Thursday, April 21, 2011

Retailing – soft in the centre

How much do we need shops to prop up the city centre?
Three tenets of smart growth applied to planning for  New Zealand’s cities are that (1) the primacy of the central city should be promoted ; (2) retailing is an important part of this; and (3) it should be focused on large centres and discouraged from “out of centre” locations.  I don’t have a problem with the first proposition, but I struggle with the other two.
This thinking harks back to Alonso’s 1960 model of land values in the monocentric city and their relationship with accessibility.  This still informs and shapes our thinking about land use and the role of the Central Business District in the city.  

But apart from shops catering for tourism, highly specialised destination shops, and the new convenience stores catering for a growing population of inner city residents, retailing no longer depends on centrality.  And the city centre no longer depends on retailing for its vitality.
A rearguard action
In 2007 the Auckland Regional Growth Strategy (1999) was reviewed.  The review (Growing Smarter, Auckland Regional Council) noted that a large proportion of retail growth occurred outside designated “growth centres” (pp. 33, 37).  It concluded that preventing retailing from becoming more dispersed is one of the challenges facing Auckland, because “retailing is a key activity needed to support growth in centres” (p. 48).  Dispersal to large large-format retailing “outside of mixed-use centres” was seen to reduce both  the amenity and attractiveness of the town centres” (p. 54).
The authors argued that the CBD and regional centres should continue to “be predominant in retail and commercial activities", and enunciated a hierarchy with different levels of retailing prescribed at each level (p. 61). Because “strong centres are an important driver of economic growth, so there is a need to continue to focus intensive growth of retail, office and service sector businesses within these areas” (p. 74). 
In an over-cooked assertion of cause and effect , the report even claims that the “recent trend of increasingly large, single use, car-based retail centres encourages consumption and larger homes in fringe areas". This, it intones, "needs to be discouraged” (p. 138).  Its hard to take this seriously.
But the same sort of thinking has been repeated in a number of planning exercises, in Hamilton, Wellington, Christchurch, and Tauranga, for example.  It continues to be supported in planning documents and argued over in planning hearings.  Advocates of preserving  retail hierarchies even cite the British Planning Policy 6 (Office of the Deputy Prime Minister 2005) and its guidelines for the protection of town centres.
An alternative view
Here is why I think this view is outdated and damaging.
(1)    It’s backward looking, conservative, and biased towards entrenched interests:
Protecting the existing (or even some ideal) distribution of retailing in the city centre and major regional centres effectively protects the interests of established property and industry investors against the pressures of the market.  Fair enough for them to seek to protect their own positions (especially if they do so by innovating and investing in ways which reinvigorate their businesses and localities) but that doesn’t make it good planning, nor is defending the status quo necessarily something that public policy should be doing.
(2)    It’s flying in the face of the retail market:
All industries go through product cycles which involve new patterns of investment: why block change in this one? 
For example, big box retailing is an innovation that the market embraced, for good reasons.  It delivers logistical efficiencies .  It streamlines the distribution chain at the point of final demand, with some of the resulting savings passed on to consumers by way of lower prices and increased accessibility.  Large scale “out-of-centre” retailing enables comparison and discretionary spending to take place at one site.  These sorts of efficiencies are not available within most older centres – and would be an inefficient use of the land in them. 
(If the planner’s aim really is to discourage "consumption and larger homes” by preventing changes in the pattern of retail investment and consequently the structure of the sector then that might best be addressed by ensuring that the prices of the relevant goods reflect any externalities that might possibly justify such an objective.) 
Today we are seeing a whole lot of other retail innovations, not least of which is e-tailing.  This is being embraced by progressive established retailers as well as opening the market to new entrants and innovators.  And it looks like the consumers are jumping onto net-based shopping in a big way.  We can expect much more e-tailing in the medium term, further enhancing distribution, freeing up commercial land, and increasing consumer choice.
Here's a more immediate question: what will happen to CD stores?  How will the successful ones respond to the challenge of increasing recourse by consumers to downloading music online?  There will be some innovative responses, I am sure.  But is there anything planners might even contemplate doing to keep them in business?  Such is the absurdity of using land use planning to preserve the status quo.
There are plenty of examples of positive retail innovation related to the emergence of niche stores, specialised food, boutiques, and services, for example.  Entirely new store types have emerged over recent years – Apple stores, specialists in outdoor wear, different forms of recreation, and mobile phone outlets being obvious examples.  Some of these have given a fillip to tired city centres.  Others, such as reinvention of home delivery on the back of web-based buying in the grocery sector are incrasing the resilience of suburbs.

We can rely on retailers to do anything, even if we cannot always anticipate what it will be.
(3)    It’s not the way to revitalise centres:
The successful centres are those that adapt and change, that are open up to new uses, that find new activities to keep people coming.  Casinos, gaming, hospitality, and various forms of recreation and  amusement have been influential in the past decade or so,  The growth of the international education industry has played a big part in cities like Auckland.  Retail is no longer the only driver of centre growth.
When tired, large footprint department stores move out of the CBD (or fold under the pressure of more innovative retail forms) the premises or sites vacated are usually amenable to more intensive uses – entertainment, hospitality, culture and arts, even housing.  In some cases, stores reinvent themselves, with “stores” within stores, stronger branding and an enhanced shopping environment making for more attractive settings.
None of this, though, is delivered by regulations aimed at preventing retailing from investing outside centres or dictating what shops should go where.
(4)    It’s not necessarily sustainable:  
Public transport is traditionally designed around commuting (which accounts for between a quarter to one third of all travel according to the NZ Household Travel Survey).  This continues to be focused on the CBD (even though the CBD only accounts for 12% of Auckland’s employment). 
But this leaves a lot of recreation, social, personal business, education and shopping trips to be done. Hopefully, they will be done quite close to home and combined on occasion into multi-purpose neighbourhood trips.  

