Retail Trends: A Recap of the CPDC December 2024 Meeting

CPDC’s December membership meeting began with Center City District’s Vice President of Economic Development, Clint Randall, providing an overview on CCD/CPDC’s just released 2024 Center City Retail Report. Key takeaways from this report include:

Density drives demand, as areas with a higher population and residential density supports more retail;
Three of the nation’s 50 wealthiest ZIP codes are in or adjacent to Center City;
Experiential concepts are booming, with a major cluster east of Broad Street;
Rittenhouse is a leading and growing market for “clicks-to-bricks” concepts;

2024 has been dubbed the “Year of the Cookie,” with 17 bakeries located in Center City, including 8 that specialize exclusively in cookies; and

The office district represents a significant retail opportunity and potential expansion of Rittenhouse Row.

Opportunities in a Changing Retail Landscape

Randall’s presentation was followed by a panel discussion led by CCD President and CEO Prema Katari Gupta with Michael J. Berne, founder of MJB Consulting, and Jacob Cooper, partner and managing director at MSC. The central theme of the discussion was how the retail world has shifted over the past five years. Looking at the changing retail landscape, Berne pointed out that while retail has evolved, the core need for in-person shopping, dining and entertainment has only intensified. As consumers seek more interaction and connection, retailers are realizing the importance of exposure through physical stores and experiences.

Debunking Common Retail Myths

The panelists discussed – and debunked – several myths about retail, including the existence of a so-called “retail apocalypse." According to Berne, many industry commentators have interpreted the decline of well-known brands like Banana Republic and Sears as indicators of weakness in the sector, when in fact they are simply being replaced or challenged by a new generation of "clicks to bricks" stores—digitally native brands transitioning into brick-and-mortar spaces. This shift is less about a so-called dying industry and more about a "changing of the guard," where trendy, lifestyle-oriented retailers take center stage, catering to younger demographic segments that have aged into market-driving consumers. These brands — such as Warby Parker, Brooklinen, and Glossier — are thriving, largely due to their adept use of social media to build brand awareness and customer loyalty. Philadelphia’s Rittenhouse Row area has successfully attracted a strong cluster of these concepts, with more on the way.

Another prevalent myth is the notion that large department stores, such as Macy’s, are the primary victims of retail’s downfall, leaving behind large, unfillable vacancies. While closures of some large-format retailers have made headlines, Cooper contradicts the negativity of this narrative, stating that the closures of large-format retailers are an incredible opportunity to diversify retail offerings. In his experience, the closures of these stores allow landlords to experiment with new leasing structures and introduce shared co-tenancy spaces that attract a wider variety of tenants.

This shift in the retail leasing model, accelerated by the pandemic, has also fostered creative collaborations and new store formats. One of Center City’s strengths is the diversity of spaces it offers, from historic department stores to newly delivered, state-of-the-art spaces in apartment and office buildings. As retailers continue to experiment with concepts of different sizes and configurations, variable space types are needed.

Addressing Retail Theft and Shoplifting Concerns

Retail theft has also been a point of concern, often amplified by media coverage of high-profile incidents. However, both Berne and Cooper emphasized that shoplifting is not the major driver behind store closures or openings in downtown Philadelphia. In Cooper’s experience working with tenants, retail theft is a non-issue when it comes to choice of location. Berne added that, while the perception of safety is important, the reality is that retailers are still opening stores in areas with higher theft rates because thriving sales outweigh the externalities of potential shoplifting. Ultimately, sales and profitability remain the primary focus for retailers, and the actual impact of theft is less significant than often portrayed in the media.

Optimism for Philadelphia’s Retail Future

Finally, with the rise of online shopping, many have questioned the future relevance of in-person stores. Leading up to 2019, the prevalent narrative was that e-commerce would replace physical stores. However, Berne and Cooper both emphasized that brick-and-mortar locations still play a vital role in the retail ecosystem. Brands like Glossier and Levain have found success by leveraging social media to build anticipation for in-person experiences, blending online and offline strategies.

Looking ahead, there’s much to be optimistic about in Philadelphia’s retail landscape. Berne believes that as the city’s downtown areas continue to evolve, we will see the resurgence of flagship stores and more dynamic retail environments. Cooper shares this optimism, highlighting the importance of co-tenancy, performance, and amplifying success stories to drive growth in the city.

Philadelphia’s growing downtown population, already making up three of the wealthiest ZIP codes in the United States, along with its growing foot traffic, varied building stock and dynamic retail mix, is poised to welcome dozens of new concepts in 2025, with more exciting announcements to come in the months ahead.