I was just in San Francisco over the weekend and walked at least 6-7 miles around downtown and there were restaurants and retail EVERYWHERE! Obviously, SF is on another level than Minneapolis, but why it's on such a different level I don't quite understand. Yes, SF is a bigger, more important city than Minneapolis. Yes, it has FAR more tourists. But still, it seemed like at least half of the streets in SF were lined with retail in one form or another: whether it was Chinatown, Little Italy, high-end retail like Coach or Prada, or Ma and Pa stores and boutiques -- retail was EVERYWHERE! Maybe it's the near-zero threat of inclement weather in SF that makes it such a walker's (and urban) paradise? Maybe SF has no mega-malls like the Mall of America? It's sad to think that Minneapolis once had one of THE better downtown retail scenes, only to be diminished to its current state, in large part due to MOA's success and a STRONG anti-city sentiment in the Twin Cities (whereas SF is THE place to be in that metro area).
I don't have any one-size-fits-all solutions for downtown Minneapolis, but I agree that infrastructure (particularly aesthetics and a feeling of place and comfort) is very important. However, in SF just about every single sidewalk seemed to be at least 20 years old, with huge cracks, terrible ramps to the street, etc. Minneapolis should make it as easy as possible for businesses to locate within the city, especially downtown. Along with Nicollet; Washington, Hennepin, and at least one more E-W street should be encouraging retail (perhaps 5th or 6th, since they'll eventually line the new park "The Yard" and be near the LRT).
Felt the exact same thing when I was in Boston and Seattle. Everything in Minneapolis is confined between Nicollet and 1st Ave, and 8th Street and Washington. A rectangular corridor that renders the rest of downtown useless after 5pm and on weekends.