  The center opened in 1976 and contained 1.3 million square feet of floor area at its peak.  Store closings became an issue in the early 2000s and the mall finally closed for good in 2014.  A plan for a mixed use development with an outdoor retail “Main Street” has been approved and initial construction is beginning, but the new plan is predominantly retail which makes me doubt its viability.

Antioch Shopping Center.  Largely demolished, although it has been redeveloped as more of an outdoor, big box power center.  It was initially built in the 1950s as an outdoor mall, but was enclosed in the 1970s.  Troubles appeared as early as the mid 1990s, and the mall was shuttered by 2009.  The Sears store remained operational as the center was redeveloped but it has now closed and that end of the project has several vacancies.

Independence Center.  Still in operation, although one of the three anchors (Sears) is closed.  This shopping center opened in 1974 and contains roughly 1 million square feet of floor area.  The previous owner defaulted on a $200-million dollar mortgage and simply walked away from the property.  The current owner bought it out of foreclosure for a little over $60-million.

Indian Springs Shopping Center.  Completely demolished and the site is vacant except for a police substation and transit stop.  This 700,000 square foot center opened in 1971 and was having serious financial issues by the mid 1990s.  It closed for good around 2007.

Mission Center Mall.  Completely demolished, although a replacement project known as Mission Gateway has been started.  This relatively small center (350,000 square feet) was built in 1989 and lasted less than 20 years.  The mixed-use Mission Gateway replacement has been a major debacle and construction is currently stalled.  The plans have been modified multiple times and it seems unlikely that the current developer will be able to get anything completed.

Bannister Mall.  Completely demolished, but early construction work has started on a corporate campus for Cerner Corporation -- slated to contain over 4 million square feet of office space when fully complete.  The mall opened in the early 1980s and contained over a million square feet of retail space.  It started to decline in the mid 1990s and was closed for good in 2007.  It is unclear whether the work-from-home trend accelerated by the pandemic will change Cerner’s plan for a large corporate campus, but I’m betting that the original plan will be modified and reduced in size.

Ward Parkway Shopping Center.  Still in operation, although the enclosed mall portion of the project has been substantially reduced in size as part of a renovation that shifted the center’s focus to more of an exterior facing, big box format.  Originally opened in 1959, this center went through several expansions and renovations until it eventually contained roughly 600,000 square feet of floor area.  Several department stores have come and gone, and the center is now anchored by Target.

Metcalf South Shopping Center.  Mostly demolished, although the Sears store is still standing (but vacant).  The mall originally opened in 1967 and eventually contained approximately 800,000 square feet of retail space.  Vacancies grew during the 1990s and the mall was mostly empty by the early 2000s.  The mall structure was torn down in 2016 except for the Sears building which was owned separately by Sears.  The site has partially redeveloped with Lowe’s as the primary anchor, along with a few pad sites and a senior housing project.  The Sears portion of the site may also get redeveloped, although given the history of Sears I don’t expect anything terribly exciting.

Oak Park Mall.  Still in operation and doing reasonably well.  This is the largest mall in the metro area with 1.5-million square feet of retail area and five anchor stores.  All of the anchor locations are currently filled although Nordstrom’s has announced that it plans to leave in 2023 for a new location on the Country Club Plaza.

The point of all of this is that retailing changes over time but it can take decades for a failed site to redevelop as something else and those redevelopment plans are not always successful.  Dying malls are old news and have relatively little to do with the changes that are taking place now, but the same fate awaits many newer shopping centers that most civic leaders assume are doing fine.  The main difference is that dying malls were largely replaced by new retail centers with a different format -- the shopping centers that are going to die over the next five to ten years will either not be replaced at all or will have a much smaller retail footprint.

Evaluate Financial Exposure

It is rarely a good idea for cities to give financial incentives to a developer for a project that is predominantly retail, but that is especially true if the incentives include bonds that are to be paid off using sales tax revenue from the project.  The difficult retail environment is likely to mean that sales tax revenue will miss the financial targets that have been set.  If the developer is on the hook for making up any shortfall, then the concern is that the project could go into default depending upon the financial resources of the developer.  If the city is on the hook -- an extremely inadvisable but all too common scenario -- then the city may well have to divert funds to make up the shortfall at a time when tax revenue may be falling and budget demands are expanding.

Regardless of whether incentives were used or not, closing stores and failing retail developments can lead to long-term financial damage for cities.  The shift to online shopping has an impact on local retail sales tax collections because few cities collect the same amount of tax revenue from online retailers as they do with physical retailers located in their community.  Cities and states either need to figure out how to remedy that issue or develop a strategy for dealing with a declining rate of sales tax revenue per capita.  The decline of local retailers will also eventually impact property tax revenue, although property valuations tend to decline slowly.

