A Short History of Suburban Retail

Seth Harry and Associates, Inc., Architects and Retail Planning Consultants

Copyright, February 8, 2004

Beginning in the mid nineteen-fifties, the traditional pattern of regional development, whereby cities grew through accretion in a recognized urban form, gave way to a more diffuse pattern, whereby discreet, non-contiguous parcels were developed in an ad-hoc, disconnected fashion, later to be recognized as sprawl. Initially this model relied almost exclusively on the existing rural networks of roads and highways to facilitate movement between homes and jobs, and to access goods and services. If you could get to it by car, then presumably it could be developed, and a growing market for suburban residential developments soon evolved.

As it grew rapidly in popularity, aided by cheap land and cheap gas, sprawl quickly surpassed municipal boundaries, and regional planning seemed to take on an almost laissez faire attitude in that conventional urban planning appeared to be no longer necessary or applicable, and the assumption was that highway infrastructure could easily be enhanced, when necessary, to deal with growing demand on an as-needed basis.

For the first time in the history of civilization, large numbers of people lived in one place and worked in another, necessitating a daily commute of some distance between, and increasingly, more and more of those people were still relying on essentially the same pre-existing rural road networks to accomplish this task. Although these roads were soon improved in quality and design speeds, and additional lanes were quickly added as demand outpaced capacity, little else was done to anticipate future needs and often, by the time the potential benefits of additional arterial right of ways were considered, the earlier ad-hoc development patterns all but made their subsequent deployment impossible or prohibitively expensive.

The net result of all of this was that an unprecedented number of people were now routinely traveling ever-longer distances, on a daily basis, over a proportionally decreasing number of ever-larger roadways.

The trade in goods and services is as old as civilization itself, and involves virtually every being on the planet, in one form or another. The traditional means of facilitating access to goods and services was to locate retail venues in the areas that represented the highest concentration of potential customers, and historically, that was always in urbanized areas, such as villages, town and cities. In this way, potential consumers were always ensured ready and convenient access to daily needs, and retailers a steady supply of customers in a readily available market.

However, suburbia, with it's diffuse and fragmented development patterns and low densities, made it almost impossible for retailers to achieve its more traditional proximities to a customer base of sufficient scale to sustain a viable retail area, and it quickly became clear that a different model of retail business was called for to meet this new demand, in this new environment. Ironically, the dendritic road pattern that was both a legacy of suburbia's roots, and a symbol of its future problems, provided a ready, if ultimately problematic, solution to the problem.

Where retailers had traditionally always gone to where its customers were -- into the hearts of towns and cities, suburban retailers, for the first time, could position themselves strategically in the suburban landscape and, quite literally, simply wait for their customer to drive by. And as more and more suburbanites did just that, on more infrequently spaced, but ever larger roads, suburban retailer's fortunes, as well as their sizes, grew in direct response and proportion. Suburbia and the automobile created, in effect, a nation of free ranging consumers the likes of which the world had never seen before.

In the early days of suburbanization, the fledgling shopping center industry struggled to define the potential "trade areas" represented by these new transportation and land use patterns. The result was Reilly's Law of Retail Gravitation, first postulated in the late thirties by William J. Reilly of the University of Texas, Austin, and detailed in the Urban Land Institute's Shopping Center Development Handbook. It is as follows:

When two cities compete for retail trade area from the immediate rural (suburban) areas, the breaking point for the attraction of such trade will be more or less in direct proportion to the population of the two cities and in inverse proportion to the square of the distance from the immediate area of each city.

Though formulated in the early days of suburbanization (mostly street car and railroad, but increasingly, car-based) and referencing the still prevailing city-centric model of regional retail, it is still surprisingly relevant today, when adjusted for today's suburban retail environment and market dynamics. In essence, this "Law" states that, in an otherwise generic market context (the rural in the original model, suburbia in today's), and all other things being equal, the largest concentration of retail offerings, either in total or per merchandize category, will always "out pull" or "out draw" a smaller, but otherwise similar concentration of retail or specific store type, by an equally proportionate amount, and by the inverse square of the distance involved.

This is an astounding and often overlooked fact. The ULI handbook summarizes it thusly: "In effect, all this law says is that people will travel to the largest place most easily reached" and in suburbia, theoretically at least, all places are easily reached (especially if you are already in your car and traveling long distances to begin with).

