Retail goods moving out; food, beer moving in - North Atlanta Business Post
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Updated Nov 14 @ 1:05PM
 

Retail goods moving out; food, beer moving in

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I read two contrasting articles last week that told me this about our retail market.

While goods like shoes, clothes and electronics are moving farther away, our food and beer are moving closer to home.

The Wall Street Journal ran an article detailing the record pace at which ‘brick-and-mortar’ stores are closing their doors. Due to competition from online retailers, large retail chains can have no appetite for fat if they want to stay in business.

Those who erred on the side of overbuilding new stores are quickly correcting their mistake.

Closings have been announced for 2,880 retail locations this year including hundreds of locations by national chains such as Payless ShoeSource and RadioShack.

Other stores, such as electronics retailer hhgregg, have actually filed bankruptcy.

In Roswell where I live, Target and Kohl’s recently closed their East Roswell locations.

I’ve been in those stores, and they always looked busy to me. But with the strict competition coming from the online market.

It’s getting harder for executives to justify expenses that come with a store: rent, employees, maintaining a clean and modern-looking store, etc..

The apparel market is a good example of how online marketing is more cost-effective than running a physical store.

Styles in that market change fast. When one style goes out of fashion and another comes in, it’s easy to change your online storefront.

You take some new pictures and post them. And then you can order the clothes that are selling more or less as they are ordered.

Having a chain of physical locations means you have to bet on those clothes being popular up front. You have to buy enough of them to stock all of your stores.

Then you have to ship them there and then have employees constantly make sure they look good in their displays.

The nature of the online market is driving down margins for everyone. In that market, retailers have to build in the shipping, or ask the buyer to pay shipping costs. So in order to be competitive, they have to lower product prices. That market is also more competitive as buyers can easily click on other sites to compare products and costs.

They can’t do that in a physical store. Because of the competitiveness of online stores, retail margins on average have been falling over the last several years, according to the Wall Street Journal article.

All that said, I read in the Atlanta Business Chronicle that while our retail goods are moving farther out, our food and beer are moving closer.

The article was about a new 32-home community in Gwinnett County that will be centered around a working farm.

Before the downturn in 2008, I was a builder and got to work with a friend on a house in the Serenbe neighborhood south of Atlanta. It too was built around a farm with residents having access to the community garden and fresh vegetables. In the small North Fulton town of Mountain Park, they have a community garden.

If you volunteer to plant, you can simply walk to it during the growing season and pick what you need for the night’s dinner.

It seems that every town now hosts a Saturday morning farmers market with locally grown food.

And as for beer, almost every town inside and outside of the perimeter has at least one brewery.

In Roswell, we are about to have four. The craft beer industry has seen double-digit volume growth for nine consecutive years.

The big boys of beer have taken a huge hit and have been buying up craft breweries where they can. Miller-Coors bought three last year, including a majority stake in Athens-based Terrapin.

We are letting the retail market move farther away from us so it can be more cost efficient. But we are paying more to bring food and beverages closer to home.

With all of that in mind, there is soon to be a lot more empty commercial buildings around Atlanta. Maybe we can do like Detroit – demolish them for gardens, or fill them with breweries.

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