As the owners of failing shopping centers start to contemplate redevelopment, they may look to cities for financial assistance.  Cities should keep in mind that financial assistance for retail projects does not create new retail dollars to capture, it simply moves existing retail dollars around.  Citizens will pressure civic leaders to do something about the blight of a failed shopping center, but financial assistance should be avoided unless the developer is proposing something truly innovative.

Plan for Vacant Storefronts

Retail vacancy rates are rising and likely to continue rising for some time.  Isolated vacancies in an otherwise economically vibrant community should not be problematic, but communities need to be alert for clustered vacancies in a particular shopping center or shopping district.  When vacancies pile up they become harder to fill and can lead to disinvestment in the property.  Rent revenue to the property owner falls because of both the vacancies themselves and because the tenants that remain insist on lower rent levels.  Falling revenue leads the property owner to spend less on maintenance which eventually leads to the early stages of blight.

Another trouble sign is a shift in the type of tenants to those that cater primarily to people who are economically distressed.  Pawn shops, dollar stores, used car sales, and payday loan services all pay rent, but they send a visual signal of economic decline which scares away conventional retailers, as well as the more affluent residents that retailers covet. 

As I pointed out earlier, the most popular forms of retail development tend to change over time as shopping behavior changes.  Enclosed malls, big box power centers, life-style centers and more have all been popular at various times during the past few decades.  Unfortunately, the physical structures that make up a shopping center tend to last a lot longer than the retail trends that determined their form.  Thus, every city has commercial development left over from a previous retail phase that is at least somewhat obsolete.  Add to this the likelihood that the amount of needed floor area for brick and mortar retail is going to decline rather than grow, and you end up with a high probability that many retail centers will want to redevelop to improve their chances of survival.

The problem is that not all shopping centers or shopping districts will survive and many developers will underestimate the scale of the changes that will be necessary to do so.  Some developers will think that updating the building facades, adding some landscaping and re-branding the center with more modern graphics will be sufficient.  In most cases, it will not.  Many centers will have to go through a fundamental shift in land use in order to really regain a solid financial status, and it generally will be a more radical shift than simply replacing a failed anchor tenant with medical offices or a branch library.

One option will be to replace retail floor area with multi-family residential, office and entertainment structures, essentially changing a retail-only shopping center into a mixed use development.  Although this approach has shown some promise, getting the details right is often challenging.  In most cases, adding residential units effectively means demolishing retail space which many shopping center owners are reluctant to do.  It is tempting to add a few units to the periphery of the site and hope for the best, but a half-hearted effort is not likely to work.  To be effective, this strategy typically requires hundreds of new residential units configured to be an integral part of the center with a great deal of attention paid to the quality of the residential experience.  This requires skills that few shopping center developers possess. In addition, many shopping centers are surrounded by freeways and wide arterial streets which tend to cut them off from the remainder of the community, thus reducing their appeal as a place to live.

Another option is to convert some retail space into warehouse space for online retail fulfillment.  Amazon has reportedly been looking at converting former JCPenney and Sears locations into fulfillment centers although as of now no deals have actually been done.  Other options might include some type of hybrid solution that includes retail, online fulfillment and merchandise returns, but again, I don’t know of any actual examples.  The advantage of this approach is that it would provide close-in locations that would facilitate same-day delivery -- something which is crucial for the continued expansion of online shopping.  The disadvantages are that shopping center floor plates and loading facilities may not be appropriate for fulfillment operations, and the surrounding retailers in the center would get little benefit which might accelerate the decline of the overall center.

Consider Changes to Zoning Requirements  

The bottom line is that most dying retail centers are going to require major surgery, not band-aid solutions.  To maximize the chances of success, cities may need to revise their zoning regulations to enable creative solutions.  Examples might include 1. expanding the list of permitted uses to enable more of a mixed-use center, 2. reducing minimum parking requirements to allow a more productive use of the oceans of asphalt that typically surround most shopping centers, or 3. providing more design flexibility for outdoor eating areas, drive-thru service or curb-side pickup locations.  Although cities may resist allowing changes to what used to be their hub of retail activity, delaying the inevitable may result in complete failure.

The problem is that zoning changes are useless without a developer willing to take advantage of those changes.  Cities should consider working jointly with the development community to craft regulations that address changing retail trends while still being practical enough to attract developers and development financing.  Generally speaking, the development industry is not very forward looking -- they tend to simply repeat what has worked in the past -- so cities will need to push developers to be innovative.

Thoughts?  As always, share your thoughts and ideas by leaving a comment below or sending me an email at  Want to be notified whenever I add a new posting?  Send me an email with your name and email address.


