Earlier this evening, having just read that Gap was planning to close approximately 200 stores over the next three years, I heard from my friend Jean that Urban Outfitters had decided not to renew the downtown Ann Arbor space that they’ve held for the past several decades. While I don’t suppose it’s that terribly surprising, given trends in retail, and the fact that Urban Outfitters CEO Richard Hayne said earlier this spring that the company would be opening fewer stores, and closing some of their existing ones, but I have to imagine that this is a wake-up call to those working in Ann Arbor real estate… Here, if you’d like to open a business on State Street, and have over $53,000 a month to spend on rent, is the listing for the 11,650 square foot Urban Outfitters’ space.
While it’s true that I don’t have much love for Urban Outfitters, which has proven time and time again to be a fairly reprehensible company that wouldn’t think twice about stirring up free publicity by selling what appear to be vintage, blood-stained Kent State sweatshirts or tapestries inspired by the clothing gay men were forced to wear in Nazi concentration camps, I’m more than a little concerned about what this means for the future of the downtown community. I know that, as a nation, we’re trending away from brick and mortar retail, but I can’t help but think that our local business ecosystems, and society in general, will suffer when our downtown shops cease to exist… even shitty one’s owned by terrible, right wing assholes like Richard Hayne.
If the name Richard Hayne sounds familiar, it might be because, a few years ago, his name came up here on the blog during an interview I’d posted with Judy Wicks, the founder of the Business Alliance for Living Local Economies (BALLE), who, interestingly enough, was once Hayne’s wife and business partner. Here’s a clip from the interview, where we start talking about how their paths diverged, with Wicks, a successful restauranteur, becoming more interested in the creation of sustainable and equitable local economies, while Hayne grew more and more interested in boosting the bottom line at all costs, without any discernible concern for society in general.
MARK: I’ve read that, prior to the launch of White Dog Cafe, you were a co-founder of the Free People’s Store, which later became Urban Outfitters. I’m curious to know if the trajectory of Urban Outfitters in any way influenced your views on business. Maybe I’m reading too much into it, but, having heard a few things about the culture, ethics and politics of Urban Outfitters, I’m wondering if what you did at White Dog, and later, through BALLE, was in any way in response to that experience.
JUDY: No, it was in no way a response. I started the Free People’s Store in 1970 with my first husband (Richard Hayne), my 5th grade boyfriend. We were 23 at the time and were very aligned politically as anti-war, anti-corporate progressives. The store was a sixties kind of place with progressive books, houseplants, new and used clothing, and hip house wares – a sort of department store for the under 30 crowd. We even campaigned for George McGovern out of the store. I left the marriage and the business in 1972 because I wanted to seek my own path for a number of reasons. As I continued my progressive views and learned to use my business to express those views through the educational programs at the restaurant as well as my business practices, I was unaware that my ex-husband had changed his views until about 10 years ago, and that really had no effect on me whatsoever. We don’t talk politics or business when we do happen to run into each other.
As for Urban Outfitters, as I understand it, their stock is doing relatively well at the moment, given the fact that they exceeded the expectations of analysts this past quarter, but their sales are down considerably from what they were last year. According to their last quarterly report, which just came out two weeks ago, sales at Urban Outfitters are down 7.9%. [The company owns other retail brands as well, like the Anthropologie Group, which are also struggling. Anthropologie sales were done 4% over this same period.] Hayne, of course, has assured his shareholders that the future looks bright, but, given the shift in shopping patterns, especially among younger people, who are spending more on food and drink, and less on material goods, and increasingly opting for online alternatives over brick-and-mortar options, when they do need to purchase things, I’m not so sure.
Here’s with more on this consumer shift away from retail, and toward food, drink and travel, is a clip from a recent edition of The Atlantic.
…There have been nine retail bankruptcies in 2017—as many as all of 2016. J.C. Penney, RadioShack, Macy’s, and Sears have each announced more than 100 store closures. Sports Authority has liquidated, and Payless has filed for bankruptcy. Last week, several apparel companies’ stocks hit new multi-year lows, including Lululemon, Urban Outfitters, and American Eagle, and Ralph Lauren announced that it is closing its flagship Polo store on Fifth Avenue, one of several brands to abandon that iconic thoroughfare.
A deep recession might explain an extinction-level event for large retailers. But GDP has been growing for eight straight years, gas prices are low, unemployment is under 5 percent, and the last 18 months have been quietly excellent years for wage growth, particularly for middle- and lower-income Americans.
So, what the heck is going on? The reality is that overall retail spending continues to grow steadily, if a little meagerly. But several trends—including the rise of e-commerce, the over-supply of malls, and the surprising effects of a restaurant renaissance—have conspired to change the face of American shopping…
What’s up? Travel is booming. Hotel occupancy is booming. Domestic airlines have flown more passengers each year since 2010, and last year U.S. airlines set a record, with 823 million passengers. The rise of restaurants is even more dramatic. Since 2005, sales at “food services and drinking places” have grown twice as fast as all other retail spending. In 2016, for the first time ever, Americans spent more money in restaurants and bars than at grocery stores…
Interestingly, a few years ago, Urban Outfitters announced the acquisition of the Philadelphia restaurant Pizzeria Vetri. From what I’ve been able to glean from my reading this evening, there are now two locations in Philadelphia, with three more scheduled to open shortly. What’s more, Pizzeria Vetri seems to be making inroads with Shake Shack… I don’t know that this, when looked at along with the news about Urban Outfitters stores closing, necessarily means that the company is making a significant shift away from retail, and into food, but it would make sense, given the numbers I shared above. And it really wouldn’t surprise me at all of we saw other retailers looking to diversify in the same way over the coming years.
But, back to the matter at hand, what happens when retail dies in our cities? Can downtowns consisting exclusively of bars and restaurants truly thrive? Or, are there perhaps new retail models that might emerge in our city centers? What do you think?
