Oakland Retailers Battle Competition From Online Shopping

The baby products store at the end of my block in Oakland closed recently, after 34 years in business. My family took note because we pass the place every day and because we were about to welcome a baby girl into the world.

When we went to Baby World’s “going out of business” sale, I asked owner Cristina Cabello why.

“The Internet killed us,” Cabello said. “Especially Amazon. You know, we couldn’t compete with the prices. They have free shipping. We couldn’t do free shipping.”

KQED has taken a hard look at online retail and its effects.

We’ve looked at the warehousing and distribution industry that is growing to deliver the convenience consumers crave. In the towns of Tracy and Patterson, huge distribution centers have created thousands of jobs, with more planned at an Amazon facility in Fresno. We’ve not only looked at the value of those jobs, but also at their future in automation.

We also returned to Baby World to see how it feels inside a store that is literally watching its customers try out their products and then go outside and order the same stuff online. Then we went out to see how Oakland’s larger brick-and-mortar retail scene is facing this down.

At Baby World, Cristina Cabello told me that business had been hard for about a year and a half, as she watched consumer behavior change.

“Finally, Amazon has trained them to do everything online, and the mentality of people changed,” Cabello said. “So we had people here on Saturday, spending time with us — 15 minutes on the car seats, the strollers … and then, at the same price everywhere else, and we offered the service. They would come to the door and order it online because it was going to be put at their doorstep the next day.”

‘Creative Destruction’

It’s not your imagination. There are a lot of stories like Baby World in the retail sector right now. That’s the assessment I heard from Chris Thornberg, economist and founder of Beacon Economics.

“There is some shaking out in the industry,” Thornberg said. “Typically, the weaker players are the ones that get diminished. But a shaking out of the industry doesn’t mean the demise of an industry. … That is why economists discuss these sort of shifts as ‘creative destruction.’ ”

Baby World isn’t the only business in Oakland that is struggling against new consumer behaviors.

“A couple stores in Oakland have signs up that say, ‘If you’re coming here to kick the tires, get measured, try stuff on, then buy it online, please don’t come in. That’s not the business we want,’ ” said Keira Williams, retail specialist with the Oakland Economic and Workforce Development Department.

Williams said that, overall, Oakland’s retail scene is thriving. Retail occupancy rates are high. Oakland’s sales tax revenue actually grew 0.3 percent last year over 2015. She said some stores are finding ways to compete.

“You have to adapt. If you have a product that is easy to buy and often at a lower price online, you have to figure out what’s different at your store,” Williams said.

There are, of course, larger forces that are helping some of Oakland’s retailers thrive. The city is gentrifying, and is right in the middle of a region that’s seeing a real economic boom, which means that people moving in have more money to spend on all kinds of retail.

Williams told me that Oakland has also focused less on building traditional shopping malls — which have really been struggling against online retail — and more on promoting its neighborhood shopping districts, like Rockridge. And those areas are doing particularly well. In commercial corridors in Oakland with an established business improvement district, sales tax revenue grew by 1.6 percent from 2015 to 2016.

Shoppers Speak Up

We asked KQED readers on Facebook how online shopping has affected their communities and their own habits. Here’s what some of them had to say.

How Has Online Shopping Impacted Your Community?

We were really excited when a pet store opened up a few blocks from our apartment, right across from the Downtown Oakland Library next to Lake Merritt. After about a year or two, we went in and saw they had a going out of business sign and I was shocked. Our neighborhood is dense and there are a lot of people with pets. I asked them why they weren’t able to stay open and the response was that too many people purchased their products online. — Meghan, Oakland

I’m a knitter and I’ve seen a number of yarn stores go under due to competition from online. — Debbie, Alameda

Our favorite bookstore [Kepler’s] was going to be forced to close by both higher rent and Amazon’s pervasive presence. Citizens who loved to browse for books, attend authors’ presentations, find gifts and pick up their book club books, fought back. They lobbied City Council, showed up at a variety of meetings, and eventually were successful — our bookstore is still in business and going strong. — Tate, Menlo Park

The biggest downside to online shopping in mine and many other San Francisco neighborhoods is package theft. The only packages that I get delivered at home are either cheap (like less than 10 bucks,) or they are so huge and heavy that thieves would choose other packages first. — Rebecca, San Francisco

Are You Still Loyal To Your Local Stores?

I sometimes go online to research various products, merchandise, and shops, but I avoid buying things online. I have never bought anything from Amazon or eBay, and I don’t want to. I go to local stores and shops to buy what I need, preferably locally owned stores. — Dave, East Oakland

We do our best to frequent the local shops — Cliff’s in the Castro, Animal House in the Lower Haight — but there are times when the option is outside our neighborhoods and online shopping, with a guilty conscience, we choose the latter for convenience sake. –Shana, San Francisco

We have tried to stay loyal to local bookstores, like Green Apple. We also try to go at least monthly to our neighborhood theater rather than stream movies at home because we don’t want that sweet old place to close. — Lauren, San Francisco

How Have Your Shopping Habits Changed Due to Online Shopping?

As a single, full-time working mom to a toddler, the convenience of having baby supplies, diapers, toilet paper, sunscreen, socks, toys, gifts, household goods, toiletries delivered right to my door is a convenience I cannot overlook. I’m sure it actually saves me money as I don’t have to drive anywhere, search for a coveted parking spot … pay the crazy meter prices and pray you don’t get a ticket and ALL the hassles that can come from having to go down to Grand Avenue or Temescal. I’d truly rather click a button and spend that precious time with my toddler. — Tonya, Oakland

I do most of my shopping online now. I will occasionally even grocery shop online. I live on a fixed income so I don’t do much clothes shopping and when I do, I know the brands I like and the size I need so I can buy everything I need online without trying it on. — Joan, San Jose