1. “The great consumer shift:  10 charts that show how US shopping behavior is changing”;  Tamara Charm, Becca Coggins, Kelsey Robinson, Jamie Wilkie; McKinsey & Company; August 2020;

Monday, November 30, 2020

Post #12: The Future of Retail and the Impact on Cities, Part 1

 There have been quite a few “retail apocalypse” stories in recent months that make it sound like every traditional retailer is on their deathbed and Amazon is going to rule the world.  As is frequently the case, the headlines are exaggerated and reality is not going to be as dire as many journalists would lead you to believe.  However, the world of retail is changing and it is in the best interests of cities to understand and prepare for those changes because retailing in 2025 will be substantially different than it was 2005.

This post is the first of a two-part series.  This initial part will focus primarily on what is happening to retailers -- particularly the physical (“brick and mortar”) stores that fill the commercial centers in every city.  I will try not to bore you with too many numbers, but it is important to understand the scale of what is happening.  The second part will focus more on the impact of these changes on cities.  My goal, as always, is to help cities be prepared for what is coming so that they can develop a strategy to not only survive, but prosper in the future.

Many of the gloom-and-doom stories about retail have focused on the impact of the COVID-19 pandemic, as if retail would have remained unchanged without the coronavirus.  The more accurate assessment, in my opinion, is that the pandemic simply accelerated trends that were already well underway.  Amazon and other online retailers have been eroding sales from traditional brick and mortar retailers for years, but the pandemic convinced many people to either try online shopping for the first time or to significantly expand the amount of their online shopping.  The net impact is that the percentage of all retail sales done online in 2020 will probably reach levels that would otherwise not have been reached until 2022 or 2023. (1)

One final caveat:  retailing is not monolithic.  There are a variety of retail businesses that have very different products and very different customer bases.  They will not all be impacted in the same way.  Nor is human behavior monolithic.  The shopping patterns of some people will change far faster than others.  The impacts of retail change discussed below are happening at the margins so to some civic leaders they may seem almost trivial, particularly for midwestern cities that are not exactly known for being “cutting edge.”  But they will spread eventually and they will end up affecting every city in the relatively near future.

The Numbers

The first key point to understand about retail development in the United States is that we arguably have way more retail floor area than is really needed.  Our country has over 8 billion square feet of retail space, or roughly 24 square feet per person.  By comparison, the amount of retail space per person in Europe is roughly 5 square feet. (2)  Much of that difference is because our country is much more spread out than the countries of Europe, but it also reflects the fact that we have a lot of retail floor area that is less productive than it should be.

The pattern of rapid outward growth common in this country has resulted in large commercial developments on the outskirts of nearly every city, which in turn has left core areas in the older parts of town oversupplied with commercial space that is aging and obsolescent.  It is generally cheaper to build new retail on the edge of town (where new housing is also being built) rather than remodel existing retail centers. Add to this the common practice of retail chains opting to grow too quickly in an effort to capture market share, and you end up with a lot of retail stores that are only marginally productive.

The second key point to understand is that as people’s shopping habits evolve, the format of retail centers will evolve to match.  This is not abnormal, but it does cause problems for cities because the physical structures built for one type of retailing are often hard to adapt to new trends.  For example, the enclosed shopping mall has been a fixture in the retailing world for the past 50 years.  In the mid 90s, roughly 140 new malls were being opened every year and they typically were the hub of retail activity for most mid-sized cities.  Now, shopping and social habits have changed and enclosed malls are quickly dying.  

Roughly a quarter of all enclosed malls have either closed already or are nearly vacant.  That number is expected to reach 50 percent by 2030.  Many of those that remain open have been (or soon will be) forced to make major changes to their physical form and their list of tenants.  Medical, educational, and public service tenants were nearly non-existent inside malls 25 years ago but are now common as replacements for department stores or other major retailers that have closed down.  Unfortunately, these non-retail tenants are not particularly helpful to the remaining retailers so their struggles intensify and the entire mall starts circling the drain.

Third, the COVID-19 pandemic has had a major impact on brick-and-mortar retail with a large number of bankruptcies and store closings in 2020 and more to come in 2021.  Most of these stores were struggling pre-pandemic, but the lockdowns and general fear of public places has been the final nail in the coffin.  Just this year, well known brands such as JC Penny, Lord & Taylor, Stein Mart, Ascena Retail Group (Ann Taylor, Lane Bryant), Tailored Brands (Mens Warehouse, Joseph A Banks), Brooks Brothers, GNC, and numerous others have filed for bankruptcy and started closing stores.  Forbes estimates that over 14,000 retail stores have closed for good in 2020, while the Wall Street Journal puts the number at a slightly less scary 11,100. (3)  (4)

To be clear, many of the companies that declared bankruptcy will re-emerge in a slimmed-down form, and some retail chains are doing so well that they are adding stores.  But the net effect is negative and the pain will be particularly acute in areas that have struggling economies or that are particularly dependent on tourism or convention traffic.

