RETAIL IS DETAIL

RETAIL IS DETAIL

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Image: Freepik.com

I love retail. I can’t help it, I think it’s in my DNA. I also really care about our downtown Miami neighborhood, and can’t help but want the many stores to stay open and succeed. But I ask myself every time I stroll outside my beloved condominium… who shops here?

The main reason my curiosity is peaked lies in the fact that our downtown is a seeming contradiction. At times it is a transient area, desolate and desperately lacking the foot traffic to sustain a business. But at other times it can well resemble that vibrant, busy and bustling community more consistent with our southerly neighbor, Brickell.

To answer my query I went on a mission that involved both observation and research. I wanted to better understand the demographics of Downtown, get to know my neighbors and discover to whom the local businesses might be catering to.

After getting my hands a bit dirty, I was able to ascertain that the population of greater Downtown is 92,235, per a 2018 report from the Miami Downtown Development Authority (DDA). In this interesting mix, Baby boomers, Gen X, Gen Y (Millennials), Gen Z are all accounted for and contributing to the local economy (Figure1). Yet they do so in different ways. When it comes to retail, each cohort possesses singular shopping habits and it follows that retailers need to match their offerings to the needs of our multi-generational residents.

In the current retail economy, a common, ubiquitous theme is one of the supercharged consumer expectations. This means that consumers want it all. They are demanding authenticity, convenience, excitement, intimate fantasies and at times even self-esteem. We can better comprehend the supercharged demands of each generation from the simple habits that they display. We can then compare and contrast inter-generational data and see what types of retail would be the best fit for our neighborhood (Table 1).

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After examining the data, it is interesting to note some obvious generational differences. For instance, millennials, who comprise the majority of downtown residents and the largest consumer segment worldwide, are four times less likely to support traditional brands and stay loyal to them. While baby boomers, currently the wealthiest cohort, demonstrate qualities that are almost the exact opposite.

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According to the same DDA report, Greater Miami downtown residents spend approximately $774 million dollars yearly. Their three main focus categories are restaurants, groceries and apparel with $117.8, $111M and $92M respectively. We can extrapolate from these numbers that downtown residents are both young and have a fair amount of disposable income.

On the other side of this equation, the projected revenues from downtown businesses in 2018 come in at $18.6B. This is a fairly substantial number for this population size. In order to fully realize this number or improve upon it, local businesses should heed some of the generational trends. Put simply, retailers need to be nimble and hit the right psychological triggers of their customers while minding the relative demography of the neighborhood. Their attention should be multifocal and omnipresent. Some areas where improvements might be made include:

· Customer experience that is meaningful and personal

· Value focused marketing

· Online and social media presence including cohesive branding experience across all channels

· Clear and concise customer education methods in store and online

· Frictionless retail experience from discovery to delivery

Retail is detail, is a common phrase used in my industry. Ultimately, success is earned not only by superb product offerings but also by identifying who your customer is and by continuously studying and understanding their needs. Perhaps the next time you stroll in the neighborhood, consider all the subtleties that go into having a successful business. Take the time to see who is catering to you and support them with your hard earned dollars. Building a lasting community requires everyone’s participation.

Downtown Shopping

Until now, downtown Miami hasn’t necessarily been a prime destination for dining or shopping. Flanked by Brickell and Wynwood/the Design District, downtowners have always sought refuge in other, trendier neighborhoods to satisfy their entertainment needs. However, change is afoot.

Welcome to the future home of the Miami Worldcenter, one of the most significant projects to date for the neighborhood and, some say, the city. MWC will breathe life into an area of downtown that for years was desolate and uninviting. It promises to bring foodies and shopaholics alike a new reason to rejoice.

The Miami Worldcenter rendition. Courtesy of Aaron Gordon, Schwartz Media.

The Miami Worldcenter rendition. Courtesy of Aaron Gordon, Schwartz Media.

Inspired by the iconic Lincoln Road, this open-air shopping area and lifestyle center will feature cafes, restaurants, shopping boutiques, and even a public plaza. The retail space alone encompasses a whopping 300,000 sq. feet. Nitin Motwani, one of the managing principals of this project, noted that MWC will serve as the zeitgeist of downtown. It will be the place where friends meet up for a drink before a game, families go for strolls and get a bite to eat, girlfriends spend a day of shopping and residents enjoy the amenities available to them including a pet-friendly dog track. Mr. Motwani is confident that this mixed-use development will deliver not just entertainment, a superlative dining and retail experience, but will also offer a chance for people to feel a sense of belonging and community.

There is little information given on the list of retailers that will be gracing the available space. We are being told that unlike the brand/retail mix available at Brickell City Center and the Design District, MWC will bring in retailers with more mass appeal and a strong customer following. We also learned that 40% of the 300,000 square feet of space available will be dedicated to food and beverage operations. As suitable as this sounds, does it also mean that residents might have to deal with the all-familiar noise nuisance issues that downtowners have been plagued by for years?

Furthermore, the much-awaited arrival of Bloomingdales is, unfortunately, a no-go for now. What will take its place? Who will be the anchor tenants? A Park West neighborhood resident expressed his disappointment at the news and also his concern over the quality/type of retailers to follow. However, with retail developers like Forbes Company and Taubman at the helm, our expectations are high.

As we digest this enormous investment in our community, an obvious question comes to mind. In this fast-changing landscape of brick-and-mortar retail closings and the nearby competition that MWC will face from Brickell City Center and the Miami Design District, is it a fool’s errand to focus on retail? Can the mercurial crowds, full-time residents, tourists and commuting workforce support more retail and entertainment venues?