If you are a retailer the connotation is obvious and immediate: Build the biggest box possible to be supported, and you will always "win" in any competitive context. This single realization is the driving force behind the seemingly never-ending escalation in retail format sizes of the last 30 years, and it has been directly aided and abetted by our regional road systems, and our increasing reliance upon a fixed network of widely spaced arterials of ever increasing individual road capacity.

For the first time in the history of retail in this country -- or anywhere else, for that matter, the size of the box was not being dictated by the density or character of the neighborhood immediately surrounding it, but almost exclusively by the size of the road in front of it.

One might ask the simple question - "Okay, so what? Why does size matter?" Well, there are several very important reasons why size matters, and the two most important relate directly to Reilly's law: the impact of over-scaled retail on pre-suburban, or (new) urban retail and the ever-increasing size of suburban retail trade areas.

As the size of the road and the amount of traffic it carries became increasingly important in terms of determining box sizes, retail formats and merchandize categories that had previously been exclusively neighborhood-scaled increased to regional proportions, and regional-scale retail centers and boxes that had previously only been seen in urban downtowns soon sprouted at former rural crossroads, now major interchanges, but still largely populated with residential densities that would have suggested only farmland a short time before (Dadeland Mall, in Miami, Florida, and Tyson's Corner Mall, in Tyson's Corner, Virginia, both hugely successful and nationally known regional shopping centers, got their start this way, and both are still going strong).

Because these new suburban retail formats depended upon size as their primary means of achieving competitive primacy, they located themselves where they could best take advantage of the new suburban developments further out -- locating themselves as far "downstream" on the dendritic network as they dare, to capture the maximum amount of potential traffic those developments would generate, and to also allow them to "borrow" substantial market share from the smaller, earlier generation retail formats located closer in -- without leaving themselves vulnerable to future competitive threats, from further "upstream."

Unfortunately however, big is a relative concept, and "big" is seldom ever "big enough" to ever ensure protection from such future threats. As suburban residential developments continued to grow in size and become increasingly introverted and exclusive, connectivity and permeability at the regional level became even more challenged, necessitating arterial roads of unprecedented size and capacity, further reinforcing and strengthening the market dynamics that contributed to the increased retail box sizes in the first place.

As a result, boxes that seemed huge only a few years earlier, now seemed to be at a severe competitive disadvantage, as the roads in front of them continued to blossom in size -- and retailers and their boxes scrambled to keep pace, before newer competitors responded to the untapped spending potential represented by the increased traffic flow. It soon became routine to see multiple generations of the same store, abandoned in close succession in a never ending quest, like a dog chasing his tail, to maintain market supremacy, with no conceivable end in sight.

This would be traumatic enough in a purely physical, as well as economic, sense (after all, what does one do with an empty shell that its previous occupant has just ensured will be competitively obsolete forever?), but what is even more troubling is the impact of these increasingly larger boxes at the regional level. Remembering from Reilly's law that the "attractive effect" of retail scales diminish at the inverse square of the distance from the shopping area, and the greatly reduced net household densities typical of the outer suburbs, suburban retailers have now become, essentially, destinations stores out of necessity, as size has became a "sink-or-swim" proposition, whereby retailers either dominate their very large suburban trade areas, or cease to exist altogether.

The end result? A simple and pleasant 2 minute drive on local roads for a quart of milk in a traditional neighborhood setting has now becomes a major fifteen or twenty minute arduous chore on a crowded multilane highway (along with everyone else stuck in the same boat), for most suburban residents. In order to minimize the frequency of such a trauma, the big box retailers have obligingly added many other retail categories to their already substantial offerings, to ensure that even though your weekly shopping trip will now resemble a major expedition, at least you will be able to buy things you might never have even dreamed that you needed, at the same time.

And yes, of course, as a result the boxes got even bigger...

In their never ending quest to protect their turf, the already humongous discount department store adds a grocery store and a gas station, the already huge "local" grocery store adds a pharmacy, general merchandise section, a video store, branch bank, donut shop and dry cleaners, and the "local" pharmacy adds seasonal merchandise, auto supplies and hardware, groceries and home electronics. You get the picture.