Finally, retail store closures mean lost rent for commercial property owners which will ultimately affect their ability to make mortgage payments and pay property taxes.  As of the end of September, only 82% of shopping center tenants were current in paying their rent. (4)  As of October, roughly 14 percent of all retail loans (and 20% of all hotel loans) that were originated by commercial real estate lenders and packaged into securities are delinquent. (5)   This is not expected to be a repeat of the residential mortgage meltdown of 10 years ago, but it will hurt many real estate investors and will put financial pressure on some cities.

In particular, it will be interesting to see if the rising number of store closings and commercial defaults increases the success rate of retailers challenging property tax assessments using the “dark store” argument.  Property tax assessments can be calculated several different ways and local governments often use a combination of methods to determine the appropriate valuation of retail stores for tax purposes.  Big retail chains, however, are arguing that the most appropriate method should be based on the market value of comparable stores, including those that are vacant (or “dark”).  This approach can reduce valuations (and hence tax payments) by 30 to 60 percent.  If vacant commercial property becomes more common, will this form of tax challenge become more successful and widespread?  It is too soon to tell but it certainly seems possible, and that could have a substantial impact on local property tax receipts.

Adapting to a New Retail Future

Fortunately, people (and the retail stores they run) are amazingly adaptable.  Retail entrepreneurs and companies have already implemented changes in response to the rise in online shopping and the financial aftershocks of COVID-19.  These adaptations vary widely mainly because any given strategy will work for some retailers but not for all.  To make sense of these various ways of adapting -- particularly to the challenges of online retailers -- I have grouped retail transactions into three different types that I think help explain which stores have the best chance of survival and which adaptations are likely to be most effective.  Retail stores, of course, are likely to accommodate all three types of transactions, but most will focus on one type of shopper:

  1. I know exactly what I want and my primary concern is price and convenience;

  2. I know generally what I want but I need help in finalizing my decision; and 

  3. I didn’t really need anything but I’m purchasing for social or emotional reasons.

I know what I want.  Many of the things we buy are basically staples of our day-to-day life and we pretty much know exactly what we want.  For these items, the key considerations tend to be 1. how much effort does it take to get it, 2. how cheaply can I get it, and 3. how quickly can I get it.  These transactions are highly susceptible to disruption by online shopping platforms because ordering something from my phone and having it delivered to my door is about as easy as shopping is likely to get.  The stores that focus on transactions of this type better have a compelling online presence and fulfilment process or they won’t be around much longer.

Many companies are implementing a strategy known as “bricks and clicks” which combines local stores with a strong online platform.  This allows them to cater to shoppers who prefer online shopping as well as those who prefer traditional in-person shopping.  It also allows people to order online and pick up at a local store to avoid the time and expense of shipping, and it allows retailers to ship their goods from a local store rather than a regional warehouse.  Witness for example, the tremendous rise in curb-side pickup during the pandemic.  WalMart and Target are both good examples, but numerous smaller stores are finding success with the bricks and clicks approach as well.  The primary challenge for small businesses, of course, is being able to spend enough on website design and back-end fulfillment to be able to compete with the big competitors such as Amazon and WalMart.  Having an online presence won’t be sufficient if the interface is confusing, the check-out process is time consuming, or the delivery options are expensive.  You can bet that the large online retailers are spending millions of dollars and mining every byte of data about their customers to make the process as intuitive and simple as possible.

Kohl’s has taken the unusual step of reaching an agreement with Amazon to accept their returns.  If you purchased an item directly from Amazon, you will generally have the option to return it to your local Kohl’s store rather than packing it up and shipping it back.  Kohl’s will not only process your refund, they often give you a discount code for a purchase in their store.  Early data suggests that Kohl’s stores are seeing an increase in foot traffic of as much as 25 percent.  It will be interesting to see if this “make a deal with the devil” strategy works over the long run for a retailer that has been struggling as of late.  Amazon, on the other hand, is able to address a major complaint of online shoppers -- returning merchandise is a hassle that limits how much some people are willing to buy online.  This agreement is their way of adding “bricks” to their business model.

I need help.  The second type of transaction is one in which you know generally what you want but you would like some assistance in making the final decision.  Perhaps you want to compare several competing options, or maybe you have questions about the product’s performance or construction, or you might simply want an expert’s opinion before you make the purchase.  Stores that focus on this type of shopper are certainly not immune to being disrupted by online shopping sites, but they have at least some advantages.  Most of us have learned the value of a really good salesperson -- someone who listens to what we want and then can cut through the clutter of competing products to show us the best options and provide meaningful insights into what meets our needs.  While online platforms have made great strides in offering “expert” advice to try to replicate a knowledgeable salesperson, they still have a ways to go.

