You see them across suburbia and our nation's heartland: Home Depot, Target, Best Buy, Wal-Mart and other big-box retailers.
Until recently, many have shied away from larger cities, especially New York, fearing high real estate costs and space limitations. But that's changing now as big-box retailers converge on urban America, eager to tap this lucrative market.
Home Depot has long had a presence in cities from coast to coast. The world's largest home improvement chain has been in the outer boroughs of New York since the mid-1990s. Now, the Atlanta-based company will open at least two high-profile stores in Manhattan this year. The chain has even launched a series of smaller stores, geared solely for the big-city market. The stores' format is about half the average size, with a selection of products tailored specifically for the needs of the neighborhood.
Now, others like Best Buy, Target and Kohl's also want to win the hearts (and wallets) of city shoppers.
The challenges of building big boxes in large cities should not be underestimated. The retailers themselves — as well as those who build andthem — need to abandon the cookie-cutter approach that epitomizes such stores in areas with fewer people.
Let's face it. Manhattan,and Los Angeles do not have the luxury of cornfields to fit 100,000-square-foot stores. What's more, adequate parking is often nonexistent; high ceilings and floor loads to hold stacked merchandise are rare; and expansive ground floors and loading docks are hard to find.
Contrary to their suburban prototype, urban big-box retailers often have no alternative but to build up rather than out. There is a need for elevators, vermaports (to transport people and shopping carts) and escalators — things never imagined in an average one-story suburban or rural big box.
Other urban considerations add to the challenge. Imagine the logistics of inserting a 120,000-square-foot Home Depot into a luxury building that includes multimillion dollar apartments.
Then there is the issue of cost. New York City and other urban areas have some of the highest-priced real estate in the nation. It can cost twice as much to build a big box in a big city than a small town or suburb. This has scared away many retailers. But those that do decide to enter the city should understand that the potentialbenefits can outweigh the costs. In fact, many big-box retailers can point to their urban stores as some of the most profitable.
Know Your Customer
Building big box in cities requires a bit of acrobatics, creativity and a willingness to do what it takes to succeed. But retailers need to be flexible in terms of store location, and they need to be ready to tailor their product selection.
Though the sight of a customer lugging 4×4s home on a subway car would be great TV sitcom fodder, some urban home improvement stores will deliver sheet lumber directly to a customer's home and more design-related items will be emphasized.
Other discount stores might also stock fewer bulk items to accommodate foot traffic. It's this understanding of specific market needs that ultimately guide the store design andprocess.
Many retailers have already shown that the urban big box can equal success. As the economy starts to bounce back, the challenge will be for a greater number of companies to see the huge potential for growth in these once ignored areas of the United States.
We are already seeing that in New York City, where we have built Best Buys and are building two stores for Home Depot and one for Kohl's.
President of New York-based IBEX Construction, which has built more than 3.7 million square feet of retail space in the past five years. Clients include Nordstrom and Best Buy.