The answer is complex. Outdoor-oriented lifestyle centers are the way of the future and thriving in today’s market. Open-air shopping integrates natural elements such as greenery, fountains and fresh air, all of which play a vital role in the customers’ moods and shopping patterns. These centers deliver an experience far superior to online shopping and more exciting than what an enclosed mall offers. Moreover, food halls are wildly popular and trending in major cities across the US. They provide an opportunity to interact, stimulate, and experiment in ways beyond that which is offered by more traditional mall dining. Today’s retail ecosystem is no longer about formulaic retailing and more about reinvention and supercharged consumer expectations. If MWC checks all of these boxes success is foreseeable.

The Economy of Fashion

Unconventional Indicators

I used to work at Macy’s in downtown Miami. I worked in the buying department at the corporate offices located on the fifth floor. It was invigorating, inspiring and a true merchant’s paradise. The store drew people for its fashion trends, its ambiance and superb customer service. Fifteen years ago Macy’s downtown was the fashion hub for the area, but the store closed the doors in early 2018 — another big box retail victim. Peeking through the windows, all you can see is leftover fixtures and debris. All that is palpable is a permeating sense of loss.

Flagler Street. Photo by Niels Johansen.

This got me thinking about our neighborhood. What is the status of retail close to the heart of Flagler? While out for a Sunday stroll, I passed by a few successful-appearing storefronts, including Supply & Advise. But the retail business has also claimed some juggernauts. I can think of other landmarks that didn’t make it, the long-time fixture La Epoca, for example. Are these just trends representing the vicissitudes of the business or do these closings speak to something more nefarious at play in the economy of downtown Miami?

As a retail consultant, I tend to think of traditional economic indicators like GDP, P/E ratios and consumer confidence to determine the economic pulse. But how do you apply these indices to a small area like downtown? Another interesting perspective might be to use non-traditional economic metrics. Let’s have some fun with this.

Did you know that fashion trends such as hemline length, lipstick and heel height have played a role in characterizing our economic health? It is worthwhile to drill down on these concepts as they not only illuminate economic cycles, but also tell something important about ourselves.

Hemline Index

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Image by Max Hofstetter

Economist George Taylor first proposed the hemline index theory in the 1920s. He was part of the vanguard in effectively establishing a positive correlation between women’s fashion and the economy. Simply stated, hemlines became shorter when the economy was bustling and longer during an economic downturn. Taylor’s findings suggested that in good economic times women could afford higher ticket items such as silk stockings and wanted to show them off by wearing shorter skirts and dresses. Longer hemlines covered the fact that women weren’t wearing stocking or they couldn’t afford them.

Lipstick Effect

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Image by Annca

The lipstick effect is the idea that in tough economic times the sales of lipstick rise. The justification is that the consumer can no longer afford their big-ticket luxury items such as coats and bags so they shift their purchasing direction to smaller items. This behavior has less of an impact on disposable income while still making the consumer feel like they are indulging in luxury. First proposed by Leonard Lauder, the chairman of Estée Lauder Companies, the lipstick effect came about when Mr. Lauder noticed that post 9/11 sales of lipstick as a category soared. His conclusion was that during an economic downtrend women are more inclined to purchase lipstick as a morale booster. Maybe the ladies were taking a queue from Elizabeth Taylor’s famous quote: Pour yourself a drink, put on some lipstick and pull yourself together.

Heel Height

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Image by GILT

Shoes, shoes, shoes. Every woman wants a bigger collection. The high heel theory states that in a bad economy shoe high heels rise as a way for women to feel more powerful and escape their reality. Based on a Huffington post article from November 2011, at the height of the economic crisis in 2009, the median height of women’s heels peaked at seven inches. For those unfamiliar with the stiletto, the chart below denotes heel height preference by state. Puerto Rico tops the list with a heel height of 2.87”.

Our Changing Human Nature

While these non-traditional economic indices are not perfectly supported by the financial intelligentsia, looking through this lens can be amusing. It is also a whole lot easier than painstakingly interviewing all the retail stores and many of the consumers in our neighborhood. Current fashion trends in NYC, Milan and Paris show enough long dresses, short shorts, midi skirts, long pants, culottes, high heels, kitten heels and flats as to deflate the hemline index and heel height theory at once. Given the power of social media and celebrity endorsements we are keener in believing that retail performance is driven by the style du jour and celebrity endorsements rather than true economic hardship or ebullience.

Ultimately such indicators in this day and age may be of little value. Perhaps they are just a vestige from a simpler way of life, one in which the Internet of things did not disrupt our basic associations with our lived reality. They also might speak to our human nature and the need to exert control, power and influence in a time when it feels like we have none. Local fashion blogger, Rebecca Dreyfuss of Style & Life notes: “Fashion is emotional, it is a way people express themselves, how they feel and who they want to be.”

I also do not believe that we have any reason to be concerned about the economic state of our neighborhood. It is vibrant and growing steadily and sustainably. The struggle of retail in our downtown may be due to the limited size and scope of this newly minted area. I am encouraged by the growth of other sectors that are continuously expanding. Take for example the opening of highbrow restaurants like Novikov, the ability of Ceviche 105 to continually pack the house, and plans for the much-celebrated Waldorf Astoria tower. Yes, there is definitely no recession here.

However, if some of the slick bankers and financial analysts who work in our neighborhood start to don the perfect trifecta of long hemlines, red lips, and skyscraper stilettos don’t say I didn’t warn ya.