Could Tech Actually Save Bricks and Mortar Retail?

There’s no question that e-commerce has changed the retail landscape forever. The hollowing out of physical stores started with books and Amazon and has now touched nearly every retail sector. In the latest wave, traditional malls, big box stores, and even grocery stores are feeling the effect.

But a recent trip down a storied Boston shopping street proffers hope that bricks and mortar retail might experience a sort of rebirth. And, ironically tech is playing a part.

Newbury Street in Boston’s tony Back Bay neighborhood has experienced all the familiar phases of retail over the past 30 years. For a long time, Newbury St., which runs for about 1 mile between Boston Public Garden and Kenmore Square was a high-end retail district, lined with boutique shops, galleries, and a few restaurants. That began to change in the 1990s, when the continued escalation in rents and the growth of big box stores resulted in the “mall-ification” of Newbury St. Even though the neighborhood remained delightful for walking,  Newbury St., which is populated by three to four story brownstones and mid-rise commercial buildings, started to look like the outdoor version of a typical American mall. Cue the Gap, Banana Republic, Victoria’s Secret, Urban Outfitters, and the like. A Tower Records store became a Best Buy.

But with the continued rise of Amazon and online shopping, and growing fatigue with the genericization of the retail shopping experience, business at many of these retail outlets started to fade. Vacancies, even in an otherwise healthy economic times, started to rise. And then, about three years ago when things were starting to look downright depressing, Newbury St. started to experience somewhat of a rebirth. Now, it’s still a work-in-progress, and there’s no doubt that retail remains a particular challenge…but the trendlines are cautiously encouraging. Ironically, e-commerce, tech, and big data have influenced or helped make this happen. How?

First, there’s the growth of what I call micro-segments, which are surely enabled by big data and social networking. For clothing, it used to be, there were men’s stores, women’s stores, and children’s stores. Now, these tend to be higher-end stores geared toward much more specific segments. The generic wedding shop is now Firas Yousif Originals Bridal, which makes custom gowns and women’s evening wear. There’s No Rest for Bridget, which has an ever-rotating line of trendy women’s clothing and accessories. Mulberry Rd. is the same idea, but for infant and kids clothing. The Fish & Bone, for pets. Allsaints has 200+ stores worldwide, catering to the ‘chic and edgy’ segment. There’s a block-long ‘athletic cluster’, consisting of Patagonia, Arc’teryx, North Face, and Fjällräven, all surrounded by yoga boutiques, a bike shop, a boxing club, and a Boston Sports Club.

Microsegments also include niches, such as Barbour, the British brand of cotton waxed jackets English country apparel, Akris, which features a Swiss line of womenswear and accessories, and Alps and Meters for luxury alpine sportswear.

Then there’s a group of stores that the increasingly sophisticated supply chain at least partially enables. Ministry of Supply is a men’s clothing shop whose main appeal is affordable custom-made wear. You stop in, are offered a coffee, and then get measured for an item that you actually have to pick up two weeks later…all while buying a sweater or some accessory that sits on their rather sparse shelves.

Third, are the types of stores that e-commerce can’t replace. Goorin Brothers Hat Shop still survives, since hats are probably something you don’t really buy online. Or the more modern Topdrawer, which sells pens, pencils, stationery, and travel type gifts – the whimsical sort of thing you wouldn’t know to even look for on the Internet. Muji is a Japanese retailer that sells a large range of clothing and household knickknacks. There are at least 15 shoe stores on Newbury St., since that’s a type of product that’s harder to buy on-line. And, high-end designer boutiques that have made somewhat of a comeback. Sure, this is a function of an affluent city/neighborhood and a strong economy, but also type of product/experience for which there is less of an online substitute.

Fourth is a group of stores I term ‘Born in Silicon Valley’: AllBirds (the shoe version of Lululemon), and Warby Parker (the Apple store of eyeglasses). You also see where Apple has had an outsized influence on design, such as at the sleekly decorated LIT Boutique, and numerous other stores along Newbury.

Yet another category is stores that started in direct-to-consumer online but are now adding a bricks and mortar presence. The above-named Allbirds is an example. Another example on Newbury St. is Tracksmith, which sells running clothing online for the prep school/Strava crowd but has opened the Trackhouse, which looks like a mix of Augusta’s 19th Hole and the Harvard Club. All that’s missing is the Winkelvi. Related, are stores influenced by online sites. So, the online StitchFix and Rent the Runway beget several high-end consignment shops on Newbury St., such as Castanet Designer Consignment and Revolve.

Finally, and this has nothing to with tech, is what I call ‘trend of the month’. Bagel shops became cupcake shops, which became frozen yogurt shops, and are now…smoke and CBD shops. Which will run through their cycle and yield to…anybody’s guess.

To conclude with a twist of irony, I should mention that one block over, running parallel to Newbury St., is Boylston St. It’s a wider street, home to the Boston Public Library and Trinity Church, but also a much larger population of chain type stores and restaurants than Newbury St. And the largest employer on Boylston St.: Boston-based Wayfair, which at least for household goods has mounted an impressive online challenge to Amazon.

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Mark Lowenstein

Mark Lowenstein is Managing Director of Mobile Ecosystem, an advisory services firm focused on mobile and digital media. He founded and led the Yankee Group's global wireless practices and was also VP, Market Strategy at Verizon Wireless. You can follow him on Twitter at @marklowenstein and sign up for his free Lens on Wireless newsletter here.

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