Retail snapshot: Co-working, wine tasting, Teslas mark changing environment

Local retailers adapt — or die.

The last Macy's fire sale signs have been taken down from the Meier & Frank building downtown. 

Across the street, WeWork is getting ready to move into its new digs in Pioneer Place, where the co-working space will occupy the third floor that years ago was occupied by housewares retailer Williams Sonoma.

A few blocks west, on Southwest Alder off Broadway, Zelda’s Shoe Bar owner Libby Hartung is marking her second year in her downtown location. She relocated after 21 years in a shop on NW 23rd.

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“I could see four years ago, all the independent small retailers leaving 23rd,” she says. “The street was becoming outdoor mall USA. Why would anyone visiting Portland come to this street?”

Every neighborhood undergoes transformation, Hartung says. “I felt like I had outgrown mine. I didn’t feel there was enough like me. “

Neighborhoods change, and so do retail environments. For years now, analysts have sounded a steady drumbeat: American shoppers are opting against brick-and-mortar stores, instead taking their business to the internet.

Interviews with a few local retailers shows how brick and mortars are adapting. As online shopping and technology penetrate more deeply, food and drink experiences, along with office space, appear to be fueling retail trends.

WeWork will activate the mall by adding office workers to the mix of people who shop the retail outlets, says Pioneer Place senior general manager Robert Buchanan. “The one will feed off the other.”

“Retailers are in the business of people and giving them what they want,” Buchanan says. “Everyone needs to constantly assess, evolve and change where necessary."

About ten blocks from the wildly popular Pine Street Market food hall, a revamp of the Pioneer Place food court is underway. 

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When “The Vault” opens this summer, it will feature a small number of “handpicked, curated” restaurants, Buchanan says. “The food court of the old days is making way for the food hall of the future,” Buchanan says.

He declined to name vendors saying only that they will be local but not part of the recognizable Portland foodie brand category. “We’re bringing something new, something unique.”

Distinguishing a food hall and a food court is not an easy task. The difference appears to be a function of branding and quality of the vendors.

Buchanan said a regional apparel company will move in as an anchor tenant in 2018.

To enhance the shopping experience, Hartung offers her shoe customers wine from local vintners; the shop also hosts social events.

“People are lonely shopping online,” Hartung says. “They want the experience. They want the customer service.”

After struggling for about a year to establish herself in the new location, Hartung says business is back. Downtown west of Broadway has become a hub for independent retailers, she says. Tourists from the Westin across the street “keep me alive."

Outside of downtown, Washington Square’s Senior property manager Thomas Randall rejected the idea suburban malls are on the decline.

“It’s important to understand that not all malls in all markets are created equal,” he said in an email.  Location and proximity to attractive demographics matter more than ever in  retail real estate today, he said.

“Will there be change in the merchandise mix at top malls? Yes of course, because this is what has always driven our business. Shoppers come to us for what’s new and fresh and we deliver exciting retail and great shopping experiences."

Randall noted that many brands that started online — like Blue Nile at Washington Square — "are choosing physical retail space at top malls to better connect with their customers."

Malls also attract innovators, he said. Washington Square opened a Tesla showroom several years ago.

“For these brands, it’s not online or in-person – it’s both," Randall said. "That’s what omnichannel is all about, and this is an increasingly important concept for successful retailers.”

Macerich, the parent company that owns Washington Square, declined to release occupancy rates or traffic counts.

Downtown Portland retail vacancy rates hover around 6%, down from 12% during the recession.

It remains to be seen how the space formerly occupied by Macy’s will alter the retail environment. The new owners, KBS and partner, Sterling Bay of Chicago, have said they plan on redeveloping the five floors with creative office and retail space. 

A public hearing for the adaptive reuse project will take place on April 24th. 

Linda Baker

Linda Baker is the editor of Oregon Business

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