Is the Retail Apocalypse Coming to Watertown?

The rise of e-commerce and Amazon has created new challenges in traditional retail space. So far, in 2019, more than 7,000 retailers in the United States have shut their doors. This is according to a report released Sept. 11 by global accounting network BDO USA LLP.

Store closures this year have already surpassed the number of stores closed in 2018, which was just under 6,000. Before the end of 2019, global marketing research firm Coresight Research predicts there could be upwards of 12,000 store closures.

With the fate of brick and mortar uncertain, what does this mean for the not one, but two shopping centers, both located on Arsenal Street in Watertown?

A change in consumer preferences

Many factors are impacting the increase in store closures. Watertown Mall General Manager Pat Stenson and Arsenal Yards developer Tom Wilder pinpointed one in particular, a change in consumer preferences.

More consumers are using the internet to purchase everything from groceries to cars. E-commerce sales have been growing nine times faster than traditional in-store sales since 1998, according to a 2017 report from the U.S. Census Bureau.

As more and more consumers opt to shop online, shopping centers and traditional brick and mortar stores around the country have to adapt or risk shutting down.

“People want an experience when they come to the mall,” Stenson said. “They don’t just want stores and a place to grab something quick to eat.”

Wilder has noticed the same trend. Shopping centers, he said, have to become a destination not just for transactions but for social and cultural experiences.

Give the people what they want

To stay relevant with modern consumers, both the Watertown Mall and Arsenal Yards are ditching traditional retailing.

The Watertown Mall has changed the makeup of their tenancy. The most recent change was to the Registry of Motor Vehicle.

The RMV occupied 6,500 square feet of the mall. After a recent construction project that combined five stores in the mall, it now occupies over 12,000 square feet.

The registry, which was already busy, now brings thousands of people into the mall every day which, Stenson said, creates traffic for the other stores. The mall has also added an upscale dining option, a Chinese restaurant called Joyful Garden, and a new dance studio that will open soon.

The new tenants should increase traffic to the mall, and these are not the only changes coming. Stenson would not give specifics but said there are more changes to come.

A new neighborhood in town

Arsenal Yards’ approach is even more extensive. The site, which used to house the Arsenal Mall, is being redeveloped by the Wilder Companies, where Wilder is a principal, and Boylston Properties. Instead of designing a traditional shopping center, Wilder said they are creating a neighborhood.

Arsenal Yards will have an open-air design and will house a mix of retail and office space, a hotel, and 300 apartments. The new design, which eliminates the old mall, is meant to reinforce Arsenal Yards as a destination, and to ensure every storefront is accessible from the street.

The developers have also focused on finding a diverse variety of tenants. In the past, Wilder said apparel stores could make up 40 to 50 percent of new developments. With the rise of e-commerce, new developments need to diversify what stores and services they offer to consumers.

Focusing on more than apparel, the developers have rented space to a variety of local and regional restaurants, Roche Bros. grocery store, The Majestic Movie Theater, and more. They will also rent out space for fitness classes, such as spin and yoga, as well as personal services, like therapeutic massages and salons.

You cannot get these services online, Wilder said.

A new model of relevancy

E-commerce and the subsequent change in consumer expectations have made their mark on the retail industry. While traditional shopping centers and malls seem to be running their course, both Stenson and Wilder see a place for a new kind of retail space. A space that provides more to consumers than apparel stores and a quick bite to eat.

“I see malls as being relevant for a long, long time,” Stenson said. “Not the way they were relevant, 10 or 20 years ago, but this kind of new model for relevancy.”