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Monday, July 27th, 2009

The New Economy Counter-Trend, or The Shrinking Amenity Gap

A Chicago icon is in danger as Prairie Avenue Books, a huge architectural specialty bookshop, is on the verge of closing. Among its problems: people are coming in to browse then buying for cheaper on the internet. I’ve been to Prairie Avenue (which is actually on Wabash Ave.) and it is definitely worth a trip. The atmosphere is more library than bookshop, which I guess is part of the problem.

This story powerfully illustrates the force of the changing economy and some of the lesser known effects of the internet and globalization. We hear a lot about “spiky cities” and how the global economy is concentrating ever more activity and economic life in a handful of global cities. Chicago is one of those cities, one of the big winners.

Yet even Chicago is not immune to the forces of economic transformation. Any number of its treasured institutions have been hit hard. Chicago once boasted a vibrant independent bookstore scene, but today it is largely chain central, with Amazon.com probably being the bookstore of choice.

More significantly, what this shows is that cities like Chicago are losing their lock on the unique attributes that once made them cultural oases in an otherwise totally drab landscape of “Generica”. Once, if you wanted to be able to buy specialty books about architecture, you almost had to be in once of America’s hand full of top tier cities like Chicago. Now you can be anywhere in America. Amazon.com puts a better selection of architectural books within the grasp of my hometown of Laconia, Indiana (pop. 29) than Chicagoans had access to a mere 10-15 years ago. Amazing.

I used to think about what it would mean practically to relocate from Chicago to a second tier Midwest city. What important things would I have to give up? I identified two major items: live opera and clothing. But heck, today even these aren’t a problem. While most small cities have only tiny regional companies, the Met Opera HD simulcasts beam the best of New York City into the Midwest’s smaller cities. I’ve never actually attended, but I’m told by opera aficionados who have that it is better than being in the theater.

Similarly, sites like styleforum.net and Ask Andy About Clothes give me access to in depth information about everything form the cutting edge of fashion to classic tailored clothing. And the internet lets me order almost anything ready to wear or off the rack from the comfort of my own home.

Think about it. Fifteen years ago if you moved from Chicago to Columbus, Ohio, it would have been like getting exiled. Even getting a decent cup of coffee would probably have been a challenge. Today, that’s no longer the case. While Chicago certainly has more and better stuff than Columbus by a mile, people in Columbus today have access to urban amenities that Chicagoans didn’t only a short while ago. You can enjoy opera, clothing, a nice meal out, great coffee, local agricultural products, etc.

This is the counter-trend of the global city phenomenon. This is the Friedmanesque flattening phenomenon in action on a micro scale and it has important implications.

  1. It means that, despite the economic advantages that accrue to major global cities, much of the advantage that they previously held over other places has been in fact eroded. The gap between Chicago and Columbus in terms of urban amenities is now a matter of “more and better” whereas before it was a matter of “have and have not”. Those are very different equations to someone evaluating a move.
  2. Smaller cities should have reason to believe they can attract talent – if they get their act together. Some major knockout criteria have been eliminated. Indeed, we’ve seen the rise of smaller cities like Portland and Austin and Charlotte. The highest value added functions of the global economy may continue to be located in global cities, but there are plenty of other things smaller cities can do if they are able to leverage their new opportunities and attract the talent necessary to pursue it.

While the Amazon effect could theoretically reach anywhere, I don’t see it really filtering down to much smaller places, at least not ones without universities, or to rural and small town areas. It might enable a few people here and there who want those environments to do so, but I believe, and trends seem to back this up, that people who like these urban amenities like the stimulation that comes from being able to enjoy them with others who feel the same way. And the critical mass of people like that has always been in cities. I wrote before about the “aloneness of an urbanophile“, and indeed most urbanites aren’t afraid of doing things by themselves, but few people want to be perpetually like that.

Will the Midwest’s smaller cities find a way to make this work for them? Time will tell.

21 Comments
Topics: Globalization, Talent Attraction, Urban Culture

21 Responses to “The New Economy Counter-Trend, or The Shrinking Amenity Gap”

  1. Alon Levy says:

    The problem with this analysis is that in countries without a rust belt and a sun belt, migration trends still favor the big cities. Tokyo is the fastest growing part of Japan, whereas most other Japanese cities are shrinking. The decline of Northern England and rise of London is a common gripe among British socialists. In Germany, the fastest growth is in Munich and Frankfurt, the two most developed and most global cities.

  2. The Urbanophile says:

    Not sure what you are getting at. The largest US cities are not the population growth engines of the country. Even in the Midwest, the largest cities – Chicago and Detroit – far lag the top growing cities in the region: Des Moines, Indy, Madison, Twin Cities, C-Bus, KC.

    I don't actually claim this will cause migration by itself. It's old hat to suggest that amazon means we can all work from small towns anywhere we can get a connection, but we know that didn't happen. I'm just saying it makes it more plausible to attracted educated people who might otherwise reject you, if you can craft an appeal to them.

