Urbanites aren’t the only ones taking part in the so-called Great Migration — retailers are also expanding into the suburbs.
Last week, Amazon announced that it is launching a new store format targeting suburban shoppers. The company is opening a new Amazon Go store in the coming months in Mill Creek, Washington — a suburb of Seattle. Meanwhile, retailers like direct-to-consumer eyewear brand Warby Parker and e-commerce furniture retailer Wayfair are also increasingly plotting suburban locations.
For years, trendy startups mostly flocked to city centers when opening new stores, as that’s where their core consumer — millennials — were located. But foot traffic to some of these areas has declined when many consumers were no longer required to commute to offices, experts said. Retail hub Madison Avenue in Manhattan, for instance, saw just 71% of foot traffic levels the week of August 8, compared to the same week in 2019, according to analytics firm Orbital Insight. As work from home life continues for many, retailers are seeing growth opportunities in opening stores where shoppers live.
“This, to me, is the next natural evolution,” said Bryan Eshelman, managing director in the retail practice at global consulting firm AlixPartners. “They are now trying to get access to yet another set of customers to continue that growth. That’s the next adjacent opportunity if you will – moving from online to city stores, city stores to suburban stores.”
Retailers move from the city to the suburbs
Opening stores in suburban locations isn’t necessarily a new concept. But it has gained traction in recent years as remote work becomes more commonplace, said Andrew Lipsman, a principal analyst at Insider Intelligence. As of February, 39% of employees worked entirely remote and only 19% worked fully on-site, according to a recent Gallup survey.
In March of last year, Warby Parker opened a new store in Ardmore, a suburb of Philadelphia. DTC hair color brand Madison Reed also opened a full-service hair color bar in the area a month before. They weren’t the only DTC darlings to move into the Philadelphia suburb in recent years. Denim-focused brand Madewell opened a store in the area back in 2015.
“A retailer has an interest in opening a store wherever there’s consumer demand,” Lipsman said. “With remote work, there are a lot more consumers who are sticking close to home in the suburbs during the course of the day.”
While city centers suffered losses during the pandemic, suburban main streets flourished. For instance, overall traffic in a suburban shopping district in White Bear Lake, Minnesota increased by at least 25% from 2020, according to Star Tribune in November. On the other hand, in office-dependent retail corridors in Midtown East and around Grand Central, almost 30% were unoccupied as of summer 2021, according to a report from Real Estate Board of New York (REBNY).
In a quest to acquire more customers, retailers are snatching up real estate in suburban locations. Wayfair’s first storefront in the Chicago area is set to open next year in Edens Plaza, a strip mall in a village called Wilmette.