Cities Where Brick-and-Mortar Retail Is Declining the Fastest [2023 Data Study]

The holiday season is in full swing, and for U.S. retailers, it is often the busiest season of the year for consumer spending. Holiday spending in the U.S. is estimated to total nearly $1 trillion¹ in 2023 as shoppers rush to buy gifts, food, and decorations and take advantage of retailers’ steep discounts.

However, the overall strength of consumer spending obscures how trends in retail have shifted over time, often creating challenges for local stores. The pandemic played a part in accelerating a major trend that has impacted the sector in recent years: the growing shift toward e-commerce and the decline of brick-and-mortar retail.

Changes in the U.S. Retail Landscape

Online sales have dramatically reshaped the retail industry since the turn of the millennium. In the late 1990s and early 2000s, startups like Amazon and eBay led the charge into e-commerce, and their successes led established retail chains to make online shopping a core component of their businesses. From 2000 to 2019, e-commerce grew from 0.9% of all retail sales to 10.6%. And with many physical retail stores closing or experiencing lower traffic in the wake of COVID-19, online sales jumped again to 14.6% in 2020 and have not fallen off since.

While there are some signs that independent retail is remaining resilient — catering to conscientious shoppers who prioritize buying local — the economies of scale, supply chain networks, and technological expertise available to the biggest retail players have generally been too much for competing independent stores or midsize chains to overcome. Between 2011 and 2021 (the latest 10-year period with available data from the U.S. Census Bureau), the U.S. lost 60,000 retail stores, marking a 12.6% decline in stores per capita.

Metropolitan Areas With the Largest Declines in Brick-and-Mortar Retail

This decline has been felt differently across the U.S. Perhaps unsurprisingly, major technology hubs have seen some of the largest declines in brick-and-mortar retail stores per capita during these 10 years. Among major metropolitan areas with more than 1 million residents, Silicon Valley’s San Jose (-23.6%) and San Francisco (-19.8%) have the largest and third largest declines, respectively. Meanwhile, Seattle — home of e-commerce juggernaut Amazon — experienced a 22.8% reduction in retail stores per capita.

Conversely, the South has generally seen the smallest reduction in brick-and-mortar retail stores. Memphis only had a 4.1% decrease in physical retail store establishments — the smallest percentage change among the nation’s largest metropolitan areas. Other major metro areas in the South, such as Oklahoma City (-7.5%), Tulsa (-7.5%), and Atlanta (-8.9%), also exhibited relatively minor declines in the brick-and-mortar retail space.

Below is a complete breakdown of nearly 400 major metropolitan areas grouped by size and all 50 states. The analysis was conducted by Upgraded Points using data from the U.S. Census Bureau.

Methodology

The data used in this study is from the latest U.S. Census Bureau’s County Business Patterns (CBP) release. To determine the locations that have experienced the largest decline in brick-and-mortar retail, researchers at Upgraded Points calculated the percentage change in the number of retail store establishments per capita over the 10 years between 2011 and 2021. For this analysis, retail store establishments exclude “nonstore” retailers, such as e-commerce businesses. To improve relevance, metropolitan areas were grouped into cohorts based on population size: small (less than 350,000), midsize (350,000 to 999,999), and large (1,000,000+).

Final Thoughts

U.S. retailers are in the middle of a bustling holiday season, expecting nearly $1 trillion in sales. However, American retailers have not felt this overall spending strength equally. The rise of e-commerce, catalyzed by pioneers like Amazon and eBay in the late 1990s, has created existential challenges for both small, local businesses and big-box stores across the country.

E-commerce, which grew from 0.9% of total retail sales in 2000 to 10.6% in 2019, surged to 14.6% in 2020 due to COVID-19-related closures and sustained that level thereafter. This, among other factors, led to the closure of around 60,000 U.S. retail locations nationally between 2011 and 2021, marking a 12.6% decline in brick-and-mortar stores per capita.

While the extent of retail closures varies regionally, the number of retail stores per capita declined almost ubiquitously during these 10 years. Notably, retail locations in the West, Midwest, and prominent technology hubs were generally hit harder, while those in the South have remained slightly more resilient.

References

1. National Retail Federation. (2023, November 2). 2023 Holiday to Reach Record Spending Levels.