Why Every Main Street Looks The Same
How Municipal Policy & Financial Incentives turned Main Street Into Chain Street
Southern Urbanism has partnered with Building Optimism and Building Culture to bring you the best stories from the people who build our cities. In his most recent essay, Coby Lefkowitz explains why modern development is so monotonous and what we must do to reestablish inspirational localism.
Walk down the Main Street of any city or town today and you might notice something off. It’s not that the roads are too wide (though they are), or that the sidewalks are too narrow (though they are, too), or even that there’s not much to walk towards (though this is usually true, as well). These are all known elements that North Americans have gotten used to in their streetscapes for nearly a century. It’s not even that what would be considered the Main Street for most communities isn’t actually a Main Street at all, but rather a stroad amidst sprawl — those highways masquerading as “commercial corridors”. None of these things would strike the casual observer as deviations from the status quo.
No. Look into the storefronts, or at their signs, and you’ll notice something else. Something that contributes to the sense of sameness, dullness, and overall lack of character that seems to be a near constant critique of contemporary places. They render our communities as spaces where we don’t particularly want to spend much time in, despite them being all that we have.
From neighborhood to neighborhood, city to city, Main Street to Main Stroad, these stores are all the same. The set of incentives that drives this sameness is prevalent in every community in America. It’s the story of how our basic needs have become corporatized through scale & credit, zoned to transactionalism, and rendered profoundly anti-human at the expense of the small businesses and idiosyncratic development patterns that lend character, diversity, community, and meaning to our places.
Scale Wins
Historically, the composition of a town’s Main Street was fairly consistent; All communities had a grocery store, a bank, a barber shop or salon, a few restaurants, and perhaps a dry goods store or boutique. But nearly every one of these stores was locally owned, so even if two towns had the same type of stores on paper, the character, personality, history, and complex interpersonal dynamics imbued into those places would have such a radically different impact that one could hardly say that either town was very much like the other at all.
This was essential to the cultivation of the imagined spirit of Main Street. The romanticized notion of a store clerk waving you down from along the way, a waitress knowing your order by heart (that just so happens to be the town’s specialty), or the counter worker at an ice cream parlor giving you an extra scoop just because you always come in. This, as the romanticism follows, is really only possible in the type of community that has the composition unique of a proper Main Street. Regardless of how true this notion was, it’s easy to imagine it being so in a place where the business owners and employees have a vested interest in the success of their own community.
these elements continue to exist through select small businesses & charming towns, they occupy a much diluted, and vastly different place in our society today than they once did. Same with our imagined spirits. No longer is our country one of small businesses and vibrant places, but insipid chains & dreary power centers. Our psyche has transformed from one of coming together as a community (regardless of its historical veracity), to a series of individualized, transactional relationships within placeless places, devoid of any personality. Scenarios like the one illustrated below are commonplace:
After work, one may drive a car from an isolated office park 15 minutes to the hypermarket for some batteries. Then, another 10 minutes to a fast-food drive-thru window, before finally ending the day fueling up at an international oil corporation’s pumps that have been been indiscriminately plopped down along a quasi-highway, only to do the same thing again the next day.
In all likelihood, in none of these stopovers would this person have had a meaningful interaction with another. They would’ve been wholly dependent upon a car, and their dollars would be sucked out of their community to some far off office tower, corporate campus, or McMansion. Indeed, when one shops at a national chain instead of a local business, less than 40% of those dollars stay in the communities where they were spent, roughly half of what would be the case if the business were locally owned. Instead of the small business owner using profits to stimulate the local economy, those dollars are corporatized and sent out into the caprices of the global winds of capital. There’s no vested interest in the success of a community for a given chain that has 1,000 other locations, just an extraction of as much value as possible.
This isn’t to say all chains are bad, or that they don’t provide any value at all. Hardly. But they’ve so ubiquitously taken over the American landscape that there’s no balance. We live in Chainland. How did we arrive at this pervasive pattern of development, and all of the dissatisfaction that has come with it?
Scale.