Take running shoes as an example.  When I search for “men’s running shoes” on Amazon, I get literally hundreds of possible products for me to evaluate.  And yes, there are ways for me to filter the results to a more manageable number.  But what I really want is a knowledgeable person who can evaluate my needs, my body type and running style, and then match me with two or three options that are both high in quality and appropriate for me.  Plus, in-person shopping gives me the ability to try them on to make sure that they feel good on my feet.  I’m willing to pay extra for a knowledgeable expert to “curate” the enormous world of running shoes to just a few quality brands and then to use their expertise to help me find the best option.  However, if I am happy with my purchase, I will probably order my second pair online to save a little time and money!

Thus, a brick-and-mortar store has an advantage if they can leverage their knowledge to provide excellent customer service.  Unfortunately, many retailers have squandered that advantage by replacing knowledgeable employees with people that are willing to work for minimal wages.  This undoubtedly improves profitability in the short run, but staffing a store with uninspired employees plays into the hands of online retailers in the long run.  You can bet that artificial intelligence experts are working on finding ways to make our interaction with a computer at least as natural and helpful as the average sales clerk.  It may be that the best approach for small retailers will be to increase the wages for their staff in order to attract and retain people who really excel at customer service and are passionate about their products.

This is also a generational issue.  Older shoppers are more likely to prefer personal service while younger generations are more comfortable with online reviews and rating systems.  Systems based on artificial intelligence are already supplementing the online shopping experience, and brick-and-mortar stores are experimenting with that technology as well, but again the younger generations are likely to be more open to having an automated robot helping them pick out their next pair of shoes.

I’m making an impulse purchase.  Humans are social and emotional animals, and that leads us to make shopping choices that have little to do with need.  Shopping can often be a social outing (or so I’ve been told) where the real objective is to have fun with friends and the functional value of the item purchased is secondary.  Or perhaps I’ve had a hard day and I need a little “retail therapy” to lift my spirits.  Whatever the reason, some purchases are more about the experience we are having as we shop and less about the actual thing that we buy.  This type of transaction is most immune to being disrupted by online shopping sites, but there may not be very many stores that can survive primarily on impulse buys.  Still, many brick-and-mortar stores would benefit from improving the experience of shopping to make it more fun and more social.

In recent years, the rising popularity of walkable, mixed use districts that include locally-owned retail shops with drinking and dining options is a testament to the power of “experiential” retailing.  In fact, the decline of retail spending at enclosed malls has coincided with the growth of retail spending in more urban locations that better fit the preferences of younger generations.  And yes, these areas have been hard hit during the pandemic because they encourage the public mingling that is scary for those concerned about viral spread, but I am confident they will bounce back fairly quickly after the pandemic has passed.  There is a pent-up demand to socialize with friends that I think will explode once people feel safe being out in public.  The restaurants, bars and boutique shops that are able to survive may well see record sales as people rush to partake of the outings they have avoided for so long.

In the longer term, retail businesses that offer creative and authentic goods and services have a chance to build a profitable niche that online retailers will have difficulty replicating.  Shops that specialize in expertly curated merchandise, hand-made or artisanal products, or goods with an artistic flair are likely to prosper provided they emphasize the experience of shopping over efficiency and volume.

The Special Case of Restaurants

According to a September press release by the National Restaurant Association, nearly 100,000 restaurants have closed either permanently or long-term since the beginning of the pandemic.  Nearly 3 million employees are still out of work and the industry is on track to lose $240 billion in sales by the end of the year. (6)  And those restaurants that remain open are typically surviving on revenue that is 30 to 40 percent lower than the previous year.

Pre-COVID, the restaurant industry had been a bright spot for shopping center owners, with new openings often compensating for the closures of retailers focused on traditional goods and services.  The pandemic brought that trend to a quick end and it remains to be seen how quickly customers will return to eating out once virus concerns start to wane.  Without strong restaurants, many shopping centers and shopping districts would lose a great deal of their vitality and customer traffic, putting landlords in an even more precarious position than they were when they were only dealing with concerns about online retailing.


So what will next year bring?  Even assuming that vaccines move forward relatively quickly, it will still be months before social distancing and capacity limits are eased to any significant degree.  Many stores and restaurants are hanging on by a thread hoping that strong holiday sales and a rapid distribution of vaccines will keep them in business.  Unfortunately, I believe holiday shopping is likely to decline compared with 2019 and likely to take a turn toward value and practicality rather than luxury and pleasure.

Consequently, I think the pace of store closures will continue at a high level for much of 2021 which means that both commercial property owners and cities will suffer.  Look for Part 2 of this series to address who is likely to suffer the most and what can be done to recover as our society moves forward.