  3. JG says:

    Just looking at this from a small business owner standpoint, I am always saddened to see these places go under. From a strict consideration of revenue and patronage, these stores must be progressive about how to maintain adequate revenue as internet and "generica" competition move into an area. Additionaly local communities (whether small towns or big city neighborhoods) must have very tight networks between business owners and the local or patrons (in the case of vacationers, etc.)

    Mass Ave Merchants association I believe to be a success story in Indianapolis, turning over the case of about two decades the downtown "skid row" into a top residential and commercial neighborhood.

    Madison, IN is an example of a small town on the Ohio river with a Wal-Mart, Lowes, Kroger, and many other chain stores; but has maintained an extra-ordinarily charming downtown with great locally owned and well-patroned shops. I recommend a trip.

  4. Matt says:

    This is a topic I've thought a lot about lately..namely, what makes it "worth" living in a big city. The option of a car free lifestyle and good employment opportunities are obviously some things that cant be easily replicated elsewhere. But as far as retail is concerned, I think you hit the nail on the head. Cities, especially those like Chicago often maintained that distinctive regional "feel", while other locales were quickly losing theirs to chain stores and strip malls. Chicago held off for a long time, but look around now and what do you see…perhaps the storefronts look different and theres a bit less parking then their suburban brethren, but on almost every corner downtown you'll find a national chain today.

    I love record shopping, and thankfully there is still a fairly robust independent scene these days. You simply cannot find stores like Dusty Groove or Jazz Record Mart in other smaller cities…the type of place that has a selection so strong you could pick up a handful of records blindfolded and leave completely happy (although ironically, Dusty Groove started out as an internet order operation long before they established a brick and mortal location). But its places like these, and Prairie Books being a great example, of the type of retail option which truly helps define a sense of "place". Once thats diminished, whats the point?

  5. The Urbanophile says:

    Matt, it is interesting. In some respects, the new economy has built up and transformed Chicago for the better. In others it has torn it down. As you note, it is chained to death. New York has held up much better. There is literally nothing I look forward to more on my trips to New York than a visit to Kinokuniya.

  6. Alon Levy says:

    The Midwest has its own internal sunbelt too, consisting of cities that were never part of the old manufacturing belt; this explains almost all of the difference between the Detroits and the Kansas Cities.

  7. Alon Levy says:

    Kinokuniya is a chain, too – it's just Japanese-owned, and so unknown in the US. I used to frequent the store in Singapore because it had a far better selection than the nearby Borders.

  8. The Urbanophile says:

    True, Kino is a huge Asian chain, but very unique in the US. Plus there are many, many independent businesses in NYC.

  9. Ironwood says:

    Urb:

    I think you're right about the "flattening," when it comes to consumer-related items — retail and entertainment (not being an opera buff, watching on PBS is just fine, although, I don't believe one can really get the same buzz from watching Second City on TV or DVD that one gets on Wells St.).

    But for me, what makes it worthwhile to live in a big city like Chicago is not access to goods or even entertainment. It's the placeness of it: leaving the toniness of Michigan Ave to go through the pedestrian underpass and come out onto the completely different world of the Oak St beach in July; people-watching on the Belmont el stop; bongo drums and the spray of water from Buckingham fountain after a Grant Park concert; the seemingly interminable wait for the 151 when it's 30-below, and then squeezing onto a bus with windows fogged up from the heat of so many bodies wrapped in down jackets.

    Ditto for experiences in other cities — the ambience you get from just walking or sitting on a bench and observing. I know everyone has their own examples, from Paris to the Twin Cities.

    Doesn't make any difference that I can get a frozen deep dish pizza or frango mints delivered anywhere. I'm in Chicago because of the seagulls, the skyline and Wrigleyville after a Cubs game.

    Yes, it's true that some unique urban places are being blandified and Disney-fied. Times Square being Exhibit A. And Michigan Ave. being Exhibit B, as we see more national chains invade spaces that were once occupied by boutiques — most recently Best Buy in the Hancock building.

    But if we move away from the realm of consumption — retail and entertainment — and stick to the realm of justing "being there" — the aspects of living in a place that come free with the rent — I'm not so worried. Whether it's the manicured neighborhoods in the Bungalow Belt, Goose Island, 57th St. in Hyde Park, Damen & Milwaukee or Chinatown, I get a Chicago vibe that feels unique and safe for the foreseeable future.

    I expect that other readers can supply similar details from their own cities.

    Cheers,

    Iron

  10. hharrington says:

    Some of us in Louisville, are desperately trying to keep our local flavor. So far we are doing pretty well. If you ever come to Louisville and travel to Bardstown road, Frankfort Ave, or East Market Street you will see almost nothing, but local restaurants and stores.

    The mayor has come under some fire for giving Cordish Company (owners of 4th Street Live) such a sweetheart deal and not doing the same for a local club owner. However, even 4th Street Live contains a local club…..Makers Mark Lounge.

    Speaking to the larger point I think it is important for cities to try and keep that local flavor. It's those little unique things that really make a city special. Especially the smaller metros that can never compete on "placeness" as Ironwood has stated. Size does matters.

