How Seattle retailers are thriving in the age of Amazon

This story appears in the July 2018 issue. Read more from the story here. Click here for a free subscription.

Four months ago, an unusually subdued guest dropped by the late-night TV show Jimmy Kimmel Live. Once widely beloved by millions of American children, Toys R Us mascot Geoffrey the Giraffe had fallen on hard times. Kimmel declared that Seattle-based Amazon “won’t rest until every other store is an abandoned warehouse teeming with raccoons.” Geoffrey the Giraffe agreed, pointing to Kimmel’s audience and claiming, “All you bitches bought toys on Amazon. Now I’m out of a job.”

The mascot was eventually escorted off the stage and into the shadows, presumably to join other once-untouchable retailing giants — think Sears, Staples, Payless, RadioShack, JCPenney — that have found themselves irrelevant.

As Amazon casts a long shadow across many sectors, though, local retailers aren’t giving up. They persist in the wake of the big retrenchment of 2017, when 8,000 stores were shuttered nationwide, making last year a most ominous one for retail, trumping even 2008 at the height of the Great Recession.

“It’s not that all retail is going away,” says Dick Outcalt, a longtime Seattle-based retail consultant and strategist who, with business partner Pat Johnson, closely watches America’s rapidly evolving retail industry. Outcalt and Johnson’s 30-year partnership has bred some predictable banter at cocktail parties, where they’re constantly approached by people asking if shopping as we know it is on the verge of disappearing.

“About 90 percent of retail still happens in traditional stores,” Johnson explains. Despite a steady cascade of closures, she notes that new retailers — constituting about 8 to 11 percent of the total industry — start up each year. “You wouldn’t know that,” Johnson admits, “especially in Seattle, where we’re just surrounded by Amazonians.”

Nowhere is the battle between “bricks” and “clicks” more apparent than at Seattle’s downtown Macy’s store, a historic institution that has lost so much ground — literally and figuratively — that Amazon is converting six full floors of the building into office space. But despite Jeff Bezos and company’s exploding presence in Seattle, Outcalt and Johnson consider Amazon’s current domination just the latest chapter in the saga of an industry constantly pulled by shifting tides.

“Twenty years ago, Walmart was going to ruin all independent retailers,” Johnson recalls. Then there were the category killers like Toys R Us, and before that, the advent of shopping malls that threatened to upend Main Street. While Amazon might be retail’s current darling, e-commerce also transfers a lot of responsibility to the customer.

“You’re doing all the work,” Johnson says of the online shopper’s new burden of weeding through daunting selections, investigating products and prices, handling the transaction, planning for delivery and, frequently, preparing returns.
“And you think that is saving you money somehow?” she asks.

Starbucks Reserve Roastery

Driving through the heart of downtown or walking through Pacific Place and Westlake Center, it’s easy to spot empty stores. But if you think these are signs that brick-and-mortar retail is in trouble, try telling that to shopkeepers downtown, where explosive growth — largely thanks to Amazon’s corporate campus — has beckoned new residents, fresh construction and retail opportunity.

Amazon’s decision to plant its world headquarters downtown, says commercial real estate broker Maria Royer, “put Seattle on the map” and fostered a robust economy that’s also helped elevate Seattle’s overall appeal to national brands.

“What we’re hearing downtown from our members is that business is going really well,” agrees Jacqueline Gruber, a senior economic development manager for the Downtown Seattle Association (DSA). According to the DSA, retail sales have increased by 34 percent since 2010. In 2016, according to DSA’s latest economic report, downtown merchants realized a cool $1.5 billion in sales revenue.

While downtown Seattle has recovered nicely from the recession, partly because of a boom in new restaurants and bars, retailers are taking advantage of Seattle’s flourishing economy to reinvent themselves in creative ways that will lure and hold customers. This tactic often means embracing both online and brick-and-mortar platforms as well as “catering that experience to who your audience is,” says Gruber.

She points to stores that have incorporated digital strategies while previously online-only retailers have grown into physical spaces to foster brand loyalty.

“It’s not really two separate [models],” Gruber says of the industry’s omnichannel approach, which includes suburban mainstays like Target stores embracing smaller urban concepts downtown (and in Ballard next year), while other retailers, such as Walmart, realize that incorporating e-commerce means they can make do with smaller footprints and fewer big stores.

Meanwhile, malls — those still thriving — find success by incorporating more restaurants, residences, event spaces, hotels and even health clubs to encourage regular foot traffic. (Pacific Place, which plans to begin a multimillion-dollar renovation this year, is further hedging its bets by building a new grand entrance facing South Lake Union and Amazonia.)

Of these approaches, the interplay between food and shopping seems particularly important, with retailers finding that restaurants can drive traffic.

“We used to talk about how you need to have restaurants in the shopping center to keep people from leaving when they get hungry,” says Jennifer Leavitt, VP of marketing for The Bellevue Collection, an early pioneer of the mixed-use concept. “Now, restaurants help draw [people] for shopping.”

It comes down to creating a social experience, Leavitt says, particularly for the younger demographic.

This experiential retail concept — “retail-tainment,” as it’s sometimes known — is the buzzword right now. It aligns with growing consumer demand for experiences — in other words, things that can’t be replicated online. Examples abound, such as the Starbucks Reserve Roastery on Capitol Hill and its newer Reserve store at the company’s SoDo headquarters (the first of 1,000 planned Reserve stores); Pioneer Square’s Drygoods Design, where sewing groups and workshops are offered along with fabric for sale; and downtown’s Steepologie, which provides a showcase of more than 300 loose-leaf teas and tables piled high with board games.