Retail apocalypse? Not so fast, says Retail Association of Northern Nevada
March 26, 2019
RENO, Nev. — The bloodletting in the retail sector continues.
National retailers Payless Shoe Source and young adult clothier Charlotte Russe are among the latest casualties of a fickle and ever-changing retail landscape that continues to claim new victims and leave dark spaces throughout Northern Nevada's strip malls and shopping centers.
Notable retailers that have folded and left significant vacancies in Northern Nevada's retail sector include Gymboree, Abercrombie & Fitch, Gap, Sears, Fallas Discount Stores, Toys "R" Us and Babies "R" Us.
Struggling national retailers that have announced plans to shutter hundreds of stores, although not necessarily in Northern Nevada (yet), include Mattress Firm, Victoria's Secret, Foot Locker, Lowe's and The Children's Place. According to Coresight Research of New York City, national retailers have announced more than 4,800 store closures in 2019.
The reasons are many and well-documented. It's certainly not impossible to succeed in brick-and-mortar retail these days — notable retail openings in the region include Sprouts Farmers Market, Tractor Supply and Harbor Freight Tools in Sparks, as well as Urban Air in Reno and a handful of new eateries throughout the region.
However, it's become increasingly difficult for certain retailers to survive as shoppers continue to migrate toward online shopping and the burden of paying monthly rent on flatlining retail locations doesn't play into long-term corporate strategies.
Recommended Stories For You
Innovating with the times is key
Despite these alarming trends, there is no "retail apocalypse," says Bryan Wachter, senior vice president of the Retail Association of Nevada. Rather, he says, retail simply continues to evolve.
"There's this idea that all the store closures and bankruptcies are indicative of a retail apocalypse, but there is no retail apocalypse," Wachter says. "These stores haven't been able to innovate."
Wachter points to Toys "R" Us as the perfect example of a retailer that failed to innovate. In 1948, founder Charles Lazarus opened a small children's furniture store, and a few years later he added toys to his product mix.
The eventual toy megastore put many small mom-and-pop toy retailers out of business over the ensuing decades. But fast-forward to the Information Age, and you have Amazon applying the Toys "R" Us business model to online toy sales. In 2018, the iconic toy retailer folded.
Payless Shoe Source is another example. Sure, the company sold affordable shoes, but online retailer Zappos sold the same shoes at the same prices with an inventory that's vastly larger, Wachter says.
"Payless didn't put a lot of thought into its online presence," he says. "Companies have to adapt and learn. We have retailers that have valuable brands and inventory that just didn't seem to be able to make it past this last evolution.
"Retail reinvents itself over decades and decades, and it will still be here years from now," Wachter adds. "The successful larger retailers are ones that really control omni-channel sourcing. Online pickup and delivery is just and extension of what retailers are really good at, which is logistics."
Despite the success of online marketplaces such as Amazon — the world's most valuable company by market valuation last year — the brick-and-mortar version of retail remains viable.
Amazon recently announced plans to open physical storefronts and freestanding stores, and its purchase of Whole Foods not only gave it new streams of revenue but immensely expanded its physical footprint.
"We are in a time where there is something new almost every day in retail innovation," Wachter says. "The ability to get products from warehouses into consumer's hands is expanding, and we are taking full advantage of that."
"Technology has allowed us to extend the supply chain," he adds. "Technology has provided us with new models that say, 'Why don't you send us your grocery list, and you can either pick it up or we will send it to your house.' The market is full of companies forming delivery services that allow retailers to have more connections and relationships with consumers. It's really extending that supply chain from the cash register to the front door, and we will see a lot more innovations like this coming to retail."
THINKING OUTSIDE THE BOX HELPS, TOO
The key for many small regional small businesses is to create something special that fills a niche or capitalizes on regional market interest. Newcomers Mod Pizza and Blaze Pizza, for instance, scratch a collective itch for tasty pizza consumed in trendy eateries.
For Scott Dunseath, founder of Reno eNVy and the Home Means Nevada Co., retail success meant producing unique products and building a strong regional following. Reno eNVy launched 14 years ago primarily at Northern Nevada special events. Over time the brand has garnered a large following of loyal consumers who appreciate the Nevada-specific brand.
"People identify with their home and their community," Dunseath says. "It was a combination of creating a unique product and finding a market that had not yet been tapped. You need both of those things."
The third leg of the stool, he adds, has been protecting intellectual property and trademarks from copycats over the years. In June 2017, Dunseath changed the name of the company to the Home Means Nevada Co. in part to spur sales to larger swaths of the state.
Last April, he took a big leap of faith and opened a 1,200-square-foot retail location at the South Creek shopping center in South Reno. Reno eNVy still operates from its longtime 1,800-square-foot retail location in downtown Reno, but in May the store will be rebranded as Home Means Nevada Co.
The Reno eNVy brand remains a strong component of the company's new direction. Scheels in Sparks also carries the company's full line of merchandise.
"To go into South Creek and pay the rents we did, we were freaking out to be honest," Dunseath says. "We had to prove ourselves as a brand to stand alone in a retail environment, but it has been great. We overachieved on our expectations."
Retail success often depends upon location. To that end, South Meadows and Damonte Ranch have been red-hot submarkets for new retail construction, says Gary Tremaine, senior retail broker with Dickson Commercial Group.
Tremaine continues to field strong pre-leasing interest for Double R Marketplace, a new 48,000-square-foot development at the corners of Double R Boulevard and Damonte Ranch Parkway that's expected to be completed in the second quarter of 2020.
Size matters nowadays too. As large retailers leave the region, other anchor tenants continue to move in or reposition into smaller spaces. Junior anchors such as Ross, for example, are downsizing their footprints for new stores, Tremaine says.
"We have some junior anchor boxes looking at our market, and that will backfill some of these larger spaces," he says. "They will repurpose into two, three or four 25,000-square-foot retailers. Those are the new numbers sizes for a junior box anymore."
Rob Sabo a Reno-based freelance writer and former reporter for the Northern Nevada Business View.