Sunday, May 7, 2017

The Sky Isn't Falling (Thoughts on Retail Closings in America)

Sears recently closed in Kokomo. So did MC Sports. JC Penney has announced more store closings in recent days. And now the negative chatter about America's retail economy escalates. According to who you've overheard or whose posts you've read, "The sky is falling."

For the record, when stores close, it isn't always the economy's fault.

Take Sears for instance. They've been Sears (or Sears & Roebuck) since 1893! They were the original one-stop shop for everything, including: mail order houses, tombstones, minibikes, live chickens, clothing, tools and about anything you can name that we use in and around a home.

If the economy is guilty of killing Sears then the accomplice is Sears itself. You see, the culture keeps changing; it's a moving target. And business models that don't figure out how to adapt to the economy, I suppose, succumb to it.

Sears' business model of being the place for everything hardly fits into a culture that goes to Lowes/HomeDepot for tools, (insert clothing store of your choice) for clothes, Best Buy for appliances and to a Carnival for shoes.

A while back I noticed old-timers saying, "Craftsman tools ain't what they used to be." And at the same time I noticed Lowes lifetime warranty on their Kobalt Tools. At that point, I knew the jig was up for Sears. When you're no longer the industry standard in a market you owned, you're in trouble.

The economy didn't kill Sears. Sears closed because it failed to remain attractive to the market.

And MC Sports...When they rolled into town, was I the only one who wondered why we needed two 10,000+ sq ft sporting goods retailers in Kokomo? Sometimes the economy is fine, but we cut the pie into too many pieces. Sometimes, two big dogs is one too many.

And you'd better sit down: Malls. Are. Dying.

2006 was the last time an indoor shopping mall was built in America. Do you know why? Culture changes and the economy goes along for the ride.

In the 1960s the culture shifted. People started to move away from the center of towns, toward the periphery and to the suburbs. Downtown businesses across America started slowly closing up. Why?

Because they could drive to this super-cool new mall, have boat-loads of parking and shop at scads of stores all under one roof! No more trying to find street parking downtown and feeding the parking meter. No more getting wet, chilled or sweaty going from store to store. The mall was the answer. And it was cool.

And the mall will have had a 60+ year run in America, which is pretty amazing! But people are tired of the mall, which is normal, because the culture naturally and seemingly autonomously, seeks change. And this change has been slowly happening--it's just starting to become painfully obvious.

Pardon my cheesy metaphor: Change often comes from deep below the surface of the water, slowly ascending, often taking years. But then one day, it breaches the surface and we're all aghast, "My word, where did this come from?" Change comes slowly over time, yet there comes a moment when we actually see it.

Have you been to Clay Terrace? They basically built a "mall" that looks like what? A downtown!

Guess where millennials are seeking to live in record numbers: downtown. They're migrating from the burbs to the center of the city. And cities like Kokomo are trying to lure businesses downtown because that's the latest cultural trend.

"But Morgan, we'll never have enough businesses downtown to satisfy everyone's demands!"

Since you and I are buying so much of everything-we-need online these days, a downtown doesn't need every kind of store to be a great downtown. Because we don't buy everything from brick and mortar stores any more, a downtown needs some cool shops, a great coffee shop, some cool restaurants--it needs cool spaces that people can connect in. And the reason the spaces need to be cool is because the culture has always liked what's cool. And the downtown needs housing, which isn't available at the mall that people are tiring of trekking to.

The sky isn't falling; the culture is changing. And as culture changes, how retail looks and functions will change along with it. Sometimes a closing is a sign of change. It's a sign that there are new paradigms afoot and new ways of doing things. When we look back at these moments, we call this progress. In real time, it can feel more like growing pains.

One last word to my friends who are in the last half of their life: When we become tired of change, we become old. When we want things to stay just the way they are, we become grumpy, because things are always changing. Young people love and welcome change--the same way that we did. As mentors and elders, we best serve younger people when we help navigate change rather than complain about it.

Peace, my friends.

(editor's note: To those who have lost jobs as stores have closed, my heart goes out to you, and I hope you are able to find gainful employment. As I wrote about business and cultural change, I never wanted you to feel slighted or disrespected. The American worker is the backbone of so much that is great in America. All my respect and best wishes to you.)