There are some well-known retail trends that underscore the difficulties facing small neighborhood oriented retail outlets. One is the rapid growth of online shopping for many items including stationery, which was one of the stores announcing their Cal Ave closing. The online shopping surge means that a smaller share of our spending is going to store-based sales.
And recent statewide taxable sales data underscores that the sales areas that are still growing are mostly not local neighborhood serving establishments. Recent sales growth show
Overall sales up 5.6%
New cars up 7.1%
Restaurants up 9.4%
Furniture up 9.5%
Bookstores down 13.3%
Office supplies down 0.3%
General merchandise up 3.0%
Supermarkets up 3.3%
Clothing stores up 8.8%
If you put the growing online shopping together with the data above, you can see the long-term challenge for neighborhood serving retail.
My sense is for this kind of retail to sustain in Palo Alto, there needs to be strong growth in the nearby customer base. While the high PA rents will always be a problem they do not explain stores that have a declining number of customers.
So two popular online wishes are in conflict—more retail but almost no growth in nearby customers, i.e, jobs and housing. That math does not work.
So if residents want more retail but slower office growth, the only way that happens is with a large increase in nearby housing. Even then the future for neighborhood retail, as opposed to visitor retail, will be tough.
But more housing near downtown and Cal Ave definitely will be a plus for sustaining neighborhood serving retail.
I also think metered parking, perhaps $1 an hour, will help. If I think of the growing vitality of downtown Redwood City and Burlingame, both thrive with metered parking. For Cal Ave, another plus would be a shuttle from the Research Park so employees could eat and shop on Cal Ave without the parking hassle.
Without more customers and rational parking/shuttle policies the chances for neighborhood serving retail to survive downtown or around Cal Ave are mostly wishful thinking.