A recent visit with my sister who lives in the city of Wilmington, DE, also home of our current US President, was really eye opening. As we were discussing the current environment in the city, my sister said she is preparing to live in a retail desert. She said that the only grocery store in their area is planning to close. My brother-in-law then added that he visited the local CVS looking for toothpaste. When he arrived he found it was locked in a case that would need an associate to access. He went home and ordered it from Amazon. While there we traveled to what seemed like a more upscale neighborhood and my wife went into another CVS. She was shocked as well to find virtually everything locked up. Their takeaway was that if they are going to continue to live in their current home as retirees, everything is going to have to be ordered and delivered.
Crime is a big HUMAN problem
My sister also said that she would not go outside in her neighborhood at night. To be fair, this is not just a problem in Wilmington, urban areas across the US are seeing escalating crime rates. But my recent experience caused me to do some research. According to a recent analysis, Wilmington, Delaware, is among the U.S. cities with the highest homicide rates. There were a total of 31 murders reported in the city in 2020, or 44.2 for every 100,000 people — well above the national homicide rate of 6.5 murders per 100,000. In fact, Wilmington’s crime rate is significantly above the national average for both violent and property crimes.
What is interesting about Wilmington is that it has lots of business, money and political power at its fingertips. To put a fine point on it, almost every business in the US is incorporated in Delaware. Yet an article published in 2018, before the pandemic, declared Wilmington is one of the hardest places to achieve economic mobility in the United States. According to the US Census Bureau, more than 24.9% of the population of Wilmington lives in poverty, and the average household income is only $45,139.
Crime is a big RETAIL problem
I was then thinking about the term my sister used, a retail desert. We are familiar with food deserts, where there are not grocery stores, but a retail desert is something altogether different in scale. My expectation is that more of the honest customers will give up on these stores, and eventually the chains will close all these locations. But what should the retailer do in this environment? Theft is rampant, staff is unsafe, and profitability of these stores is clearly under pressure. On thing that is clear is that when a retailer closes all locations in a market, its ability to leverage a digital presence wains. Retailers need to build a composable operating structure now that will allow it to succeed in these urban markets rather than giving market share to ecommerce only retailers. Urban markets will require specific strategic approaches and should be included in a stress test of current retail strategies.
People with resources will relocate or build workarounds like delivery from Amazon. I worry about the vast swaths of poverty across this city where options go down and prices go up.