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Americans make the move to cities

April 17, 2014

For decades, Americans have left cities to move to towns with more open spaces. But in recent years, a change has taken place as young adults and even some older ones eschew the suburban life to make their lives in the nation's cities.

According to an analysis of U.S. Census data by William Frey, a senior fellow at the Brookings Institute, the population of major cities grew faster than their suburbs beginning in 2011. Fifty-one cities with populations of one million people or more grew 1.1 between 2010 and 2012, according to Mr. Frey, while their suburbs grew 0.9 percent. Atlanta, Denver and Washington, D.C. were among the fastest growing cities with population growth exceeding their suburbs by about one percent.

A recent piece on the Quartz website attributed some (not all) of the challenges suburban malls face to the migration of consumers to cities. The trend has also affected mall-based retailers that cater to teens and young adults such as Abercrombie & Fitch and Aeropostale, according to the article.

The Quartz piece concludes that while it's premature to predict the death of the suburbs based on recent trends, it is a development that is having an effect on retailers today.

Discussion Questions:

What do you think Americans are looking for when they move back into cities? How should retailers respond?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Do you see the move back to cities as a trend that will grow or just a short-term anomaly?

Comments:

Last night I was watching an episode of House Hunters International. I love that show because nothing highlights cultural differences more than seeing how people live in other countries. But one of the things that always strikes me is European kitchens. Not just how small they are, but particularly how small their refrigerators are.

But I don't think this is a European vs. US thing. I think this more reflects urban vs. suburban lifestyles. Having never lived the urban lifestyle, I can only speak to what I've observed in others, which is, because space is at a premium, retailers should expect that consumers offset it by getting out more. More frequent trips of smaller basket sizes, more trips that are more for leisure and entertainment rather than staying in. A "walking distance" strategy where a store's draw is a couple blocks instead of a couple miles. And maybe even some kind of home delivery strategy, since the concentration of population could support it.

None of these things are new, but if the consumers are new to the experience, loyalty could potentially be won by offering help in adjusting to this new kind of lifestyle.

As for me, I'll take the weekly grocery trip and the wide open spaces any day.

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Nikki Baird, Managing Partner, RSR Research

While it's too easy to stereotype Millennials as "tribal," it's not hard to understand why their desire to live in cities is a reaction to their parents' lifestyles of exurban sprawl, McMansions and so forth. The long-term question for retailers planning their location strategies is whether the "new urbanism" will last, once Millennials start families. And having children seems to be happening at a later age among this group.

A recent New York Times article reflected on the growing numbers of young urbanites who are choosing not to make the traditional "move to the suburbs" even after having two or three children, so perhaps this trend will be long-lasting. It's not surprising to see some of the biggest retailers (Walmart, Target and others) accelerating their urban and small-format strategies to keep pace with this trend.

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Dick Seesel, Principal, Retailing In Focus LLC

I've been banging the "suburbs will be transformed drum" for 25 years.

My prediction? The suburbs will eventually be occupied by lower income workers and the money will move back to the urban cores.

Why?

There are a lot of reasons most of them associated with aging. Empty nest baby boomers often find urban condo easier to maintain then sprawling suburban lots. Also, most cities have better access to medical facilities, especially emergency medical facilities -- a fairly critical factor if you are of heart attack and/or stroke age.

As mobility becomes restricted because of the consequences of age -- loss of night vision, inability to gain a new driver's license, unwillingness to park a car and walk several blocks to a destination, etc. cities again look more attractive than suburbs.

Finally, there are economic factors. Jobs are found in cities more often than in largely residential suburbs.

As to what this means to retailers, again 25 years ago I suggested they grab up urban locations whose value was rapidly eroding as the suburbs grew, even if they sat on them or rented them out for a couple of decades and activated them only when demand was built up.

It was a good idea then and it's being proved out now.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

While Nikki was watching House Hunters I was watching Fargo. Those analysts are always watchin' TV...okay, back on topic....

As Americans run to the cities, retailers need to do the basics - tune the assortments, work with vendors on some ideas around "city style" packaging - smaller sizes, etc. They also need to tune their loss prevention solutions. As more people move into an area, so do the shoplifters - they love the crowds.

So glad this crowd is heading for the cities. Leaves more room for me out in the country/suburbs that they invaded years ago.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

5% - 1900
55% - 2008
70%- 2050

Those are the percentages of the world's population that lived in cities in the past ... and are projected to live in cities in the future.

Why? More jobs. More choice. More innovation. More creativity. More convenience.

If you're retailing in the city, don't get too lazy and think that just because more people are headed your way that things are going to get better for you. Look around and you'll see every retailer getting much better ... and fast. The "new" city consumers will expect constant change, outstanding experiences and will have no loyalty. Ongoing innovation of your concept and how you deliver it will be essential.

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Kevin Graff, President, Graff Retail

Here's one American's story. As an older adult, I can tell you that I moved into the city for conveniences and cost efficiencies. I no longer need to own a car. I can get to my bank, supermarket and drug store in less than one minute on foot. I walk to the movies and take public transportation to the theatre and museums. For all of those I spend less than hour of travel time and there are no tolls or parking garage costs. Whether it's a check up or the need for a specialist, doctors abound. Many of the stores that were in the suburbs only, i.e. Costco, Home Depot, and Trader Joe's have locations in the city. Department stores have been here all along. It's my belief that retailers have been paying attention to the demographics and investing in urban locations when they think the time and population warrant it.

