When Under Armour abruptly closed its flagship on the northeast corner of 16th and Walnut Streets late last month, the mood on the city's swankiest shopping corridor went dark. During that same week, Diesel padlocked its high-end denim storefront at 1507 Walnut.
The whispers of despair grew even louder.
Take these shutterings and combine them with the demise of Michael Kors, Guess, Jack Wills, Ralph Lauren, and mix in the persistent, pesky rumor that Rag & Bone might also soon be a ghost, and it's no wonder the street's merchants are talking.
But instead of looking at this luxe corridor, between Broad and 18th, as a harbinger of all that's about to be wrong with the Philadelphia retail scene, I encourage you to consider what is happening on Walnut Street through a more positive lens.
Walnut Street is a microcosm of what the future of America's upscale urban retail experience is likely to become. Like shopping centers — in particular, Ardmore's Suburban Square — they promise to mix high-end experiences that include healthy restaurant fare, intense workout experiences, and shopping that is set up in a showroom-like environment with a side of bubbly or whiskey (think Warby Parker, the glasses retailer that encourages you to try on their wares in store, but buy online).
But unlike these lifestyle-geared shopping centers, many buildings on a street such as Walnut have their own landlords. There is no all-controlling entity with a vision for what their center should be. That makes Walnut an organic, real-time reflection of our changing spending habits that, right now, are much more rooted in experiences than they are the accumulation of things — even that perfect pair of Christian Louboutins.
In many respects Walnut Street's high prime real estate has made it a magnet for cellphone companies and banks. Citizens Bank will replace Aerosoles on the southeast corner of 17th, making three — count them, three — banks at that intersection. Although not aesthetically pleasing, they have no trouble affording the still well over $200-per-square-foot prime real estate prices.
But it's in between these two blah anchors of the retail corridor where we see the new definition of luxury coming to life. Designer-led, high-end boutiques, such as Burberry and Coach, had cornered the market on what is aspirational. Now, there is cachet in SoulCycle, sweetgreen, and apparel stores that have a showroom feel and, most important, have a built-in social media (read: devoted) following.
"This is what we call a healthy refresh," said Douglas Green, managing partner of Center City-based commercial real estate company MSC Retail, which has several properties on Walnut. "While the Michael Kors and the Aersoles may close, the Warby Parkers, the Bonobos and Untuckits are going to be 2018 relevant brands."
So what else is coming down the pike?
Where there was once a Conestoga Bank at 1632, the interactive bookstore and coffeehouse Shakespeare & Co. will set up shop this fall. In the 1700 block, surfer-casual Marine Layer will move in what was once True Religion's digs. And Amsterdam-based internet sensation Scotch & Soda (think a Dutch Urban Outfitters, sans kitsch) is rolling into Michael Kors' old spot.
Commercial real estate agents confirmed that there are a number of pending leases with — you guessed it — more athleisure, more food, and more fitness.
"The kinds of retail that we are chasing now is different from what we've traditionally chased," explained Michelle Shannon, vice president of marketing and communications for the Center City District.
When I met Shannon back in 2009, the Center City District was in the midst of touting a retail strategy that focused on luring designer specialty shops. To land Tory Burch or Alice + Olivia, Shannon said, would have been the ultimate coup. Not so much anymore.
"When you open up [Women's Wear Daily] and see retailer after retailer scaling down, I'm certainly not picking up the phone and calling them," Shannon said.
This trend in retail got its legs in the beauty industry over the last five years as blowout bars, lash bars, and braid bars became more popular. We didn't mind spending a few extra dollars on people who specialize in blowouts or brows. That became a new form of luxury.
Who is behind this lifestyle shift? Millennials, of course.
According to the Center City District's 2018 State of Center City Report, 76,411 millennials live in extended Center City — the neighborhoods tucked between Tasker Street and Girard Avenue. That's 40 percent of the population with a total of 190,416 in extended Center City. That doesn't even account for those who travel to Walnut Street as a destination shopping experience and work near the corridor.
These shoppers, says Sarah Owens, senior editor of global trend-forecasting company WGSN's The GenZ Equation, are the changing face of luxury.
"Luxury [to this generation] is to go to SoulCycle and treat yourself to an avocado toast, instead of going to buy those new Gucci loafers," Owens said. A pair of shoes that you can share on social media once or twice doesn't have the legs that it once did. The new luxury is convenience, culture, wellness, and sustainability."
And when clothing is involved, it's not just enough to sell it. Fashion needs more. The most successful clothing brands are content creators, too. A few years ago, Scotch & Soda partnered with Airbnb to rent out an apartment in the heart of Amsterdam for a relatively cheap price. The pad was decked out in Scotch & Soda items that you could buy if you wanted, but the whole idea was to get you to post on Instagram that you were there. Even if you didn't stay, you might follow the brand on Instagram, and buy the clothing you saw on their feed. Not only did they sell clothes, but they sold this particular lifestyle.