What will happen to cities as retail moves online?

Yuri Milner, a Russian Internet investor is predicting that the percentage of retail sales done online will be 20 per cent within a decade, and 50 per cent within two decades. This is up from just 6 percent today. What are some of the potential consequences for urban places of shifting to a society that does half it’s shopping online? Here are some of my thoughts:

We will drive less

If retail shifts online people will need to take fewer shopping trips. This will have a huge impact on how we use roads. In the US, 45 percent of trips are taken for shopping and errands, while only 27 percent are social and recreational, and 15 percent for commuting. The amount we drive is already hitting a plateau, so if we start buying more online expect to see it to start dropping.

Place will matter more

Cities, developers, retailers will need to focus on creating vibrant walkable places. When shopping online becomes easier, expect to see a surge in retail projects that are focused on “place making.” As it gets easier to shop online retailers will have to look for innovative ways to draw people to stores.

Niches will drive brick and mortar retail

Photo Credit: Jason Bragg, Toronto Neighbourhood Walks Project

In areas where developers and retailers are not investing, niche and ethnic retailers will continue to be the main tenants for suburban shopping malls and older main street. Niche Markets where demand won’t or can’t be met by online retailers will still leverage the bricks and mortar buildings drawing on a loyal customer base.

Offices will remake Retail Strips

I also believe that we will see more of what I call the office strip. Streets where the retail is rented mostly by medical offices and other services such as health and education providers, drug stores, massage therapy businesses, lawyer, and real estate offices As the population ages, demand for these services will increase. This is already happening in Toronto where many of the condominiums meet ground floor retail requirements by renting out space as offices and clinics.

The Rise of the Exurban distribution centre

We are also going to see the rise of massive warehouse distribution centres that employ thousands of low paid, often temporary, workers on the outskirts of cities who are going to be sorting and delivering all these products sold online to your door. For a view into what that potentially means I highly recommend reading Mac McClellands article about working in an Ohio warehouse during the Christmas season rush.

These are just some of my best guesses. What do you think the rise of online retailing will mean for cities?


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