‘Video Killed the Radio Star’ Launched MTV, But It May Also Be a Swan Song for Some Retailers

by Nate Hunter

Techology continues to affect the physical footprint of retail in many evolving ways.


Chris Maling“Video Killed the Radio Star” was a song performed by a new wave band from the U.K. known as The Buggles way back in 1981. But the changes in technology that this one song represented would be seismic in scope and are still being felt today. It was the first music video to be played on a little-watched cable TV channel called Music Television, which morphed into what became the media sensation known today as MTV. And, those of us who were around during that transformative period, were reminded again recently that nothing has been the same since, especially in the world of commercial real estate.

I was reminded of this recently when Dish Network said it will close its remaining 300 corporate Blockbuster Video stores in the U.S, ending an era for a chain that was a “go-to” pad or corner tenant in nearly every American shopping center. But the real question in this hyper-technological age is will we miss the Blockbuster Stores? For example, my wife just uses her iPad in the kitchen to follow recipes, send an e-mail to the neighborhood with ingredient requests, watch cooking demonstrations, and trade ideas with friends — all at the same time!

So, I continue to ask myself, in light of the news about Blockbuster, what will be the next retail category to suffer the same fate? And, what will become of the space that’s vacated? Will other retailers come in to take the space, or will technology be the end of the brick-and-mortar retail stores we have come to identify with across the country?

Does Zappos/Amazon or another shoe website eliminate the need for shoe stores? Does the fact that Amazon is now the largest hardware retailer in the U.S. in terms of hardware sales eliminate the need for more brick-and-mortar Home Depots and Lowes?

Answering that question is difficult. The answer is that we may see fewer large chains like Blockbuster, but we will always have the centers where people shop, socialize and want to touch and feel the merchandise prior to buying it. We may see downsizing of larger retailers if their internet sales continue to rise, but not extinction.

We may see a reconfiguring of space to house different types of retailers. But we will never see an end to the suburban mall, the village center that anchors local communities, where you get your haircut, buy your coffee, eat dinner. Technologies like live streaming video, video on demand and others that are now available in most homes, have killed the Blockbusters and Hollywood Videos, but there is something to be said about watching a movie on a giant screen with other human beings, a shared experience. Technology cannot kill that, and that’s why there always will be a need for brick-and-mortar structures. We may see fewer JC Penney’s, Macy’s and Sears stores, but we will see more and smaller retailers fill the voids they leave by slicing up the huge buildings they occupy and renovating them to house smaller, multi-tenant retailers, not necessarily huge clothing stores.

It’s also about getting the product to your front door and getting it fast. We now have all the ground transport services, including the US Postal Service, either testing or undertaking same-day and possible Sunday deliveries, or both, so that consumers can get their products right now. It’s like everything else tech-related – people complain about the milliseconds it takes their computers to download something. No one wants to wait.

Again, using my wife as an example, since she is the ultimate consumer, I recently arrived home to find 12 boxes at the front door from Zappos. Sensing my urge to freak out on yet another extravagant purchase, she suggests I go upstairs to the master bedroom. On the bed were seven different outfits she had laid out in an effort to match them with the shoes she ordered. When she saw my face, she said, “Relax, I only plan to keep two pairs of shoes that match my outfits and return the rest.” And, by the way, returning the shoes costs us nothing.”

Basically, the lesson learned is why buy from a brick-and-mortar shoe store if you can have them delivered the same or the next day you saw them on your PC, iPad, or smartphone? Then it hit me: Is Blockbuster just another commercial real estate victim of technology, or are there more shoes about to be dropped?

— Chris Maling is senior vice president and director of retail investment services for Colliers International Commercial Real Estate Brokerage. He is based in Los Angeles.

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