?? Mark's Favourites: Cities and Retail in the Post-Pandemic World
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Cities have become an increasingly important part of the MAPIC mix, with special sessions dedicated to how to optimise retail and leisure within cities and regions and a number of the world’s gateway cities acting as powerhouse hubs for retailers.
Yet the past few years have not been kind to some of the most important city destinations, first with the pandemic, then the ongoing impact of travel restrictions and finally political interventions.
Though recovering now, thanks largely to domestic and regional tourism, Hong Kong suffered badly from all three.
Paris has been the focal point for disruptive demonstrations over raising the French pension age, while London has in my opinion been negatively impacted by Brexit, tourist visa issues and the ending of tax free shopping relief.
But arguably none of the key gateway cities have been impacted as drastically as San Francisco, California where the argument that inaction is an action could hardly be more clearly displayed.
The city’s downtown retailing community is locked in what some are calling a ‘doom loop’, after offices left empty during the pandemic remained vacant thanks to the popularity of remote working, which has depreciated commercial real estate values and therefore reduced City Hall tax receipts.
That has meant a squeeze on public service budgets, which has triggered more residents and businesses to depart, further shrinking the tax revenues.
More than two dozen retailers have left during and since the pandemic and in May this year department store Nordstrom exited its two San Francisco stores, including its flagship at the Westfield mall, while Australian furniture retailer Coco Republic abruptly announced it would close its store less than a year after it opened.
In making the decision, it cited the safety of its shoppers, along with a significant reduction in foot traffic.
These are just the latest in a string of big name departures including Amazon, CVS, Walgreens, Uniqlo, H&M, Abercrombie & Fitch, Saks Off Fifth Avenue, Gap, Crate and Barrel and Nordstrom Rack, while the city’s largest Whole Foods temporarily shut after rampant theft and a fatal overdose in a store bathroom.
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Around a quarter of stores in Union Square, the city’s premier shopping district, are vacant and retailers have repeatedly listed public safety, theft and homelessness as reasons for their closures.
Retail to office conversions, relaxation of planning permissions and a programme to entice pop-up businesses to fill empty storefronts through grants and assistance have been part of City Hall’s response.
However, landlord Westfield has understandably been less than impressed with the civic response.
In a statement it laid the blame on an inadequate response to crime for the spate of closures, calling out “unsafe conditions” and “lack of enforcement against rampant criminal activity.”
San Francisco has its own problems, which had been coming from before the pandemic, but they illustrate how fragile even strong cities and locations can be without the right planning and if the fundamentals are not looked after.