When my children were growing up, I felt that the suburbs were safer. I never cared for the dependence on car pools to get them to the library, to friends, soccer, etc. I thought that was the price to pay for keeping my children in a safe and nurturing environment. I grew up in the Bronx where I could walk or take a bus wherever I wanted to go...at a very young age. However, the times have changed and safety is more challenging and of greater concern justifiably. It would be hard for me to advocate bringing up children in the city, unless there was a solid stream of income and adult supervision to support it.

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Joan Treistman, President, The Treistman Group LLC

Pretty much what Ryan and Joan said is what I am thinking. The cities have services available for the poor, and young condo seeking grads as well. The footprints of the stores have changed, and many baby boomers like everything nearby, without the hassle of walking thru an airplane hanger to buy a gallon of milk. Medical care is growing in cities, and that is going to continue for years to come.

I still like my small town, and I can drive an hour or less to a couple of large cities for entertainment, so it works for me.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

I grew up in Chicago and am prone towards cities; everything about them just makes life easier. Obviously, some have better infrastructure than others, but generally, they are the future of the U.S. Cities are where creative culture and people abound, which will be key going forward. As much as we think we need to keep manufacturing things, the truth is, we're the idea country and always will be. Our Constitution ensures that.

Awesome that young people are figuring that out.

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Lee Peterson, EVP Creative Services, WD Partners

First off, I want to add to Nikki's comments about the smaller refrigerators in many European countries. Europeans tend to eat a lot less processed foods. They are kind of snobby that way and much healthier. That means they pick up fresh foods daily to consume.

Aside from that, here in ATL we have seen a big move back "inside the perimeter," as we call it, mostly due to rising gas prices. ATL is a big one person car city and the traffic is horrendous. Gas prices have wreaked havoc. The thing is, families are making sacrifices to move closer in and into smaller spaces.

What are these folks looking for? Affordable food and activities close to home which are a bit harder to find "inside." But, how long will this trend last? That all depends on mass transit, gas prices and the need for space. The suburbs aren't going away anytime soon. That's my 2 cents!

Lee Kent, Let's meet share and succeed in Retail, YourRetailAuthority

Across the globe, more people live in cities than in rural areas for the first time ever. Cities are growing exponentially, especially in emerging markets. Something like 45 of the top 100 largest cities are in China, for example. Here is the U.S., I believe retail and CPG brands - especially apparel brands - are doing a great job of catering to the urban lifestyle. I'm not certain though that the grocery business has captured the inner city market as much as possible, yet. Small markets are fashionable, however, I think catering to a huge "walk-in" trade has its own special challenges.

I believe some newer tools that are available can help define and capture those consumer insights to better manage the walk-in trade.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Seniors move to cities because they are looking for convenience and more access to cultural events, nightlife, etc. As empty nesters, they may not need a car and they may not want the fresh air and green grass that is important for growing youngsters.

But this "trend" may be somewhat of an anomaly. Let's see how it plays out for a few years. For example, what "city" are we talking about and how do you define the city limits? Yes, I mean the safety issue. Some cities are just not safe for anyone, let alone seniors who would appear, well, vulnerable as they cruise around looking for adventure. Many big cities -- and you know which ones they are -- are in awful shape in terms of rising crime, debt, decline in services, etc.
I certainly don't view them as a paradise for the golden years.

But I could be wrong.

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John Karolefski, Editor in Chief, CPGmatters.com

For the first three years I lived in my house (right in Washington DC) I didn't own a car because I didn't need one. I took the subway to work and walked to movies, restaurants, and shopping. Most of DC's current blazing growth is because of condos being built for Millennials.

If I were a retailer, I'd be concerned about the future of mall shopping in exurbs. There are a bunch of Millennials who don't even have driver's licenses, and there's just not a compelling reason to drive OUT to shop when you can walk IN to shop.

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Cathy Hotka, Principal, Cathy Hotka & Associates

After a few generations, an army of Americans never felt any real salvation in the suburban nature. They realized they loved cities and their dynamics after all ... for the reasons already mentioned. So they moved back into cities.

Smart retailers have realized this trend and have responded. The others have just faded away.

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Gene Hoffman, President/CEO, Corporate Strategies International

Americans are looking for convenience and access to services. Many cities saw rapid development of good condos in convenient locations over the last 2 decades, attractive to boomers and Millennials. Cars are optional, many services are available, with entertainment, health care and great shopping. Quality of life is improved without the long commute. It is easier and faster to get around, and housing in smaller spaces can be more affordable.

Retailers have an opportunity to develop within these new communities, offering assortments and services for new city residents, who have different shopping behaviors - more daily shopping, search for affordable luxury in many categories, new service opportunities, and more.

Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

There are a number of factors at play here which include both the downsizing of the older population and the desire to remain (or move to) an urban setting for some of the younger population. Certainly the challenges facing malls is one outcome, as are the growth of small format stores and vibrant restaurants in urban areas. Hard to know at this point if this is just a cycle in the back and forth dynamics between cities and suburbs or a more permanent shift.

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Brian Numainville, Principal, The Retail Feedback Group

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