BrainTrust Query: 7 Years for 7 Reasons – The Decline of the Power Center
by Doug Stephens, President, Retail Prophet
its inception as a commercial real estate concept in the 1980’s, the
long-term viability of the power center has been a topic of running debate. While
they are clearly not great achievements in design, the decline of the
power center will have much less to do with aesthetics and much more
to do with powerful social and economic forces beyond their walls.
power center will begin to decline in seven years for the following seven
The Aging of
the Baby Boomer: The
sheer size of many big box stores will begin to present real physical challenges
to baby boomers. As eyesight begins to wane, reflexes slow and hearing
diminishes, driving becomes less desirable and perhaps impossible. Look
for boomers to shop close to home whenever they can, favoring pedestrian
shopping venues, Main Street type business areas and mixed-use retail development.
The Gen X Deficit: Their
smaller size as a generation makes it virtually impossible for Gen X
to rise to Baby Boomer levels of consumption. Until Generation
Y moves into the driver’s seat, there will likely be a general decline
in consumption of many categories of goods and services.
M-commerce and In-home Service Will Grow: On-line
shopping will steadily increase due to improved technology, pervasiveness
of high speed connections and the added buying power of Gen X and Gen Y
consumers. Improved hand-held browser technology will make mobile
commerce progressively more comfortable, trusted and intuitive, further
reducing reliance on immense bricks and mortar stores.
Consumption Isn’t Cool: "Frugal
chic" has replaced the unbridled spending that fed the growth of power
centers over the last twenty-five years.
Costs Will Hurt Everyone: The
big box business model is predicated on buying vast amounts of product
and shipping it via boat, truck and train across the globe. Rising
fuel costs will strain the efficiency of this supply chain model, if not
cause it to implode.
Generation Y: The
big box buying model is predicated on steady, dependable demand, annual
line-reviews and minimal assortment change, whereas Generation Y will
seek out retailers that respond to new and exciting product trends.
As a generation that has always been plugged into what’s new, they will
not simply accept the "stack it high and watch it fly" mentality of many
stripping of land for the development of these centers will be met with
increasing resistance by municipalities and citizens alike.
about the retailers that currently call the power center home? I
would look to brands like Wal-Mart, Home Depot and Best Buy among others
to start playing with smaller footprint concepts outside the power center
and big box formats. With smaller stores and at least a partial return
to domestic supply, they will work to become more responsive to changing
fashion and styles in an effort to capture a younger consumer base.
the greatest irony of all is that for some big box retailers, the next
20 years will be a matter of learning how to succeed in the very place
they started…on Main St.
Questions: What do you think of the long-term viability of power centers?
If you agree that power centers are headed for a decline, what will replace
them or how can they be reinvented?