All things equal, those with more resources have more power than those with fewer resources. This isn’t revelatory — you already knew that. Most people also intuitively grasp how chain stores beat out local businesses; more selection, better prices, and brand loyalty that compounds each time one visits a new location for a given chain. Not only does this fuel revenue for one specific chain, but it primes a consumer to look for, say, Subway when in want of a sandwich, and not a local deli. This solidifies into a chain of demand from devotees new and old. Cynicism aside, there’s much to be said for the psychology of reliability when one is on the road, or visiting somewhere they’re not familiar with. To see McDonald’s Golden Arches along the way, or Chick-fil-A’s red letters, is to instantly feel comfort that you’ll find a meal you can trust, wherever you may be. The importance of this shouldn’t be understated. Demand side growth can only go so far, though. At a certain point, if the only thing you’re being served is a limited series of choices, you can’t quite say your true preference is any one of those limited things if there isn’t more expansive choice. You simply don’t have many other options.
When a company like Walmart offers its price match guarantee, it doesn’t do so out of benevolence, or a sacred covenant to customers, but ruthless competition. Chains leverage their economies of scale to drive down prices. They make money on lower margins, but higher volumes. Smaller businesses can’t compete because their relatively low volumes don’t allow for lower margins. While many folks may love their local grocer or hardware store, if the prices are more expensive than they can justify, those stores will go out of business. We arrive at a situation where one community may have had a grocer, a hardware store, an electronics shop, and a bike repair center that all get subsumed into one large big box, somewhere on the edge of town (or the middle of nowhere), mandating one must drive to have access to these services they may have previously walked to. The scale of chains doesn’t fit nicely into walkable Main Street USA, but demands anonymity & parking. This is anathema to quality places.
Our Development Patterns Favor Scale
So if Chainland’s imperatives are crushing small businesses, how many are there left? Surprisingly, perhaps shockingly, more than 98% of all retail companies are small businesses. These are classified as employing less than 50 people. At first blush, this doesn’t seem to make much sense. We see chains everywhere, how are they less than 2% of all businesses?
If we dig a bit deeper (using the best data available, which may have some reporting holes in it), the picture becomes clearer. As of 2020, there were 1.04 million brick & mortar retail locations in the US. Currently, more than 700,000 of these establishments are chains, with restaurants comprising the most of any category at more than 220,000 locations. While less than 2% of discrete businesses may be chains, if the data is to be believed, 70% of physical retail locations are chains. This is a staggering number. All of our commercial streets look the same because 70% of our stores are chains!
It’s worth remembering that this doesn’t mean 70% of the stores are Targets, Chipotles, Exxon Mobiles, McDonalds or NAPA auto part dealers, as a chain can be any store with more than 1 location (and more than 50 employees, per the definition used above), but the vast majority are. If scale enables you to expand to 2 locations, chances are you’ll grow beyond that. Subway, the largest chain in the US, had 21,147 locations as of the end of 2021. Currently, Dollar General has 18,190 locations. Other prominent chains like Starbucks and McDonald’s have 15,444 and 13,862 locations, respectively.
To put these numbers into perspective, let’s look to the past. In 1929, there were nearly 1.5 million retail stores in the country, with 11% being chains. By 1948, brick & mortar locations grew to 1.77 million, with the proportion of chains shrinking to just below 6% of total stores. How has this trajectory reverse so forcefully? The answer lies in development patterns and scale enabled by economic expansion.
In the latter half of the 19th century, a maturing economy enabled a burgeoning upper middle class of residents to move from crowded cities starved of open space out into the country side. These proto-suburbs developed around regional rail & streetcar lines. They allowed more of the urban population to enjoy the privilege of open land. Though the Census refined how it classified suburban areas in the 1950 census to bring the definition in line with how we think of them today, by 1910, rough estimates pointed to 7% of the country living in suburban areas. Economies developed around this new and growing class of commuters. A strip of shops, services, restaurants, and other essentials required to facilitate this new development pattern sprouted up. Relationships became romanticized because they transcended the transactional nature of commerce. Even the most utilitarian offerings became service based as the coterie of commuters & shop owners had a mutual dependency far more intimate than within the city. Or so the imagine spirit of Main Street would have us think.
