Big Boxed: Are Super Retailers a Wise Investment?

Big Box stores have been in the news a lot in the last few days, usually for the wrong reasons. The Phoenix region, for example, is struggling with high vacancy rates because when a big box retailer leaves, it’s really hard to fill that spot again (as is obvious to anyone who stops to think about it). The problem also is exacerbated by changing consumer tastes and other factors:

The big-box vacancies are being driven by overbuilding, the economic downturn and a trend toward smaller stores.

Nationally, Best Buy also made headlines this week by announcing that it’s closing 50 stores after major financial loses. The Atlantic Cities notes that most of the Best Buy stores destined for closure are archetypal big boxes:

Of the stores that are closing, most are located on the edge of a city or suburban center and are surround by other familiar retailers who have, for decades, embraced the development model of building big box stores surrounded by vast parking lots on cheap land.

Furthermore, Mother Jones recently reported that worldwide, Walmart takes up more space than Manhattan, consumes more energy than the state of Vermont, and emits more CO2 than the 50 lowest emitting nations combined.

None of this is good news for big box stores.

And that’s also all on top of the fact that big boxes are clearly visual and aesthetic disruptions to a city. Think about driving into Provo from the University Ave exit on I15; the area is home to Home Depot, Sam’s Club, K Mart, the mall, and a vast sea of blistering asphalt. It also has its fair share of vacancies or underperforming properties. And that’s the first impression Provo is sending to visitors arriving from the south. Ugh.

And yet, there’s a sense that big box stores will somehow save cities. Spanish Fork recently engineered a deal to bring in a Costco. Mayor Curtis — a leader I have an tremendous amount of respect for — included the arrival of a Target on his 2011 “To Do List.”

A successful big box store generates a lot of revenue for a city and can therefore seem like an obvious asset. Some big boxes — Target, for example — also seem impervious to decline, at least for now. So it’s understandable that cities want them.

But the news above suggests that cracks are already forming in the big box business model. Consumer preferences can also be fickle, the economy volatile, and competition fierce. In that climate, big box sales tax revenue can evaporate, while cities gets stuck with massive empty buildings, wasted land, empty parking lots, and an array of environmental and blight-related problems.

As a result, unless Provo wants the entire city to look like south University Ave — or, worse, most of Orem — it should take a long, hard look to decide if the substantial risks associated with courting big boxes are actually worth it. I’m not suggesting that Provo unilaterally reject all big boxes (or that I never shop at them, which I do from time to time). But without a realistic and critical discussion about their pros and cons, as well as how to prevent them from causing blight, it shouldn’t be a surprise if they leave a city worse off than they found it.

A row of big boxes on south University Ave. Note the space where Robert's used to be to the right of Deseret Book. That space is now vacant. The Furniture Cellar (on the left) might also be considered an underperforming space as far as sales tax goes because it's a discount retailer presumably drawn to the area by the lower rent of a less-than-desireable location. Also worth noting is the vacant parking lot. This picture was taken in the middle of the day, when people should have been out shopping. Instead, however, I would have needed an extreme wide angle lens to capture the scope of the site's disuse.



Filed under Development, economics

3 responses to “Big Boxed: Are Super Retailers a Wise Investment?

  1. Pingback: Best April Posts | (pro(vo)cation)

  2. Pingback: Big Box, Big Problem | (pro(vo)cation)

  3. Pingback: What To Do With Abandoned Big Boxes | (pro(vo)cation)

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s