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Shopping Experienced

As the retail landscape changes, local malls are reinventing themselves, while boutique retailers are predicting a positive future.

The holiday shopping season is ramping up once again with retailers big and small making their final push of the year to get consumers to buy. And buying, they are. In fact, the National Retail Federation expects Americans to spend as much as $720 billion on gifts for themselves, friends and family in November and December of this year.

But while the holiday season may seem rosy for retailers, it’s no secret that online shopping and behemoths such as Amazon have seismically shifted the model of the industry, causing the retail leaders of yore to close stores, cut staff and sometimes close down completely.

Some casualties of the past year include Toys R Us and Sears, which both declared bankruptcy and shut down stores. Additionally, Lowe’s is closing stores and slashing inventory, along with Macy’s and mall staples such as Gymboree, Gap and Ann Taylor.

While many see these events as a portent of death for retail stores, experts say that this isn’t the whole story.

Big Box Stores Find Balance
“I think that the death of retail is greatly exaggerated,” Matthew G. Kenney, a professor of business at Valencia College, says. “For example, if you look at the industry data in the market [and] in the census data, retail is growing at a clip faster than the economy in general.

“Sears’ problems and Toys R Us’ problems go back decades and it really had nothing to do with online competition taking products from them,” he continues. “It really had to do with the fact that the market changed and they didn’t. You know, the market took a right turn and they kept going straight.”

To adapt to the current market, many big box stores are choosing to size down, going from sometimes 100,000-square-foot stores to 20,000 to 25,000 square feet. Target and Macy’s have both begun to open small-format stores in strategic locations across the country, although none in Orlando as of yet.

Besides saving on costs, the small-format store is also an attempt by large retailers to connect with customers in a more personal way.

“One of the things that they are really striving for is creating a sense of community,” Kenney says. “And what’s ironic is that the small businesses have that.”

In many cases, when big box stores initially debuted, they put small retailers out of business. But the last number of years have seen a reversal of the trend as people are seeking intimacy in their customer service interactions along with product quality.

“So it’s kind of coming full circle back to where it was 50 to 60 years ago,” Kenney says. “I think ultimately the person in business who’s going to have the greatest advantage is the person who’s closest to the customer.”

When it comes to competing with Amazon, Carlos Nicholls, manager of a specialty retail store in the Altamonte Mall, says boutique chain retailers are actually at an advantage to big box stores.

“You get a better customer service interaction,” he says. “There is a higher level of awareness in your specialty store.”

Nicholls, who has worked in retail for about 10 years, says the biggest change to how chain stores are doing business is the merging of the online and in-store channels, which used to operate separately.

“Yes, Amazon is the king in this,” he says. “They have retail centers all over the U.S. But if you really think about it, so do we. Each store is technically a distribution center and it can be. So, I think you’ll see much more of that.”

The Middle-Market Mall
John Crossman, CEO for Southeast-based real estate firm Crossman & Company, agrees that shoppers are looking for connectivity, and that this is the case for malls as well.

“What happened with malls is malls became very consistent and very efficient,” he says, “but then they hit a point where they became somewhat soulless and disconnected.”

Retail analysts say today’s failing malls, ones with high vacancy rates and low foot traffic, are the result of a market correction for overbuilding.

“There’s about 1,100 malls in America,” Crossman says, “and I think that in some time that’s going to get crushed down to like 300.”

Replacing the middle-market mall experience for many has been open-air, mixed-use shopping centers such as the Waterford Lakes Town Center. Crossman expects many failing malls to move toward a mixed-use model.

“There are malls that are going to stay malls because they’re fantastic like the Millenia Mall. … It’s a fortress asset that works well the way that it is,” he says. There’s other malls that are not going to be malls in the future but it doesn’t mean they’re going to turn into Detroit wastelands. They’re just going to turn into other dining, retail, mixed-use developments, which is probably what we’re going to see happen with Fashion Square Mall.”

Some malls have already started to implement a mixed-use approach. The owner of the West Oaks Mall, Moonbeam Capital Investments, has been redeveloping the property including renovating vacant anchor spaces to function as offices.

So far, a SunPass customer service center has opened in what used to be a Sears, and Bed Bath & Beyond opened a call center in a former anchor space as well.

The Altamonte Mall has also moved toward leasing to untraditional tenants including adding a dentist office and a mattress store.