While the number of people living in the suburbs was growing, much of the economic expansion was still occurring in cities. As the economy boomed through the 1920’s, opportunity rose significantly. In boom times, there’s more money to fuel growth, which leads to more chains that aggregate and compound economies of scale. This can be seen in some of the earliest corporate skyscrapers, like the Woolworth building, which rose thanks to the success of a chain of five-and-ten-cent stores not unlike the earliest Walmarts.
When economies contract, chains are hit particularly hard as optimistic expansion strategies are forced to deal with more somber realities. This explains why chains contracted as percentage of total stores from 1929 to 1948, as the Great Depression and World War II crushed domestic retail sales. It’s partly why chains contracted in the post 2008-recessionary period (more on that below). But with the period of economic expansion after World War II, our development patterns changed. Scale was able to capitalize on this.
Instead of population concentrating in walkable cities, or communities accessible by public transportation, the post-war development pattern sprawled outwards in a rigidly zoned amorphous ooze, enabled by highway expansion and doomed to car-dependency. The pace of growth was rapid. By the end of the century, a majority of Americans were living in these places.
This had a profound impact on Main Street, and the state of American retail writ large. Instead of commercial activity downtown or mixed in among housing in smaller, more affordable spaces suitable to the organic growth of a local business, retail was relegated to specific zones along highways on new greenfield sites between communities. This presented a massive barrier to entry for would-be small business retailers. Not only would they have to build out new spaces at considerable expense (only partly subsidized by landlords), but they would have to create entirely new marketing, management, and organizational strategies too. While well capitalized companies were able to thrive in such an environment that privileged this scale, upstarts were not. This was problematic as retail had effectively been made illegal everywhere else in the suburbs, especially the kind of places where small businesses thrived, namely, the domain of people, not the car.
Those businesses that remained downtown struggled considerably as their customers fled to new subdivisions out on the edge. Downtown entered into a vicious cycle where it became less desirable to visit as there were fewer shops around, which hurt the existing shops, which led to more closures. The reasons for visiting grew slimmer and slimmer, until sadly, many downtowns effectively died.
In this vacuum, instead of the romanticized community of Main Street, our retail spaces transformed into highly controlled, segregated, and car dependent realms. Malls, strip malls, power centers, pad sites and more devolved to a lowest common denominator of design. All that mattered in this paradigm was getting what one needed, and driving home. If retail cannot be integrated within a community it takes on a distinctly austere form. If you’re driving past an area at 50, 60, 80 miles an hour, you won’t notice design flourishes, so a box will do nicely. Quite nicely. Gone was the tradition of imbuing one’s storefront with the pride of one’s business. Those finishes were antiquated, vestiges of pre-modern ideology. These things don’t scale, they simply cost too much.
The growth and profit imperatives of publicly traded companies, which many chains were increasingly opting to become in order to leverage their ability to scale, kicked into hyperdrive. In 1948, profits from chain stores were around $310 million dollars (adjusted for inflation), representing 23% of total retail sales. By 2021, US retail sales are projected to have exceeded $4.4 trillion.
With some rough (note, very rough, due to difficulty in sourcing information) estimates, after backing out e-commerce sales ($871 billion, the majority of which comes from chains), non-chain food & beverage ($659B–$239B = $420B), and specialty retail ($44.6B), brick & mortar chain stores likely were responsible for $3.06 trillion in sales, or 70% of total retail revenue. If we solely look at brick & mortar retail, chains comprise more than 86% of all retail sales. This is total and complete domination. We’ve arrived at a place where we have far fewer retail establishments than in the past due to consolidation by large chains, spread across far larger floor areas. It is the precise opposite of whatever Main Street USA is meant to be.
Our Financing System Favors Scale
This domination is reflected starkly in our built landscape, reinforced not just by zoning codes, car dependency, and our underlying development patterns, but a system of carefully constructed financial incentives & imperatives. A considerable amount of money is required to construct any building. As developers seldom raise the full amount of equity for any one project (mostly because using all of one’s own equity dilutes returns when cheaper money can be borrowed), they go to banks to fill in financing gaps. For any development, but specifically ones that have large components of retail, lenders look to mitigate as much of their risk as they possibly can. This is because they don’t want to have to finish a half-way complete project, or take over management of a vacant one. They’re not in the development or management business.