Thoughts?  As always, share your thoughts and ideas by leaving a comment below or sending me an email at  Want to be notified whenever I add a new posting?  Send me an email with your name and email address.


  1.  “US Ecommerce Growth Jumps to More than 30 Percent”; eMarketer; October 2020;

  1.  “The Unmalling of America”; Gregory Scruggs; Lincoln Institute of Land Policy; December 2019;

  1.  “More than 14,500 Stores are Closing in 2020 So Far - A Number that Will Surely Rise”; Walter Loeb; Forbes; July 2020;

  1. “As Covid-19 Shuts Malls and Hotels,Their Owners Fall Behind on Loans, Setting the Stage for a Changed Landscape”; Michael Braga; USAToday; November 2020;

  1.  “Virus will alter Malls and Offices”; Telis Demos; Wall Street Journal, November 27, 2020.

  2. “100,000 Restaurants Closed Six Months into Pandemic”; National Restaurant Association; September 2020;

Friday, October 30, 2020

Post #11: Adventures in Micromobility - Part 1

The American love affair with the automobile is starting to wane.  Not that the car is going to vanish anytime soon, but other transportation options which were either of limited popularity or which didn’t even exist 10 years ago are now commonplace.  Consider, for example, a class of transportation known as “micromobility” which consists of small vehicles focused on individual users taking relatively short trips.

The most familiar example is bicycling which has been around for over 100 years but which is enjoying a significant boost in popularity and in total miles traveled.  What is new with bicycling is the introduction in many cities of shared bike systems which allow users to easily rent a bike for a short trip, thus doing away with the cost of bike ownership and the hassles of storing and protecting the bike at the end of each trip.  Electrically assisted bikes have also proliferated in the last 10 years which has both extended the range of a reasonable bike trip and reduced the effort required.

The micromobility category also includes electric scooters which range from powered and ruggedized versions of kick scooters (generally referred to as “e-scooters), to electric mo-peds, to “Vespa-like” electric scooters, to full-fledged electric motorcycles capable of highway speeds.  All of these options are generally viewed as being more economical, more environmentally friendly, and more fun than a trip in an automobile.

The Scale of Growth

Unfortunately, there is no comprehensive source of trip data that can account for all the various forms of micromobility trips.  The best data comes from shared systems where the user has to explicitly rent the bike or scooter for each trip.  While this excludes privately owned bikes and scooters, it at least gives a sense of the growth in the number of trips taken and their general popularity.

In their report on 2019 travel using shared micromobility systems, the National Association of City Transportation Officials (NACTO) estimated that there were 136 million trips in 2019 -- up 60 percent from 2018 (1).  To put the rate of growth in perspective, the number of trips in 2019 exceeded the sum of all shared micromobility trips from 2010 through 2017.  This is partly due to the explosive growth in the number of cities with shared bike systems, but it is also due to the advent of shared systems for e-scooters which have only been on the market for the past 3 years.  In 2019, 50 million trips were taken on shared bike systems (up from 35 million in 2017) and 86 million trips were taken on electric scooter systems (up from virtually zero in 2017).  

I do not anticipate that this rate of growth will continue into the future.  Already, there has been some consolidation in the shared e-scooter market and some companies have withdrawn from certain markets to focus on others.  I do, however, expect the number of micromobility trips to continue to grow (just not as rapidly as the past couple of years) and I do expect continued innovation in the number and design of micromobility vehicles.

It is also important to point out that despite the impressive growth, the percentage of all trips taken by micromobility options is a very small number.  However, there are at least two reasons why micromobility needs to be taken seriously as a mode of urban transportation:

  1.  Micromobility travel can be a substantial benefit to people who are unable to travel by car -- expanding their geographic range for living, working, education and shopping; and 

  2. Even relatively small percentage reductions in trip volumes by car (or perhaps reductions in the growth of trips by car) can result in significant reductions in traffic congestion and the need for roadway expansions.

A Focus on Scooters

In this post, I’m going to focus on stand-up e-scooters -- the type that can be seen parked on street corners in most major cities and which are increasingly for sale online and in major retail outlets.  Throughout the coming year, I hope to touch on other forms of micromobility in order to gain a better understanding of the advantages and limitations of this growing form of transportation.

In order to conduct thorough and exhaustive research (wink, wink), I recently purchased a Bird Air scooter for my personal use.  The model I bought is in the middle of the pack as far as scooters go -- substantial enough for a serious commuter but lacking high-end features such as a full suspension, disc brakes or dual motors.  It is roughly comparable to the scooters used by Bird, Lime, Spin and others for their shared e-scooter systems except for three notable differences:  (1) my scooter has a stem that folds down and clips to the rear fender so that it can be easily picked up and carried; (2) the battery on my scooter is smaller to reduce weight; and (3) my scooter has no need for the GPS tracking and rental authorization systems that the shared scooters need for their commercial operations.