If too many shops are too centralised, though, opportunities for transport efficiencies will be reduced.  The result will be increased time spent travelling, reducing the opportunity for combining shopping with other trips, and increasing congestion in and around the main centres.  The limited capacity of public transport to cater for multi-purpose trips, for the carriage demands of shopping, or the irregular hours of trips for social and recreational purposes, mean we cannot rely on it to significantly counter the external costs that result.
Given a strong commitment to suburban living in Auckland for the foreseeable future, decentralised and localised retailing are likely to play an important role in maintaining choices while facilitating more sustainable trip-making.
So let’s get real
Experience suggests that it is going to be very difficult to work out where retailing will go over the next decade or two.  Had we looked forward from 1990 we would have struggled to foresee the significance of big box retailing, the emergence of specialist food shops, the arrival and spread of farmers' markets, or the growth of e-tailing. 
Its time to take our planning finger out of the dyke.  We  cannot stop the flow.  But planning can set standards that reflect community expectations, or counter the adverse environmental impacts of our actions and transactions, and ensure that people have choices for fulfilling their shopping, leisure, and personal service needs as effectively and efficiently as possible. 
Who do we plan for?
The people planners act for should not simply be the current owners of property and businesses in major centres, although the right plans might help them to reinvest and respond effectively to changes in demand, taste, and circumstance in the future. 
Rather, the focus should be on the community at large.  That means seriously considering how to plan for a retail sector which is dynamic, and which we are not very good at predicting.  Preservation is not the way to go because society and its tastes are not static.  Nor is erecting and then aiming to enforce hierarchies defined by grouping functions in ways that bear little resemblance to how we might shop in the future. 
Classifying centres in terms of what uses they should and should not have , what retailing is permitted and what isn’t is just too tall a task, and unlikely to contribute to either a sustainable city or a dynamic city centre.


Mark said...

One issue on this that concerns me is the Planners concentration on retail. Basically because their own life experince is CBD Council office and shopping. And it's an easy/visble area to "control".

As a society we to are far too concentrated on retail, and ignore the "hidden" real economy, and look at a small end use and visible component.

In a lot of centres retail is there to support other businesses as well eg service centres eg banking/Accounting/legal/food etc. A small manufacturing/industrial business in Morningside uses the banking centre in Eden Valley/Dominion road for banks etc.

As you rightly say, the key is to let local centres develop the mix to meet the market needs. Different in every location. Council can support/encourage with Mainstreet type groups. But an area must market itself, and find it's niche.

There is actually a positve to having large box sites outside town centres, as they can dominate a smaller centre and also be a large dead area at certain times of the day or week.

I look at the Eden Valley/Dominion Rd arae as an example that works fine without planners doing anything.

It's anchored around a large Countdown car park, hertiage buildings. It's a major service centre with all the banks/travel agents etc, and has a good 18 hr business cycle - becoming a restaurant/pub area in the evening. It serves a wide area, and also works along side St Lukes and the elcectronic/homeware mix next to St Lukes.

Through individual business location decisions, it has achieved this itself. What it doesn't need is a "mixed use" corridor of retail/apartments down the length of Dominion Rd as the Planners decree should happen. This would stretch out the retail too far, and lose the centre approach that has worked.

Owen McShane said...

The whole planning fiction of protecting retail heirarchies was demolished by the McKinsey Global Institutes study of Employment back in the nineties.
They found that regulated retail markets (such as Paris) saw a loss in retail productivity, lower wages, fewer jobs created and less innovation than occurred in lightly regulated markets such as the US at that time. In France the end result was catastrophic to the fashion industry because the main fashion chains moved to less regulated markets like Singapore and Hong Kong.

Giving a monopoly to inner city retailers simply means the landowners do not have to invest or innovate. Have a look at Takapuna that should be the most exciting retail centre on the North Shore. Its a dump.

Andrew D Atkin said...

Reinforcing your point on the unpredictable future of retail:

One of the first applications for driverless cars (and yes they *are* coming) will be "micro" cars that are about the size of a large rubbish bin. It's an easy application because there are no substantial safety issues with cars are so small (about 5% of the weight/volume of a normal car) and don't take passengers. They will be extremely cheap to run, and would easily platoon so there will be no concerning capacity issues.

As a cheap, instant delivery system integrated with online stores, they would penetrate the retail world probably massively.

No planner can calculate the impact of this. My *guess* is that retail will basically evolve into more of a showcase industry in response to this. The CBD could become proportionally more about entertainment than shopping. Like you have also suggested, I don't see why that should be a problem at all. In fact it could make the CBD more vibrant as people might be more 'casual' than 'busy'. More of a holiday atmosphere, if you like.