For many decades, the downtown, metropolitan area of a city was considered the central breeding ground for innovation and economic development. Establishing a retail chain within a metropolitan hub was considered the benchmark of success and the most sure-fire means to increase exposure and boost sales. However, a new model, commonly referred to as the “retail innovation district”, has emerged allowing startup companies and progressive retail chains to explore countless opportunities in neighboring areas beyond your classic downtown hub. As Bob Dylan famously wrote, “The times they are a changin’.”
Large scale demographic migrations – the product of millenials entering the workforce in droves and moving to once isolated or less desirable areas of the city – have caused businesses to change their corporate calculus and reassess the value of opening shop in downtown areas. In recent years, there has been an incredible uptick in businesses choosing to move to the amenity-rich surrounding neighborhoods of major cities. Given the fact that these new markets are abounding with residents that have disposable income, many retail chains have taken a leap of faith and moved to these once forgotten urban locales in hopes of squeezing out greater profits. As retail chains blueprint forward looking strategies, they should consider the value that these emerging neighborhoods will provide.
Recognizing that retail follows the market, municipalities should aim to foster increased residential and workforce density within surrounding urban areas to entice retailers to move into these neighborhoods. There should be continuous, open dialogue between local government officials and residents to ensure that the community’s desires and needs are met. In the same breath, however, local governments should impress upon retailers that, once they open up shop, they are a part of the community, and, are therefore, expected to meet the needs of the newly-minted retail innovation district. In this respect, the social impact of retail innovation districts cannot be underscored enough. As new retail entrepreneurs and established retail chains move into these neighborhoods, they can create the emerging geographical community. More importantly, by moving to these communities, retailers can ingratiate themselves to the residents and increase brand loyalty. And, in light of the high turnover rates among retail establishments, in general, maintaining a stable core of loyal denizens will be crucial to a retailer’s long-term success.
Creating an environment and atmosphere in which residents can work, live and play is the primary objective of an innovation district. A retail innovation district should be an “experience destination” that offers a blend of dining, entertainment, and shopping. Look no further than the Seaport District to see the merits of a retail innovation district. This walkable retail area has attracted numerous consumers from beyond the immediate walking radius and invigorated the community beyond all expectations. The rise of retail innovation districts is just beginning and one can only hope that the proliferation of these districts will spur continued economic development and urban revitalization beyond the downtown central business districts.