  11. Anonymous says:

    to hharington: I tend to agree with you that size does matter…to some point. I will (walks softly) use the 4th Street Live and Commericial District in Indy as an example. I frnakly have never understood 4th Street Live. It is nothing more than a few bars strung together in a small area with no real connection to anything. I don't think it even really matters that it has a connection to the "local flavor or not".

    As a "desitination:" it is laughable. I agree Louisville gave Cordish a lot of money to help or start to "revititlize" it's downtown night live. But there just it's anything there to do other than have a cocktail right afterwork before heading home.

    In comparsion in Indianapolis you have a the Commerical District which covers a much larger area, has several "exclusive" chains as well as the standards and a well connected Mall/convention/sports compelx.

    I guess what I see Louisville doing with 4th Street Live is dropping a copule of bars down in the middle of downtown that at out on context and on a small scale.

  12. Anonymous says:

    Also, something done in downtown Indianpolis with a "local flavor" look at Lucuas Oil Stadiou. "The Luke" to us locals. Lucas Olil tried to do it all in sports cars and things…it completely misses the point. "The Colts" are the local flavor. What this really points out is that Lucuas Oil know nothing about the real Indianapolis.

  13. Janice says:

    Funny, I was just in Columbus, OH this weekend for a wedding. As a Chicagoan, I didn't expect much. I was proved wrong. Columbus is now the largest city in OH. Its downtown has lovingly restored older buildings and at least three nice nightlife areas within walking distance of where I was staying. True, I didn't see much retail but then I wasn't looking for it.

  14. Anonymous says:

    Also,to hharington Louisiville needs to:
    1. Dump the horse racing image.
    2. Dump the horse racing image.
    3. Dump the horse racing image.
    4. Dump the horse racing image.
    5. Dump the horse racing image.
    6. Dump the horse racing image.

    you get the point. It's a dead sport. Much like Indy is sheading the racing imagine.

  15. Anonymous says:

    BTW Urban I like to call it the iPhone effect. LOL

  16. Anonymous says:

    Anon 3:04

    Why would Louisville want to 'dump' the horseracing image? The Ky Derby/Oaks/Breeders Cup and Friday Nite racing are not examples of a dying sport.

    Would suggest Indy hang on to the racing image itself. Without that image…what is Indy's claim to fame?

  17. Mark Arsenal says:

    This is all anecdotal. I think things like book, record and clothing shops have been killed by their own product evolution more than by the intronetz. The future of local businesses will be small manufacturers and provider of basic needs like food and handyman services, not expendable amenities like books.

    The music industry committed suicide slowly over the past decade, and now people don't have any way to hear about new music except on the 'net. That's what killed independent record stores.

    Most people who want to read any specific book would be hard-pressed to find that specific book at a small seller (in the past or today) – in the past they relied on book-finder services thru the local bookshoppe, now Amazon and Ebay provide a self-service method of doing this. Any serious reader usually has too many unread books on their shelf at home to just go to a store and buy stuff that's in stock. You only want to add to the reading list if you find out about a specific book on a blog or article that you just HAVE to read – so maybe blame blogs for the end of browsing?

    The main question I have is whether Amazon's business model will be viable when oil goes to $500/barrel? The whole micro-distribution network might look a whole lot less efficient then.

  18. The Urbanophile says:

    hharington, I think Louisville (and even more so Cincinnati) have done a great job of hanging on to that local flavor. To some extent that might be both a blessing and a curse.

    As for Mr. Anonymous who thinks Louisville should try to shed the horse racing image, I think that would be crazy. It's Louisville's strongest brand asset and it has almost entirely positive connotations.

  19. the urban politician says:

    Great post, Aaron, and I think you're dead on.

    I can only attest to what you've said by my experiences here in Racine/Milwaukee metro, which is far smaller than NYC, where I used to live.

    If I want fine coffee, good books, movies, and generally high quality food, I need not go very far. Milwaukee has some decent selection of ethnic food, although of course it does not have the sheer volume of possibilities that you may get in New York or down in Chicago.

    Nevertheless, does that really matter so much? That's a choice we all have to make, and I think smaller cities are able to win that argument for a lot of people if you factor in things such as traffic, cost of living, etc etc.

  20. The Urbanophile says:

    TUP, thanks.

    Taking this further, it's been noted that the internet didn't lead to people working remotely, but rather tended to concentrate them in cities, where face to face interaction is important.

    But, I think it did change the boundary line between viable and non-viable cities for attracting the high talent workforce. Previously Chicago was probably the only option in the Midwest. Today, Milwaukee is very much a realistic place to live. Will Chicago continue to attract the absolute top talent? Probably. But there's still a broadly addressable market for Milwaukee to target. 15 years ago it probably wasn't even in the game. Today it has a sporting chance.

  21. Alon Levy says:

    The main question I have is whether Amazon's business model will be viable when oil goes to $500/barrel? The whole micro-distribution network might look a whole lot less efficient then.

    I doubt that. In Europe, gas is taxed in such a way that it costs as if oil cost $300/barrel. And yet, shopping is increasingly done in strip malls and Carrefour/Wal-Mart supercenters, Amazon is alive and strong, and if anything transporting freight by truck is more common than in the US, which has a better freight rail network.

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