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new york
CNN
—
When AMC 24 Hamilton closed in November 2020, many New Jersey locals may have collectively sighed or ignored it as another unexpected casualty of the pandemic economy.
But for nearby businesses, the theater’s absence was a tough pill to swallow.
“(Sales) are down 30 or 40 percent,” said Jim Danay of the Bock Group, which owns UNO Pizzeria & Grill in Hamilton.
Danai said UNO stores have rebounded since AMC 24 Hamilton closed, but sales still lag behind when the theater was open. The restaurant once had a promotion where customers received discounted movie tickets.
The UNO and AMC 24 Hamilton stories speak to broader issues, including the relationship between large and small businesses, the importance of foot traffic for retailers, and what matters most to brick-and-mortar businesses.
The closure of destination businesses, such as movie theaters and sports complexes, can have a serious impact on local small businesses beyond short-term sales.
The mere presence of such a business can provide important exposure for restaurants, specialty stores, and kiosk businesses that may otherwise go unnoticed by many consumers.
“Having this type of tenant will encourage people to visit the center and come into contact with other tenants. This is cheap advertising for small businesses, resulting in increased brand awareness.”Retail said Stephanie Cegielski, vice president of industry group ICSC.
When a major source of transportation closes down, local economies can also suffer.
“Overall demand and activity across the community will decrease and could even shrink,” said John Deskins, director of West Virginia University’s Bureau of Business and Economic Research.
Closures could mean job losses as well as vital tax revenue for local governments. Consumers who prefer shopping centers to shopping online can take their business to a nearby town.
From 2019 to the end of 2021, many retailers closed stores in crowded city centers and moved to the suburbs, according to a study by JPMorgan Chase Research Institute. This economic restructuring has been particularly driven by the rise in remote work during the pandemic, which previously led commuters to spend more money where they live rather than in the city where their office is located.
Location and appearance are important
Brandon Isner, head of retail research for the Americas at CBRE, said foot traffic ultimately comes down to where stores are located, not just which stores are open. .
Demand for retail space in prime locations remains extremely high, with vacancies at record lows, experts say. As big-name retailers compete for space in busy downtown areas, businesses are becoming less reliant on one key retailer.
And even if a large company closes its doors in a sleepy commercial area, the hole is unlikely to be filled. This is because in recent years, strategies for opening new stores have become more important.
“Many of these retailers are very sophisticated in their use of store location data,” Isner said. “It’s not like in the past where you would open 20 stores in a market and just hope it does well. They can use big data to actually find out exactly where to go. That’s great. If it’s a new center, that’s great, but if it doesn’t have good foot traffic yet and you don’t know if you can attract customers from that community, you probably won’t locate there.”
Appearance is important in attracting and retaining big box retailers to spaces like strip malls. Small businesses do better when surrounded by big, popular companies, but a bleak location can be a red flag for larger companies.
“These tenants are not going to want to go into a center that looks tired, because the first thing they think is, “This place isn’t very well maintained,” Isner said. Ta.
One solution to struggling retail centers is major reinvestment, Isner said.
“Someone once said, ‘Paint has one of the highest returns per dollar,’ and it’s true,” he said.
One brick-and-mortar staple product stands out.
For small businesses, locating a store near a grocery store may be most effective. Grocery stores are clearly a mainstay in the changing retail center landscape.
Isner points out that grocery stores remain a reliable source of foot traffic.
He said that even during economic headwinds, people still need to eat, so many retailers are now considering relocating to grocery-centered centers to maximize in-store customers. He said there was.
“Even in a recession, grocery stores will maintain foot traffic as people eat out less at restaurants and buy more groceries,” Isner said. . “There’s a lot of power in being next to the cars that always come into the grocery store.”
Retail companies such as clothing stores, sporting goods stores, and companies that sell personal care products are particularly profitable in grocery-focused retail stores because they typically sell products that do not overlap with customers’ weekly grocery lists. I am.
Grocery stores remain a reliable source of foot traffic, so if a ShopRite or Publix vacates a retail center, it could cause significant damage to the neighborhood.
“If a grocery store closes in a smaller center, all the retailers in that center are going to be in a pretty tough spot,” Isner said.
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