In order to mitigate this risk, lenders look for people who have experience creating shopping centers. In a catch-22, this nearly guarantee that the only people who can develop retail are those who have already developed retail. This privileges large developers who have done it before, and puts would-be small businesses who want to own their own stores at a fatal disadvantage. Those well-capitalized developers, similar to large chains, leverage their economies of scale and relationships to compound their advantages, beating all smaller parties into submission. Bigger buildings in sprawling landscapes are rubber stamped, while smaller ones in walkable fabrics can barely even pass a preliminary review.
What’s the best way to leverage economies of scale? Copy and paste a design used from a previous project to prove to the bank that you can do it again, on the same terms. What better way to provide maximum comfort to your lender than building the same exact project? You can use the same architects (you already paid for the boilerplate plans, after all), the same engineers, the same bank, and even the same tenants. The zoning codes are likely the same between two communities, but if they’re not, that’s no insurmountable hurdle.
The previous project presumably was successful if you’re attempting to build another one, and prevailing development patterns all but guarantee success as non-chain retail can’t compete. This process removes inefficiencies, reduces friction, and most importantly raises the bottom line without having to deal with the headaches brought on by smaller tenants. That it’s devoid of local charm matters little, as the Walmart or Starbucks franchise are more than happy to sponsor a local little league team, because they’re a part of the community, too!
It doesn’t matter if your project is in New Brunswick, or New Braunfels, San Jose or Saint Louis, it can be successful because chains have national relevance and loyalty. The teams of mega-developers and mega-chains are two sides of the same coin, reaping and sowing the benefits of soullessness across the country while communities are left without any identity, significant tax burdens, the evils of car-dependency, and no way out. Copy & paste this strategy across the country, on a foundation expressly zoned for this outcome, and we arrive at why everywhere feels the same — it is all the same!
These same dynamics come into play with existing properties, too. Just as lenders want security from those they’re extending a loan to, they want security from those who will be occupying the building. This is reflected in a tenant’s credit, or a measure of trustworthiness that signals how sure a prospective tenant might be able to pay their rent, or honor the terms of their lease. The higher the credit, the less risky a tenant appears on paper. The lower the credit, the higher the risk. If a property has higher credit tenants, it will be valued higher, and receive lower interest rates and more favorable financing terms because the cash flows are more secure.
Chains are high credit tenants. They have well known trusted corporate structures that stand behind them, are generally very reliable payers of rent, and are no-fuss entities who know what they’re doing. Small businesses, on the other hand, are unknown commodities. The owners cannot match the financial prowess of multi-national chains, and worse yet, might not have a tested business model (the horror!). This means their cash flows are very uncertain. Despite the fact that community-based small businesses are the foundation of great, highly desirable neighborhoods, most landlords and lenders would rather take the sure bet of sterility than the uncertainty of dynamism. Some would also describe this as being lazy, or uncaring, over a landlord’s obligation as a steward of the build environment. This conservative tilt is ubiquitous, but not without a cold logic of common sense. If you’ll allow, a brief example:
A landlord owns one commercial building along the Main Street of a community she invests in. Within 3 months, she’s approached by a couple who want to open a coffee shop and gallery that supports local artists. As they’re just starting out, the maximum they can afford is $4,000 per month. After expenses, but before debt payments, the property would generate $36,000 a year in net income. A broker tells the landlord that with this tenant, the property would likely be valued at a 7% capitalization rate. Though the landlord would love to partner with a coffee shop as there isn’t one in the entire downtown, she would lose money based off of the valuation of the property at $480,000 with this prospective lease as her total loan outstanding is $600,000. So, she waits for another tenant.
Months go by. Even years. Finally, a multi-national bank agrees to sign an LOI to open a branch in her storefront, with plans to move forward on a lease. The landlord is thrilled. While missing out on two years of rent hurt, the $96,000 she would have received from the Coffee shop pales in comparison with the new valuation of the property. Though the rent paid by the bank would only be twice as much as the coffee shop, the valuation of the property is more than 3 times as high at $1.6 million. This is because banks are among the highest credit tenants in the industry. Not only do they offer great terms —they usually pay far more in rent than almost any other prospective tenant — they offer great security and are not very management intensive at all. This results in lower operating expenses (if it’s not a triple net lease), compressed cap rates, and a higher valuation.
