Originally published in the Manchester Journal on May 17, 2017
U.S. Department of Labor statistics show that over 2,880 retail stores have been closed so far in 2017, a pace that exceeds that of the 2008 economic recession. In March alone, retailers cut approximately 30,000 jobs across the country.
Though the retail industry is struggling, Labor Department statistics show that GDP continues to grow and unemployment remains under 5 percent, with wages rising steadily.
Nationally, online commerce has remained relatively unaffected by the decline in retail sales. The Associated Press reports that sales for online retailers have increased by almost 12 percent over the last year, and e-commerce has jumped from 2 percent of online spending to almost 20 percent since 2010.
In tandem with the rise of online commerce, more shoppers are beginning to shift their spending to experiential products and services rather than apparel. Over the past decade, however, the food industry has grown twice as quickly as its retail counterpart, with the travel and tourism industries are not far behind.
Decline in retail reflection of national trends
By Cherise Madigan
MANCHESTER — Manchester may be tucked away in the Green Mountains, but it’s become painfully clear that the town’s economy is not as insulated.
In fact, Manchester has reflected national trends almost exactly when it comes to a “retail bubble burst,” resulting in a massive wave of store closures and bankruptcies nationwide.
Locally, this has spurred a discussion among town officials and business leaders regarding the future of Manchester’s identity: retail hub or travel destination?
A declining retail industry
These massive corporate retail closures have directly impacted Manchester in recent years with many stores closing their doors, a trend that is deeply troubling for many community members.
“Unfortunately we have a lot of chains here, and often it’s easier to close a little store in Manchester rather than a bigger store in Albany or wherever else,” said Pauline Moore, Manchester’s economic development officer. “We get hit really early on with a lot of the closings. Just about all of the closings are retail-oriented, and we can’t buck the trend.”
In 2016, Banana Republic and its parent company Gap faced severe financial difficulties which resulted in multiple store closures, with Manchester’s Banana Republic outlet closing earlier this year. This month, Eastern Mountain Sports filed for Chapter 11 bankruptcy and announced that it would be closing 27 of its 51 stores, including all of its Vermont locations. Yankee Candle, Famous Footwear, BCBG Max Azaria, and Coach are among recent store closures in town.
Manchester’s long history as a regional shopping destination has given the town an overabundance of retail space — another way in which the town reflects national retail industry trends.
“I think that we’ve got about 600,000 square feet for commercial use,” said Town Manager John O’Keefe. “If you think about it, an average Walmart is about 100,000 square feet, so that’s a lot of retail for a town of 4,400 people.”
Many of Manchester’s storefronts, once dedicated to retail, remain vacant in the wake of these massive corporate closures.
“It’s reasonable to have a 10 to 15 percent vacancy which is a healthy market, though no vacancy is ideal,” said Paul Carroccio, CEO of TPW Real Estate and president of the Manchester Business Association. “I’m sure that it’s higher than 15 percent, but that’s fine. We’ll find new tenants or repurpose those spaces.”
Retail troubles remain an outlier in an otherwise healthy economy, in Manchester and throughout the country. Why, in the face of economic growth, has retail begun to falter?
“Retail margins are shrinking, and the retailers are starting to really look at fixed costs which include having a physical location, a store front, and all of the things that go with it,” said Carroccio. “It looks like they are finding that they could actually remove those fixed costs and have more variable costs either by participating more in the online world or just having people come to centralized stores.”
The rise of online shopping has degraded the popularity of commercial retail offerings in Manchester, where town officials hope to promote the proliferation of unique local businesses.
“We all shop online,” said Moore. “We need to have stores that offer unique experiences, where you can find things that you can’t order online.”
“The way that we are going to be successful is by not trying to compete with Amazon,” said O’Keefe. “I think that is going to be the key to Manchester’s success, because people come here for a unique Vermont experience, and I think that gives local businesses more of a leg up.”
One major property owner says drawing younger visitors and residents to town is as important as the stores along its streets
“My sense is that the outlet retail industry in Manchester will be under all lot of pressure in coming years, obviously due to Amazon and the online retail industry,” said Peter Keelan of Keelan Properties. “If we could bring more young people into the area, you’d start to get more mom and pop retail stores popping up rather than corporate stores with headquarters outside of Vermont.”
The town, recognizing the desire for these “mom and pop” establishments, is working to make small business ownership a more accessible goal for local residents.
