By: Yasiman Montgomery
The fashion world is very interconnected with urban planning due to the fast evolving intersection between physical retailers, online retailers, tenants, landlords, other stakeholders, and the city. This relationship has been highlighted recently due to the dramatic growth of e-commerce channels, which grow at a rate of about 20% per year. The total e-commerce sales by 2016 were around $4.1 trillion worldwide and in 2019, it makes up about 12% of total retail sales. E-commerce’s growth is heavily correlated with physical retailers decline. While E-commerce is experiencing a dramatic growth, traditional retailers have experienced a steady decline. Shopping trips have reduced from 34 billion visits to US stores in 2010 to 7.6 by 2013. Additionally, there have been an accelerated number of store closings and even stores that are not closing are reducing their expansion plans. These dramatic changes have encouraged adaptations by all parties, from urban developers to physical retailers.
Physical retailers can adapt to e-commerce by adapting to omni-channeling, Omni-channeling is where either consumers first browse or research a product in a physical store, then purchase the product online or first research a product online or during a physical store experience to buy the product. Another adaptation is more physical retailers are entering shorter leases, creating “pop-up” shops, and placing limited quantities in physical stores to create exclusivity. Urban retail developers are adapting to less retailers leasing spaces by rethinking the original tenant and leasing to more experiential retail. Experiential retail spaces have been surviving e-commerce because they provide the consumer with an experience in addition to shopping, such as restaurants that feature bookstores or a restaurant that has a clothing shop in the front. Additionally, urban development has seen an increase in demand for industrial real estate. Another area of innovation between fashion and urban planning is the development of city centers.
Urban centers offer several benefits to constituents of a city, such as jobs creation, sales tax revenue and community vitality. Unfortunately, the convenience and intelligence of online retailers, including the collection of consumer data and marketing, has decreased sales of physical retailers in urban centers. Urban Planning as a collective with input from retailers, city developers and landlords is necessary to improve the physical retail experience and discourage the abandonment of physical retailers by consumers and stakeholders.
Innovators should not be too discouraged from creating physical retail spaces, but should also still tap into the online market to benefit from both areas of retail. There are tax incentives for physical retailers as the e-commerce retailers are subjected to taxing from 31 states in order to comply with more than 10,000 jurisdictions. Expenses for online retailers would include software and services to track sales tax rates, submit sales tax payments, and prepare paperwork. Additionally most cities have tax incentives based on zoning and small business grants that may make it worthwhile for you to open a physical shop. The decision is ultimately yours!
Fashion Law at Howard Law School
Fashion, a global $1 trillion industry, has been defined as the dialogue among the creative industries that propose innovations and consumers who decide what to adopt or reject.
But what happens when some creative innovators propose innovations that they are unable to protect?
Here at Howard Law School, our goal is to spread the message that IP protections are for EVERYONE by working to identify deficiencies in intellectual property law that make it difficult for some fashion innovators to retain their intellectual property rights.
In our class we explore the concept of inspired copying in the fashion industry and its effect on creatives of color.