With this math, the landlord could have waited more than a decade without renting the space and still come out ahead after lost operating income and holding costs. Every vacant space in America is waiting for a white knight to save them and the valuation of their property. Often times these businesses are banks, national fast food chains, or other high credit tenants. That’s why one Main Street may have 5 banks along three blocks. The financial incentives mandate America devolving into a sea high credit well paying chains.
An Opportunity For A Better Built Retail Environment
The last decade has marked a departure from more than a half century of chain store dominance. In the wake of the Great Recession, many national chains have shuttered locations, formally ending a period of near continuous expansion since 1950. While reporters have breathlessly remarked that this is a retail apocalypse brought about by e-commerce, that’s not exactly true. In 2017, when the notion of a retail apocalypse gained popular momentum, less than 9% of retail was coming from e-commerce ($453B). Though this is a meaningful amount, it’s apocalyptic. While every closure of a Payless or a Sears was reported with near religious zeal, more brick and mortar retail stores opened than closed from 2017–2019.
The story is more than e-commerce. Legacy retailers have struggled to adapt, doing little to change their antiquated businesses models or user experiences. To walk through a Kmart at any point in the last 5 years was to become intimately aware of how unsatisfactory the big box brick & mortar experience had become. But the downfall of struggling retailers was also hastened by other factors, like marauding private equity firms who levered up companies only strip them for parts — while leaving tens of thousands of hard working people in the lurch, a demographic shift towards consciously supporting small businesses and walkable communities, and an oversupply of retail space generally. The US has more than 23 square feet of retail per capita, more than any other country on Earth. We have nearly 10 times the retail square feet per capita than Germany, and 5 times the United Kingdom’s. It doesn’t feel like an apocalypse, but a correction.
I hate to call it an overreaction, as the judgement has been swift and brutal for many a famed firm, but perhaps that’s just it. Sears, J.C. Penny, and Brooks Brothers, among others, were significant cultural touchstones, and the innovators of their day. Entire generations grew up with malls as the heart of their communities, finding their identities in the built environment of food courts, covered promenades, and department store giants. Their cultural importance has for some time extended beyond their diminished economic impacts, leading to media distortions of the true nature of the retail landscape. And who can blame them? One day the same feverish reporting might cast its focus on the last remaining Apple stores, the most culturally significant brick & mortar shops of this generation.
Let’s dispel the myth that retail is dying. It’s not. Bad retail is dying after decades of overbuilding woeful places. While the move away from malls surrounded by seas of parking is good for our communities, the vast majority of our retail is still firmly within the domain of car dependent Chainland.
But there is a window of opportunity to reverse this, if only a sliver. Despite all of the challenges, small businesses as a whole have proven resilient, with the total number of retail stores growing generally, & smaller specialty retail specifically. This growth is proving there’s demand for more brick & mortar businesses, where 85% of shopping is still done in person. After all, you can’t cut your hair online. There’s a grassroots movement towards more local, organic retail. People are valuing it more, and more landlords are willing to put in the effort to partner with tenants and help them grow. We need more of this. These tenants may very well be the next great companies of tomorrow, but they can’t get there unless they have an opportunity. We must provide for that. This is great for a landlord’s bottom line, and her community.
For communities who want to cure themselves of the curse of homogenous sprawl-induced chains, to find community identity and meaning through small businesses, there are a few steps they can take to get started.
We can’t support our small businesses if the landscape is designed to support big boxes. We need to make it easier for small businesses to thrive. This requires extensive zoning reform. But it also requires a rethinking of historical modes of American commercial development. We must go beyond the romanticized linear Main Street of our collective imagination, such that retail becomes less like a parade one transacts along, and more like a comprehensive place one can be integrated within. In other words, we should make downtown a place to be, not just pass through. Mid block retail should enabled (there are few things more charming than a cafe nestled unexpectedly in a residential row), and corner commercial spaces should be allowed as of right in most places. This goes beyond core retail, though, and should include many ground floor uses like offices, civic functions, or novel spaces like ping pong bars and social clubs. The goal should be to give life to the street all hours of the day, with many varied and diverse uses that forge a unique character one can identify with.