“We actually had a meeting recently with the Small Business Administration which is a US Agency, the Women’s Business Organization out of Burlington, and a couple of other folks about doing a series of seminars about training people how to start their own businesses,” said O’Keefe. “People talk about the need for more mom and pop stores, but that being said the moms and pops need to both be willing to start a business and have the knowledge and skills to do so.”
Increasing the proportion of locally owned businesses is just one aspect of Manchester’s changing identity, however, as town leaders look to solidify Manchester’s status as a major travel destination.
Moving in a new direction
Across Manchester, there seems to be a recognition that travel and recreation, in tandem with retail, is the key to the town’s economic growth.
“We’re becoming more aware of presenting ourselves as a destination where you can do fun things and have experiences,” said Moore. “The interesting trend has been that hotels and restaurants have been substantially up in Manchester.”
A primary focus of town officials, as well as the Manchester Business Association, has been increasing the number of visitors to Manchester to bolster the dining, travel, and tourism industries.
“Shoppers are just not buying the things that they used to buy,” said Carroccio. “Younger generations are more driven toward amenities and services rather than goods, and I think that’s why we see travel and hospitality growing rather than retail.”
Indeed, Manchester is increasingly becoming a destination for tourists, with approximately 300,000 visitors per year according to the Vermont Department of Tourism and Marketing. An additional 100,000 visitors per year come through Manchester for day visits.
Nationally, these more experiential industries remain unaffected by the decline of retail sales. This has been reflected in Manchester by major lodging projects like the new Hampton Inn and the Taconic Hotel opened last year.
“Look at the money that’s been invested in Manchester over the last two or three years,” said Lana Hauben of the Manchester Designer Outlets. “We’re talking about a minimum of $70 million. Why do you think these companies are doing this? They don’t just throw the dice on the table.”
The town hopes to capitalize on this trend by increasing opportunities for outdoor recreation, and attracting various events and festivals to Manchester
“One big one we’re handling is to start hosting more athletic events like tournaments and camps,” said O’Keefe. “We’ve started to get into that and we have a great park, one of the nicest facilities in the state, so we’re definitely leveraging that to bring in more visitors.”
Tourism is highest in the summer months and during leaf-peeping season in October, with about 40,000 visitors per month. The slowest time of the year for tourism in Manchester is April, with only 10,000 visitors. Town officials hope that scheduling tournaments, camps, and other events during these slower periods will result in steadier tourism figures year round.
“Manchester has tremendous infrastructure, the town park is one of the nicest in the state as is the hockey rink, and you’ve got the ski mountains only 20 minutes away,” said Keelan. “When I look at Manchester, I don’t look at trying to replace that retail with more retail, what I would focus on is getting younger people into town.”
The lack of affordable housing in the town core can prove prohibitive for younger residents looking to move to the area, start families, and maybe businesses as well. The town is working to address this through a revised zoning ordinance, in conjunction with the new town plan finalized last week.
“The town needs to take a hard look at where they want to be in five or ten years, and a big issue in Manchester is affordable housing,” said Keelan. “I think Manchester can solve the retail issue long term by getting younger professionals into town, but we need to change the zoning so retailers such as myself can offer more opportunities.”
The Manchester Business Association, formed in the wake of the dissolution of the Manchester and the Mountains Chamber of Commerce a year ago, is strictly looking to boost tourism through carefully crafted marketing efforts.
“We have a pretty good representation of the stakeholders in the community that are dealing with this issue,” said Carroccio. “We all put food on our tables based on the health of the real estate market whether it’s residential, retail, or industrial so it’s paramount to the whole marketing aspect.”
Through a new initiative known as ART Manchester, local property owners like Hauben have joined forces with Manchester Life Magazine (a new affiliate of the well known Stratton Magazine) and the Southern Vermont Arts Center to bring a series of pop-up art installations to fill vacant storefronts during summer months.
“The business community is not just sitting still,” said Hauben.
An opportunity for growth
Manchester may be severely impacted by the national decline of the retail industry, but its advocates insist that the town’s future remains bright.
“Our strengths are not necessarily that we’re a retail center, we’re a lifestyle center,” said Carroccio. “Visitors want to hike, bike, ski, relax, and eat good food — then they shop.”
These priorities provide a glimpse of how the town’s leaders in both business and government envision Manchester’s future. Manchester has a long held its identity as a shopping destination, and while that industry is integral to the town’s economy there is growing recognition that it could be fortified by a more local and experiential focus.
“When people see anything negative, they go into a panic,” said Hauben. “People need to remember that in the business world, these kinds of things happen. And maybe it can lead to something better.”