The Retail Challenge

The US-based architect takes us through the retail industry in the US from an architectural point of view

It was my first day as an architect for a growing restaurant company that was transforming from being a family owned business to a national chain. (This restaurant chain based in Detroit, Michigan grew from one to over 40 all over the US in a span of five years).

At that moment, I didn't realise that for the next 30 years, I would be witnessing many such companies transform and that I would be spending my architectural career amongst the most diverse and talented groups of entrepreneurs, shopping mall owners, contractors and vendors in the USA. There are lot of parallels between the retail industry in India today and what the retail industry was in the 1970s in the US. The 'mom and pop' shops started getting competition from organised retailing and completely changed the landscape of the retail industry. The boundaries of where one can do business expanded from local to regional to nearby states and finally nationally.

   

The traditional department store had to compete with a new brand of discount retailer

 

 

Mall developers started building malls nationally and encouraged successful retailers and restaurants to lease spaces in the malls across the country. Even competition  for good locations within good malls became an issue; organised businesses got prime locations in prime properties by making commitment to talking locations in new  malls built across the USA. It was the beginning of mall culture that was here to stay and spread throughout the world.  

 

In the 80s, the pace of change accelerated. The suburbia malls got competition from urban malls built downtown in major cities. Specialty shopping centres catering to tourists emerged.

The traditional department store had to compete with a new brand of discount retailer. Outlet shopping centres selling surplus clothes from the manufacturers of retail  chains drew large crowds. However, like every other industry in the 80s, the biggest change was brought about by technology. The fax and PCs unleashed an unparallel wave of productivity gain. Organised retailers started gaining a bigger share of the retail and hospitality market because of the level of efficiency. At the same time  a new class of young entrepreneurs turned their ideas into successful ventures and gave established chains a run for their money with their innovative approaches. Specialty retail had arrived.

In 1982, I moved to San Diego, California, and began working with specialty retailers. Nineties saw the real estate market's bubble burst, followed by a deep recession and then the recovery. Technology kept on increasing computing power and took productivity to dizzying heights. The cell phone made its debut and we all know the impact that it had. The CAD software made it possible to do 3-D studies of retail spaces, enabling retailers to spot opportunities for visual merchandising and product  adjacency studies which was not readily apparent from 2-D images. Photo-realistic renderings and animation helped communicate visions of stores from the entrepreneurs  to developers and financers with much more clarity, which made it easier for first-timers to present their concepts to major malls. Technology basically helped  established businesses cut construction costs and time enabling them to launch aggressive expansions of their projects in malls across the USA.

 

What sets them apart is that they have global view of things-360 awareness

   

 

Retailers could also see real-time data on what was being sold real-time which helped streamline the distribution and inventory process. Towards the end of the 90s the biggest change was induced by the Internet mail and e-commerce. The world had become flat and the tiger of globalisation was unleashed!

 

This decade, globalisation has intensified and there is no turning back now. Outsourcing has become a way of life whether or not people like it. The Internet bubble has burst, the real estate industry is in a bubble and in the process of being busted. The retail industry has been severely hit as well. Several retailers are filing bankruptcy because they have failed to pay attention to what their customers are really looking for. They took on too much debt, implemented strict cost-cutting and in the bargain lost good talent who would have helped keep the retailers in the loop of what the new trends are.

The vacancy rate in malls is rising, (A recent article in a daily reported that a prime mall in Mumbai has occupancy of barely 60 percent). The stock markets all over
the world are down. The inflation rates have hit an all-time high.

Even with the chaos in the world economy there are many businesses which are doing well. Several of the specialty and luxury retailers are thriving and everyone seems to be questioning why. The first-time retailer is now able to show a business concept to the big mall developer who would not have given him time one year ago. So even  with the depressing state of the economy somehow the retailers are not losing hope.

During my 30-plus years in the retail industry, I have had the privilege of working with successful retailers.

What sets them apart is that they have global view of things. I am not talking about the international aspect but talking about the peripheral 360 0 awareness. They do  not look at life in a fractional way but see the whole picture.

Rather then focussing and getting frozen in a small snapshot of time looking at their immediate challenge they tend to look at the opportunity the current situation presents. They do not focus only on one part of the business. They pay equal attention to all areas of their operation. Success is composed of multiple elements which can be thought of as links in a chain.

In my forthcoming columns I will be taking you through the retail industry in the US from an architectural point of view. I will be your guide to why some retailers are more successful than others and how we as architects can help our clients in making them successful.

(The writer is the Founder & President, DRV Design, San Diego, USA. He earned his B Arch from Sir J J College of Architecture, Mumbai, and moved to the US in 1974. He can be contacted at serena.vora@gmail.com)