In addition to my own personal scooter, I have also used a shared e-scooter system by Lime in downtown Dallas when I was attending a convention in 2019.  E-scooter systems are now operating in over 100 cities in the US and over 50 in Europe.  Most of these cities now have regulations in place to address some of the problems that cropped up when scooter systems first appeared.  And while problems still exist to some degree, in most places scooters have become an accepted part of the transportation landscape and the behavior of scooter users and companies seems to have improved.

The Advantages

The micromobility sector in general, and the e-scooter segment in particular, are aimed at short trips.  Nationally, about a third of all trips are less than 2 miles in length which means there is a large pool of trips which could potentially shift to a micromobility product.  In a suburban setting, using a car for a short trip is reasonably convenient but in a more urban setting where parking and traffic congestion are more of an issue, a short trip by car can seem like more hassle than it is worth.  Enter the e-scooter and other micromobility solutions.  My experience has convinced me that e-scooters can be a great option -- with some limitations -- for trips that are a few blocks to two or three miles in length.

In general, e-scooters travel about the same speed as a bicycle, 10 to 15 miles per hour.  This is  roughly three to four times faster than typical walking speed.  Thus, the first two advantages of an e-scooter are that it (1) is much faster than walking and (2) requires none of the effort of either walking or biking.  Riding a scooter simply entails pushing off with one foot to get the scooter rolling and then pressing down on the throttle, and off it glides like a modern day magic carpet.  It takes no more skill or balance than riding a bike and it is far more accommodating of people who are dressed up for work.

Planners generally assume that the average person would be willing to walk roughly half a mile if sufficiently motivated.  Residents of highly urbanized areas are probably used to walking further and suburban residents often head back to their cars if they have to walk more than a block.  But an e-scooter makes trips of a mile or two seem like nothing.  In fact, this brings up advantage number three:  I found that riding an e-scooter was an absolute blast.  I’m sure it gets old after a while, but I’m still in the phase where I’m looking for reasons to take it for a spin.

Advantage number four is that e-scooters pair well with transit for longer trips.  If your commute to work, for example, involves a transit system that is an inconvenient distance from your residence and/or your place of work, an e-scooter is an excellent solution to that proverbial “first mile/last mile” problem.  Using a shared scooter system is probably the most obvious option provided you live and work in areas where scooters are readily available.  Simply locate the nearest scooter on your phone app, ride to the transit stop, park it on the street corner and board your bus, train or subway.  

In areas not well served by shared scooter systems, a personal scooter like mine works almost as well.  Simply ride to the transit stop, fold the scooter to its collapsed position and carry it on board.  A 30 pound scooter that is roughly a foot wide and a yard long is slightly awkward to carry with you but I have done it on our local bus system without any significant problems.  At the work end of the trip, simply unfold the scooter and ride to your place of employment.  Ideally, you would be able to fold it up again and take it inside to your office or workstation.

The fifth and final advantage is that e-scooter trips do, in fact, replace trips that would have otherwise utilized an automobile.  Studies in Portland (2) and Santa Monica (3) estimate that roughly a third to perhaps as many as half of scooter trips would have otherwise involved a car (either a personal vehicle or a ride-share vehicle like Uber or Lyft).  This can be a significant benefit in congested areas.  Another third of scooter trips replaced what would have otherwise been walking trips which raises an interesting issue.  While riding an e-scooter is more environmentally friendly than using a car, it is less environmentally friendly than walking.  Thus, it is not clear that scooters are as green as their proponents like to claim, particularly for shared scooter systems that require employees in trucks to pick up, re-charge and re-deploy the scooters each night. (4)

The Disadvantages

Although useful, scooters are far from perfect.  Problem number one, in my opinion, is safety.  Santa Monica reported 122 collisions in an 18-month period of time, ten percent of which resulted in serious injuries.  Undoubtedly, there were numerous other incidents that were never reported.  Nearly half of the reported collisions were with vehicles.  Another seven percent involved collisions with pedestrians and 18 percent involved collisions with fixed objects.  The remainder simply lost their balance and fell off.  Collisions are an even greater risk at night when a scooter’s minimal lighting makes the rider almost invisible to cars and makes obstacles harder to see.

I don’t want to overstate the problem because the number of accidents is quite small compared with the number of trips taken.  But since scooter riders are relatively unprotected, when accidents occur the results can be serious.  My experience has been that with a little common sense, riding an e-scooter can be quite safe but it does require constant awareness of both roadway hazards (e.g. potholes) and vehicular traffic.  The safest place for a scooter rider to be is in a bike lane, but particularly in the midwest, those are not nearly as prevalent as they ought to be.

