How Are Houses of Worship Like Retail Stores? Changing Channels Of Distribution
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(OPINION) When a house of worship declines — and many are — the congregation tends to blame a dull pastor, an uninspiring music director or a drafty building with a bad sound system.
Suppose the reason, more often than not, is changing consumer preferences across categories of business, the same changes occurring in the retail and financial services businesses? And what can houses of worship do about it?
Because they are sacred, shrouded in ritual and tradition, houses of worship are regarded as immune to the forces of economic markets. Retail businesses always are measuring the success of each of its stores compared to each other and those of competitors. Houses of worship rarely if ever undergo such scrutiny. In place of rigorous analysis, houses of worship are evaluated through emotion, hope and prayer.
Over the past 30-40 years, the retail industry has undergone a revolution in how goods and services are delivered from source to consumer — its channels of distribution. It used to be that my hometown, Syracuse, New York, was filled with typical, average, undifferentiated retail stores. Today, most of the local Main Street and neighborhood retailers in Syracuse and thousands of other communities are gone, supplanted by:
Megastores and megachains, like Walmart and Target.
Online operations, like Amazon and eBay.
At the other end of the spectrum, small specialty shops — hockey-skate stores, cookie stores, and mid-century modern antique shops.
Financial institutions have undergone a similar revolution, local and regional banks replaced by megabanks, online operations and, at the other end of the spectrum, small but personalized community banks and credit unions.
The revolutions in retail and financial services are well measured, analyzed and documented. Twenty-first century Americans like to avail themselves of places for goods and services that are big, online or very specialized.
Aren’t faith institutions going through the same revolution, a few decades behind retail and financial services?
Houses of worship are closing left and right. A recent survey of a mainline Protestant denomination in one state showed 20% of 500-plus churches in critical condition (tiny congregations, precarious financial condition, decaying properties) and another 40 percent in serious condition.
The vast majority of troubled churches are undifferentiated — that is, average, typical — local houses of worship. Such houses of worship are being supplanted by:
Megachurches. Sometimes described as the “Walmarts of churches.”
Online operations. Televangelists like Pat Robertson, Jerry Falwell, and Robert Schuller paved the way for professionally-produced, online services.
At the other end of the spectrum, small but specialized houses of worship — often differentiated by race, ethnicity, national origins and/or some other definable characteristic. In particular, houses of worship serving immigrant and other ethnic populations are taking root and growing.
The retail industry has changed because of two types of forces: demand-side (changes in what consumers want) and supply-side (changes in what retailers need). Why are houses of worship changing? Again, two sets of reasons: demand-side and supply-side.
On the demand side:
Declines in membership, attendance and giving provide evidence that faith institutions are not delivering what consumers want. A 2020 Gallup poll showed that, for the first time since the poll was started in 1937, fewer than half of Americans are members of houses of worship, plummeting 23% over the past two decades. People still consider themselves creatures of faith; they’re just dropping their affiliations with houses of worship.
Because of increased transportation mobility and internet connectivity, houses of worship no longer need to be located near people’s homes. In the 19th and early 20th centuries, people could travel only by foot or horseback; today they can drive or ride several miles to services. Not only that — internet connectivity now allows congregants to experience services at any house of worship in the world that has possession of a camera, a microphone and an internet link.
On the supply side:
Individual houses of worship must shoulder costs associated with operating real estate — repair, cleaning, utilities, insurance. Costs have increased steadily. Often their buildings have tens or hundreds of thousands of dollars in backlogs of major repair and replacement of roofs, HVAC systems and other structural repairs.
Clergy are a supply-side issue as well. Good clergy jobs are in short supply, as small, struggling houses of worship cannot afford to pay a livable wage. Many pastors have two, three or even four-point charges. Clergy are resigning or “quiet quitting” due to low salaries and substandard working conditions.
The COVID-19 pandemic may not be a direct cause of the decline of houses of worship, but it certainly accelerated the decline, giving congregants “permission” to stop attending services and inflicting stress on clergy.
Retailers unable to react to new market realities either adapted or went out of business. Financial institutions did the same. How should average, typical houses of worship adapt? Three alternatives:
Get big. Becoming a megachurch is easier said than done; however, just about all started out small. Only a few local churches can successfully become huge and multifaceted, but one or two in each market may be able to adopt such a strategy.
Go digital. Investing significant resources in producing online services — not merely affixing an inexpensive camera to the floor of the balcony and a lapel microphone to the pastor but delivering broadcast quality.
Differentiate. Specializing — becoming the best house of worship at one factor or another — may be the way most houses of worship need to evolve. A differentiating factor might be something social justice related, like “the church that feeds the most hungry” or “has the best music” or “is the most welcoming to immigrants.” It is no longer enough to be the typical or average house of worship down the street, when it is too easy to drive or connect via the internet to another one in the next town or halfway around the world.
Another strategy many congregations are forced to consider is to close or merge with another house of worship. They should do so strategically, measuring the needs of the community and the denomination, not merely pounding a “For Sale” sign out front and selling to the highest bidder.
Of course, the problem faced by houses of worship is exacerbated by the fact people are falling away from organized religion in general. A 2021 Gallup Poll showed a drop in U.S. church membership under 50% for the first time since the poll has been conducted — a 24-point decline since 1999. There has been no such falloff in shopping or banking.
Virtually all congregations, healthy or not, need to address the toxic mismatch between declining congregations and underused, oversized, undermaintained, overly expensive properties. Savvy houses of worship are reusing or redeveloping their property and sharing with other congregations, not-for-profit organizations, or even for-profit businesses, enlivening their neighborhoods and earning much-needed revenues in the process.
Congregants often blame the decline of their individual house of worship on specific shortcomings: an uninspiring pastor, mundane music, inadequate parking and the like. Instead congregants may be exhibiting more broadly based consumer behavior. As with retail and financial services, houses of worship may be suffering from a shift in channels of distribution — congregants moving away from the undifferentiated and toward the large, the online and the small but specialized.
Worship has survived for centuries through all sorts of economic forces that would have threatened its existence. The challenge is for houses of worship to find new ways that stay true to their faith and use their real estate to benefit both faith institutions and the broader community.
Rick Reinhard led economic-development organizations in the U.S. and United Kingdom before going to work six years ago for the United Methodist Church. He now heads Niagara Consulting Group, which works on reuse and redevelopment of houses of worship, as well as local economic development. He was a Loeb Fellow at the Harvard University Graduate School of Design. He may be contacted at richardtreinhard@gmail.com .