While it's nice to think about what an unpleasant experience shopping has become, it's still more important to think about what all this means from a regional perspective. As more and more cars, are driving longer and longer distances, on proportionally fewer and fewer roads, simply to satisfy basic daily needs, our vehicular miles-per-trip has skyrocketed. Where a half-mile drive on local roads used to be all that was necessary to do one's weekly shopping, that same trip today might be five to ten miles or more, depending upon your personal tolerance for pain and how much you think you might "save" on such an expedition.

And because everyone is making essentially the same trips on the same roads, our infrastructure needs have risen commensurately. We now use more fuel, generate more green house gases, and pave over more of both our natural environment as well as productive farm land to satisfy the same basic needs that we used to satisfy with a fraction of the same resources and aggravation in a traditional urban context.

A substantial irony is that not only do the big roads attract and sustain the big boxes, the traffic that they generate often necessitates additional "improvements and enhancements" in road capacity that only serves to attract even larger boxes (or encourages the boxes that are already there to increase in size, whenever possible). This self-reinforcing feedback loop tends to concentrate retail development activity in existing suburban locations such that any attempts to mitigate traffic problems or add additional uses and residential densities, or otherwise reduce trade area sizes and travel distances, becomes almost futile, and any attempt to introduce a more balanced, traditional (urban) model of community development almost impossible to achieve.

As stated in the Urban Land Institute's Shopping Center Handbook: "A shopping center cannot generate new business or create new buying power... rather, they attract customers from existing (shopping) districts or capture a portion of new purchasing power from a growing area... "It can cause a redistribution of business outlets and consumer patronage, but it cannot create new consumers" In other words, and in spite of widespread perception to the contrary, no retail boxes, regardless of size, are capable of actually creating spending potential, simply by virtue of their bigness. However, they are very capable of influencing and redistributing the spending patterns of the buying power that does exist within any given community, and with these very large boxes that influence is increasingly being felt at a regional level.

As box sizes and their corresponding trade areas (in markets of similar density and household income, the size of the box generally more or less directly dictates the size of the trade area) become ever larger, the consumer markets that they draw from now routinely transcends municipal and county boundaries, and their corresponding tax districts. Any retail box, or concentration of retail, that is over-scaled relative to the spending capacity of its immediate context, will, of necessity, be required to pull from a larger regional market in order to sustain it.

The large increment road network that most sprawl is built upon helps facilitate these very large concentrations of retail, as described above, often many times in excess size of the local community's ability to sustain it, and this situation can create some extremely challenging regional dynamics. It is not unusual these days to find a small semi-rural town or county with many times the amount of retail square footage it needs to support its citizen's retail needs, usually in the form of large national chain boxes, with the remainder of the demand coming at the expense of other nearby communities and their respective retail business districts.

This sets up an ongoing "retail arms war" of internecine border skirmishes in which each community fights to acquire the biggest boxes in a "winner takes all" fight to the death, that in reality nobody actually wins, except of course, the big box corporations and their shareholders; typically living thousands of miles away from the front lines. Even neighborhoods and communities which would rather not have big boxes, feel obliged to go after them, for self-defense purposes, if for no other reason.

Traditional urbanism, by virtue of its compact form, mix of uses, and a full hierarchy of street types and residential densities, tends to be self-regulating with respect to retail formats and typologies. Neighborhood serving retail that addresses daily needs had traditionally always been within easy reach of actual neighborhoods, and more unique or expensive purchases, made on a less frequent basis and requiring a larger market for support, were typically located downtown, where the highest concentrations of buyers usually resided, and where transit was also often available. In this context, large box retailers were appropriate and welcome, and they made maximum utilization of the existing investment and infrastructure represented by the city.

In a suburban context, where retail sizes are no longer dictated solely by the density and character of a shopping center's immediate context, but more by the volume of the traffic passing in front of it, this traditional relationship has been all but eliminated. True Place-based retail has been replaced by a recent trend of (at best) "place-making," whereby essentially suburban shopping centers are made to look and feel like things that they are not. Therefore it's increasingly important to always remember: from a regional perspective, it's the first part of the shopping journey that matters most, not that last fifty feet, no matter how pleasant that last little bit might be. If ninety-five percent of a retailer's customers drove 5-10 miles on large, multilane arterials, through low-density single use developments, to shop there, it doesn't much matter what it looks like when you get there, it's a suburban shopping center!

This is not to imply that one should not bring the buildings to the frontage line and strive to create a walkable environment, that should be a given regardless of the building type, size or use -- only that in many respects, these are mostly incidental to the larger dynamics underlying most suburban development today.