Problem number two is weather.  Although many scooters are water resistant, I personally would not ride in the rain and I certainly would avoid riding in icy or snowy conditions.  Cold weather might deter some riders although I don’t think it would be any worse than walking.  The bottom line, however, is that in the midwest there are going to be a significant number of days in which a scooter is not a good transportation option.  This means, for example, that scooter commuters need to have a “plan B” ready for days when the weather is not cooperative.  In fact, many scooter sharing companies remove scooters from the streets when they deem the weather to be too adverse for safe riding.

Problem number three is the often haphazard parking of e-scooters in ways which create obstacles for pedestrians or people with disabilities.  This is a problem common with any “dockless” system that allows riders to end their rides pretty much anywhere, but scooters users seem to be worse at parking appropriately than dockless bike users.  Although all scooter systems give their users guidance on how to properly park the scooter at the end of the trip, that advice is disregarded too often.  Some cities have created scooter “drop zones” in areas that are popular destinations to avoid clogging sidewalks, but that is only a partial solution.

The fourth problem is also essentially a rider behavior problem.  Too many scooters are ridden in a way that either directly threatens pedestrians or at least makes them uncomfortable.  Ideally, e-scooters should never be ridden on a sidewalk but the world is not always an ideal place.  When I used a scooter sharing system in downtown Dallas, there were times when traffic congestion was so heavy that I felt extremely unsafe riding in the street.  Nonexistent bike lanes and narrow streets meant that I had to either take an entire lane of traffic -- in which case I became a traffic obstruction -- or I had to ride on the sidewalk and do my best to weave around pedestrians as safely as possible.

The final problem is that scooters have limited carrying capacity.  There is room for one person, and that person can have a backpack or over-the-shoulder handbag but that is about it.  The handlebar stem could probably support a plastic bag containing a few small items but this is not the vehicle you want for picking up the kids from daycare or shopping at Costco.  Of course, scooters were never intended for those kinds of trips, but it is a definite limitation that you have to keep in mind.

Impact on Urban Design

It is always dangerous to extrapolate a short-term trend into a longer term projection.  There are certainly plausible scenarios where e-scooter usage either continues its explosive growth, plateaus (or grows only modestly), or turns out to be a short-lived fad and fades from the urban scene.  If I had to bet, I’d probably pick the plateau/slow growth projection.  I think the most lucrative markets have already been tapped for shared scooter systems and I think only a handful of companies will make enough profit to survive over the long haul.  The companies that figure out the most efficient path to profitability will continue to expand incrementally to places that fit their operational model but there are many communities that won’t have the right combination of factors to make scooter sharing feasible. There is a substantial amount of innovation taking place with scooters made for private ownership, however, and that leads me to believe that growth will continue but at a modest pace as niche players fill in the gaps around the larger players.

Consequently, I think cities need to take this form of travel seriously and include e-scooters in their future planning and design efforts.  The approach I recommend is to view scooters as an alternate form of bicycle travel.  Cities should continue their efforts to create more bike lanes, bike routes and shared trails.  These efforts will support the continued growth of both bike trips and scooter trips.  Improving bike/scooter infrastructure is most crucial in areas of moderate to high density where traffic congestion is generally greatest.  Unfortunately, most cities focus exclusively on increasing vehicular capacity in congested areas when in many situations increasing micromobility capacity and pedestrian capacity would be more effective.  Obviously, there are no blanket solutions that work in every situation, but cities should not assume that vehicular capacity trumps everything else.

Secondly, cities should strive to maintain a grid of streets and avoid the suburban tendency toward endless cul-de-sacs that force all traffic onto major streets.  Scooters and other micromobility options work well on side streets where both speed limits and vehicular traffic volumes are lower as long as the side streets can get you where you want to go.

Finally, cities should look for underutilized areas in or adjacent to the public right-of-way for scooter drop zones and bike-share docking stations.  This might even require sacrificing an occasional parking space or two, but I think the potential of micromobility is substantial enough to make this bet worthwhile.  As I have mentioned in previous posts, street design needs to accommodate the full range of transportation options and not be focused exclusively on automotive traffic.

Thoughts?  As always, share your thoughts and ideas by leaving a comment below or sending me an email at  Want to be notified whenever I add a new posting?  Send me an email with your name and email address.





  1.  Shared Mobility in the U.S.:  2019; National Association of City Transportation Officials; 

  2. PBOT Releases Results of E-Scooter User Survey; Portland Bureau of Transportation; October, 2018;

  3. Shared Mobility Pilot Program Summary Report; City of Santa Monica, California;  November, 2019;

  4. “Are shared e-scooters good for the planet?  Only if they replace car trips”; Jeremiah Johnson; Fast Company; August 2019;,made%20