“Ten years ago, we would have thought that was crazy,” Crossman says. “But the reality is that it brings in traffic. And it brings in traffic typically when there’s not normal traffic.”

As for the Fashion Square Mall, success has been elusive. Many of the storefronts are sitting empty today and on any given day traffic is next to nothing. People in the community have questioned for years why the property has not been bulldozed since previous developers’ attempts at remodeling the mall have not revived it.

Crossman says the issue is more complex than people might imagine because even if a developer were to attempt to raze the mall, there are a number of obstacles in the way including the fact that many anchor tenants own their spaces and that there is an enormous cost to get such a large building demolished.

“Malls are not for the faint of wallet,” Crossman says. “They are intensely complicated.”

A Walk Along Main Street
In August, local investor Rob Nunziata and his brother bought the historic Church Street Station train depot in Downtown Orlando. The space had been operating as a restaurant and bar but closed earlier this year.

The brothers bought the building in part to help revitalize downtown, which has plenty of bars but scant retail or activities for people to engage in during the day.

“If you look at other cities with vibrant downtowns, you’ll notice a lot of them have some national tenants,” says Nunziata. “And oftentimes what happens is those national tenants will then draw in more local tenants because it becomes sort of a hub.”

With this in mind, the brothers set up to get feedback on what brand people would like to see in the building. So far the website’s online poll has grocery store Trader Joe’s winning, along with a food hall concept like New York’s Chelsea Market.

Nunziata and his brother set up the website because they would like to be a part of bringing Orlando’s downtown back to its former glory.

“Downtown used to be very vibrant,” he says. “Church Street back in the ’80s used to be the second or third largest tourist attraction in the state.”

Retail stores are a big part of what makes a downtown successful as evidenced by other successful main streets in the area such as Winter Garden and Winter Park, both of which have become strongholds for mom-and-pop shops who say community support is what’s keeping them alive.

Liz Allen, a co-owner of a new store on Plant Street called Kitlife, says she and her partners chose to open up their store in Downtown Winter Garden because of the community. “It’s very mom-and-pop friendly here,” she says.

Kitlife started as a strictly online retailer. But, with with the company’s flagship product being a paper planner, Allen and her partners thought it made sense to also have a physical location.

“Typically, people that are paper planners, they’re a little bit more hands-on,” she says. “So, actually having the opportunity to come in and see the product face to face, not just on the computer screen, is a big difference.”

Surviving and Thriving
Meredith Gardner, co-owner of clothing, accessories, gifts and home furnishings store The Grove, says small shops today need hustle, customer service and in-depth knowledge of their community to survive.

Gardner’s Winter Park store started as a brick-and-mortar four years ago. Although, today the store also sells online, in-store sales still drive the business.

“Online is convenient but this is hopefully a great experience,” she says.

Cedar Watson and her twin sister, owners of Paper Goat Post, agree that the shopping experience is why people want to visit shops like theirs.

“You do have to create an experience,” Watson says, “and be unique and kind of think outside of the box a little bit.”

The sisters opened up their stationery, gifts and party supplies store in Ivanhoe in 2015. They do not sell their merchandise online.

“We wanted to … be a resource for all of the things that we loved,” she says. “And we didn’t want to tackle the online marketplace.”

Stacy Coon, owner of a newly opened gift shop in Ivanhoe called Yay, says shopping in a lot of ways is not just about buying what you need, but a pastime for many.

“I actually love retail in terms of the entertainment factor,” she says. “It frightens me a little bit because I feel like retail is struggling in general right now and I would just hate for us as locals not to have interesting and fun shops to go to.”

LeAnne Rollins, business development manager for Writer’s Block Bookstore in Winter Park, says beyond offering customers service they can’t get at bigger stores, small retailers need to be involved in the community to do well.

That’s why Writer’s Block partners with schools and other stores in the area. The store also holds lots of events such as inviting authors to come speak.

Small bookstores have been written off by many as a dying industry due to e-books and Amazon, but Rollins says that narrative is inaccurate.

“Digital reader sales have been flat for the last couple of years,” she says. “There has been a resurgence of independent bookstores in the double digits. It’s happening across the country. People just really enjoy that hometown feel of being able to walk into a bookstore.”

And she’s bullish on the future of independent bookstores.

“We’re not going anywhere,” she says.

This article originally appeared in Orlando Family Magazine’s December 2018 issue.

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