It is also extremely difficult to resist the temptation to join the fray and to "upsize" retail formats arbitrarily in both existing urban neighborhoods, as well as "new" urban communities in an otherwise suburban context, if only as a defensive reaction to combat perceived competitive challenges -- a sort of "if you can't beat them, you might as well join them" response. But it would be mistake to do so. No retail happens in a competitive vacuum, and at some level, the market context in which that box resides will feel the ripple effect of such an action, and you will only be setting up a similar suburban dynamic to be dealt with somewhere else down the road (no pun intended).

A more appropriate approach would be to adopt a regional model of development that includes a fully integrated, hierarchical model of transportation and land use planning which focuses on the increment of the neighborhood as a basis for structuring long-term growth. Such an approach would balance local access against long distance travel needs through appropriate street typologies, including transit, and an urban structure that encourages appropriately scaled retail formats, ideally and compatibly situated relative to their respective consumer markets.

Retrofitting existing suburban environments is a much tougher challenge, and represents and even greater temptation to give in to the status quo, by over-scaling retail components in anticipation of the competitive threats inherent in that context (a lack of awareness of these issues contributed to the failure of many early New Urban Greenfield commercial developments, leading to much of the frustration felt today). However, again, simply doing so, while maybe appearing to be a reasonable and understandable short-term expediency, only prolongs the day of reckoning when the issue will need to addressed comprehensively, and more importantly, makes hypocrites of New Urbanists.

In fact, the very generic nature of the suburban highway retail environment, which made possible the rapid nationalization of the retail industry, may prove it's own undoing, as every retailer out there is only as good as his last "deal". Today's "economic development showpiece" is often tomorrow's highway slum, and this trend is as troubling for the national retail industry as a whole as it is for the communities who's downtowns have been laid waste by these now obsolete boxes. This realization is certainly behind much of the current effort to make new retail centers appear more "community-based," but this strategy provides little long term protection unless it is true in fact, as well as in words.

However, over-scaling in new urban developments may be appropriate, at least in the short term, if it is done in the context of a long-term strategy for consolidating and rationalizing retail development along more effective regional urban patterns. The SmartCode is one example of an attempt to begin this process, but it is only one of potentially many tools that may be capable of providing a template for such an endeavor. Regardless, it is one that exists today.

In any event, the first order of business should be to "do no harm." And that means: let's not create more problems in the name of solving the ones that already confront us.

2/11/04

...a shopping center, in and of itself, does not CREATE buying power (spending potential). It does not saying anything about encouraging people to exercise what power is already there. There is a common misunderstanding (apparently) among many suburban and small town planning commissioners and politicians that bringing in, say, a big box retail concentration somehow represents "economic development". This is not true.

The only "potential" that is in the community, is already there. However, if you build a bigger box than your community can support all by itself, it can sometimes "borrow" (or steal, depending upon your perspective) spending power from other communities around it. In this way, it can "appear" that a big box has somehow "created" economic development, rather than merely stealing someone else's retail market. Of course, most of that money -- if it goes into a national big box -- actually leaves the community, but the sales taxes generated (the so-called "ratables" that every bedroom community nationwide is fighting for) does stay. So the community that lets in the big box first sort of "wins" (if you don't count all the other costs associated with a big box coming in) but only if you don't mind screwing all your neighbors in the process (in many respects, I think of this scenario as THE most direct contemporary version of the Tragedy of the Commons -- the "Commons" in this case is, in fact, the spending potential of the small towns and suburban communities effected -- no single community can support its services solely upon its retail sales taxes, but if it can "borrow" from the Commons, at least one might...).

As for being "induced" to spend money on things you didn't know that you needed, etc. Yes, access to goods and services, as well as a wide array of attractive merchandise, is a strong inducement to discretionary spending, but for the most part, Americans have rarely needed much help in this department, for generations. We are, IMO, some of the least discerning consumers on the planet (a factor of our relative wealth, I'm sure), we tend to buy what's cheapest or easiest to get to, or what Madison Avenue, in the form of billions of dollars of advertising, tells us to buy. We rarely actually buy the best products or those that represent the highest value.

More importantly, we routinely go deeply into debt (both financially and environmentally) to support our material obsessions. NOT spending enough has never been our problem...

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