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Downtown, Where All the Stores are Closed

Nordstrom is shuttering its Indianapolis store

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Not long after the Indianapolis 500 made that city the vital center of national attention for a day, part of its center was red flagged to the infield.

Nordstrom announced it was closing its 216,000-square-foot Circle Center store downtown because a nearby location in an outlying Indianapolis neighborhood was sucking away a lot of the downtown store’s business.

Retailing doesn’t have to be a zero-sum game. But in this economy, retailers have to justify every door they leave open – particularly if that door is located in a city’s downtown.

It seems I’ve been having this conversation a lot lately. I live in Louisville, which is valiantly trying to resuscitate its core, with a brand new athletic and concert facility expected to bring people in to eat and stroll as well as attend the events. This is a riverfront city with a lot of history and mood, and a tremendous number of outstanding restaurants. But will the downtown truly revitalize with virtually no retail?

I’ve seen similar struggles in other places where I’ve live. Cincinnati has tried to keep its downtown retailing vital – having Macy’s headquartered there has helped a little – but not long ago lost a five-star gourmet restaurant. (Oops!) And Nordstrom famously backed out of an agreement for a downtown store several years ago before finally opening in a suburban mall.

Atlanta has a thriving convention business and also downtown sports arenas, but the investment in the inner city that it had hoped for after the 1996 Olympics – particularly retailing and residential – hasn’t happened.

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Indianapolis has been similarly hoping for a downtown bump after building a new football stadium there, the home of the Colts and the site of the 2012 Super Bowl. Last year, downtown Indianapolis was the site of the NCAA college basketball championships. Some top-notch downtown hotels have been built there and the tourist business is beginning to grow in Indianapolis. How can Nordstrom rip the heart out of such ambitious doings?

Shortly after the announcement, Erik Nordstrom, director, executive vp and president of stores, told the Indianapolis Star, “For us, that visitor market isn't as important. Our business is much more built on a local customer who becomes a regular customer who has a relationship with a salesperson and has repeat visits. So the conventions are certainly a plus [but] I don't think they are as meaningful for us.”

That’s pretty instructive. Huge conventions and sporting events are less the basis for retail investment than locals’ living habits. And if working people flee downtown after 6 p.m., and residents don’t live there and people spend Saturday night at their suburban steakhouse or cineplex, why build a store there?

To invert that all-too-famous movie line, “Don’t build it because nobody will come.”
 

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