Where Have All of the Storefronts Gone?

Have you noticed the number of empty storefronts around? (For a list of recent store closings, see here.) Business failure unfortunately is part of an economic recession, but it also follows changes in consumer patterns and market demands. Although studies debate the advantages of online versus brick and mortar stores (see herehere and here), consumers are increasingly more comfortable shopping online. Increased security and user-friendly return policies (not to mention all of those free shipping deals) appear to be fostering that trend.

Online or virtual stores also have a very different business model and cost structure (see, e.g., here). A small workforce in one location can service all of a company’s online customers. Compare that model with the brick and mortar model where a company operating in more than one location needs, at a minimum, to own or lease property in each location, pay maintenance and taxes for each facility, retain employees at each facility and comply with the law of each jurisdiction.  (For interesting comparisons, see here, here and here.) Accordingly, brick and mortar stores are relying to some extent on certain intangibles—e.g., consumers wanting to touch and see what they are buying, wanting personal service, etc.—to offset these additional costs.

So is it the economy, the changing market or (as is likely) some combination of factors causing companies like Blockbuster, Borders and Harry and David’s to struggle? (For my prior post related to Borders’ financial challenges, see here.) And if it is the latter, will traditional brick and mortar retail stores make a strong comeback when the economy recovers? I am not so sure. I think we may see more retail bankruptcies end like Circuit City’s case—i.e., Circuit City’s core business continues, as does the use of its name, but only in an online form (and under new ownership; see here). Although I appreciate the efficiencies of this model for both the company and the consumer, I do not think it is necessarily the best trend for us as communities and neighbors. As the commercial says, having a face-to-face conversation with a salesperson about your product questions: “priceless.”

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5 Responses

  1. Anonymous Coward says:

    As the commercial says, having a face-to-face conversation with a salesperson about your product questions: “priceless.”

    It seems like the trouble is going to be that for most products most of the time, this doesn’t actually matter because you already know what you want to buy. If you hear about a new book, you punch it up on your phone and with same day delivery it’s at your house by the time you get home from work.

    Which means the physical retailers lose all of those sales. But in order to maintain a storefront while making only the sales from people who need to talk to a salesperson, you have to charge high prices. And I think the smart phones are really going to kill them, because what is going to start happening is that people will go into a store when they have questions, ask their questions and find the product they want, then pull their phone out of their pocket and realize that the product costs half as much on Amazon.com with same day or overnight delivery. Then they place the order online and walk out of the store without buying anything.

  2. Michelle Harner says:

    I think your comment is right on point. There really is no need to go into stores anymore; it really is just a personal choice or preference. And as you suggest, you can probably gather more intelligence on a product by staying out of the store and investigating it online; or at least get a better deal by asking questions in the store and then buying online. The “priceless” component of the in-store experience that I do not think online retailers can match is the human interaction. I realize that component does not add value to the bottom line, but I do think it adds to our sense of community. But I realize times are changing. Thank you for the comment. Best regards, Michelle.

  3. A.J. Sutter says:

    I think your attitude is way too passive, Michelle. If people want more community, they should support community businesses. Browsing in a store, and especially asking staff questions about merchandise, is simply unethical if you’re going to make all your purchases online. It’s also self-limiting — how could the store afford to pay the staff or get the inventory you’re pawing over if no one buys there? (I’m talking about independent retailers, especially.)

    You’re also not drawing a global enough conclusion from your original premise, viz. empty storefronts. What’s lost isn’t just the human interaction in an in-store transaction. Empty storefronts depress an entire community — their impact goes beyond the loss of that particular store, affecting the mood of people in downtown, real estate values, and the willingness of new businesses to move in. They’re also an invitation to crime, or may attract some undesirable new businesses. It’s been a while since I walked down Fifth Avenue in NYC, but I remember one phase in its history when many of the great and historic retailers were replaced by rug stores and discount electronic shops. Market Street in San Francisco went through a similar seedy phase (though I guess today the Internet makes most porn venues obsolete too). It can take decades for these neighborhoods to recover.

    We also tend to overlook a new type of exclusion. Not everyone can afford a computer, or an internet connection, and not everyone has a credit card. Not everyone can afford a car. If we make these necessities of life because it’s impossible to pay cash at a physical store within walking distance, we’re exacerbating inequality. Again, there is an ethical component to these “personal choice[s]” and “preference[s]” that lie hidden beneath your sparkly economics jargon.

    If you (generally, not just Michelle) claim to care about community, then put your money where your mouth is. If you don’t care, then that’s a sad indicator of the retreat of American society into an electronic cocoon. It also illustrates how technologies that facilitate indulgence of individual preferences can undermine the collective good. Maybe we should be slower in adopting them.

  4. Michelle Harner says:


    Your thoughtful response reminded me of a segment I saw on PBS discussing the renewed sense of community that arose out of the Great Depression (see link below). It also caused me to wonder whether a similar development is possible now, or if the recent recession will cause greater isolation. It is somewhat ironic that in this time of incredible electronic connectivity—when on a global basis we know more about each other than ever—our local social fabric may be unraveling. I completely agree with you regarding the negative economic and social impact of business closings on a community. And I think the success of economic development efforts in any community will largely turn on whether that community is vested in the project. I do not think that the saying “if you build it, they will come” holds true in the current environment. You summarize the challenge nicely in your last paragraph—getting people to disconnect from their gadgets and reconnect with their communities. As always, thanks for the comment.

    Best regards, Michelle.


  5. Shag from Brookline says:

    This reminds me of the mid 1940s when I was in high school in the Boston area. It seemed there were a lot of empty stores. Some landlords became so desperate they started renting to fortune tellers. But they did not realize that the back of the store would become living quarters. This of course had a negative impact on local neighborhoods. When landlords realized that their expenses were greater than the rents they were receiving, eviction steps were taken. There was a joke making the rounds back then: “Did you hear about the wealthy Gypsy who opened a chain of empty stores?”