Think small! Minimum lot and unit sizes should be scrapped so that smaller retail shops can be developed. These are the type of fine grained places people want to come to, explore, and stick around. They’re the same type of places that help small business owners get on their feet, as they may find difficulty managing larger white boxed spaces.
Housing is essential. In order for commercial areas to be successful, they have to be of a mixed use nature so that there is a built in support network of neighbors to patronize shops and businesses. There are two fundamental flaws of Chainland & sprawling retail centers. First, they’re disconnected from complementary uses. This means every trip must be a dedicated one where a car is (usually) required. There’s no chance of serendipity, and no chance of popping one’s head into a store and picking something up. This leads to capricious consumption patterns, where one can just as easily go to the shopping center 3 miles away as 5 miles away, as there aren’t tethering mechanisms. When housing is a part of a commercial development program, intimate patterns are developed that become a part of one’s daily life. Second, this segregation of uses forces commercial tenants to have seas of parking allocated out front, depersonalizing space, spreading out distances, and commodifying the experience. Every place becomes a drive thru, not somewhere to stay and linger. This has many consequences ranging from heightened heat island effects, stormwater runoff, increased occurrences of traffic accidents, more expensive infrastructural maintenance, diminished health outcomes, and a lack of connection to one’s community. Interweave housing, commercial, and civic space together, allowing people to live a majority of their lives car free, and watch what magic ensues.
It’s not by chance that the places we love the most are those that have the most local businesses. Part of this is because in America, these areas have historically been older, with more vernacular forms of building. These places get a lot of traditional urban form right, and are the last vestiges from a pre-Chainland society. But successful areas need not be old to be loved. We can create great places today, so long as we’re thoughtful and get the foundation right. What’s more important than the age of a place is the sacred relationship between a local business and a human scaled building, such that direct connections to a place can be forged. One can learn more about somewhere from how the buildings look, what type of stores operate in them, and how their streets function, than just about anything else. It’s profoundly important to get this balance right.
When we treat our main streets and outlying retail districts as the only places where commercial value can pass through, they will necessarily be viewed as transactional spaces. Owners will respond as such. But if we were to reimagine them as networks of interwoven, intimate streets that one goes to experience, and live in, not merely transact, a whole new world opens up.
It’s high time to take the narrative of commercial places back from Chainland. We’ve sacrificed community, complex interpersonal relationships, our health, our environment, and the primacy of humans all for a few dollars off our fast food receipts, which end up being offset by prices at the pump anyway, de rigueur. This has been a pennywise, pound foolish bargain. Sure, we may be getting cheaper milk, fruits, lawn chairs and TVs, but we’ve lost something more profound: the spirit of our places. This is priceless. Once it’s gone, it’s very difficult to bring back.
Our perception of place matters intimately in our understanding of who we are as people. The built environment is a direct reflection of our values. Do we want to continue in the transactional, anti-human, car-dependent, placeless Chainland of today, or aspire to some enlightened notion of what our world could be? For my part, I choose the latter. I’m hopeful, and encouraged, that more and more people are turning to this romanticism by the day. It’s time for a new imagined reality of our world, and go after it. After all, Main Street USA is almost entirely an imagined ideal.
Coby Lefkowitz is a real estate developer, writer, and thought leader in the world of urban planning and development. He recently published the book Building Optimism, explaining why our world looks the way it does, and how to make it better. Purchase your copy, via the link.
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I'm not sure I understand this argument. If the author is trying to say "there are too many chains downtown", I think that is wrong because the weakest downtowns have the fewest chains. Retail in a weak downtown will often have a few restaurants or antique stores, but won't be able to support big box retail or (in the very poorest downtowns) even chain fast-food. For example, a decade or two ago you could find K-Mart in midtown Manhattan or central Philadelphia, but not in downtown Atlanta.