Whats in Store2

Online shopping presents a new challenge to traditional retailers.

Change is constant and inevitable. Will “real” stores survive or give way to “virtual stores”? Well it’s already happened and will continue to do so at a faster rate. The key to surviving as a brick-and-mortar retailer is to embrace the new while staying true to your original goals.

Let’s take a walk down memory lane. Television hit American households in the late 1940s and early 1950s. At the time, lots of folks predicted the demise of movie theaters. And while TV did end up making a huge impact on going out to the movies, especially in small markets, the movie industry adapted, adding Technicolor to the big screen long before TV was available in color. Then, Dolby “surround sound” arrived and, now, movie theaters are offering dinner and cocktails at your seats. People are social creatures and like to be out and about. So the film industry has adapted and movie houses are alive and well. Retail can do the same, but not without many casualties.

When my colleague, Bob Carey, one of the top retail real estate professionals in the country, first broke into retail development/leasing more than four decades ago, he had the pleasure to represent one of the great mom-and-pop toy stores in San Francisco, King Norman’s Kingdom of Toys, for its new store developments. King Norman had a popular local kids’ TV show at the dawn of TV. In his stores, he offered the very best in customer service, such as free gift wrapping and even free local delivery. Norman told the story in the early ’70s that he could no longer compete with what he called “killer big box competition”—
Toys ’R’ Us—which came on the scene. Norman and most mom-and-pop toy stores are gone today. It seems, then and now, that consumers want deals and one-stop shopping with huge assortments. They’re now getting that on the Internet.

No industry is safe

Up until recently, it seemed apparel and shoes would be safe from the impact of Internet trading. Not the case. Look at the enormous success of Internet-only shoe seller Zappos, and the fact that virtually all clothing companies and department stores now have a big Web presence. The same is true for the drug and sundry store category. Sites like Warby Parker and Birchbox are penetrating that sector as well.

Big box retailers aren’t safe, either. Consider booksellers Borders and Barnes & Noble, which in the past put hundreds of independent booksellers across the county out of business the same way Toys ‘R’ Us killed local toy stores. Now, because of Amazon and electronic readers, Borders is already gone and Barnes & Noble is soon to follow.

That takes us to Jeff Bezos’ Amazon. His business plan is very basic: Develop a huge product assortment on the Internet, establish huge distribution facilities that can cover several states, offer low prices and no sales tax. A conventional retailer would need dozens of stores to cover the market reach of Amazon. The efficiency of the Amazon concept is hard to beat.

In the electronics sector, even former leader Best Buy is hurting. Consumers use it as a comparison showroom, then they order what they want from Amazon, for the most part tax free (though this is in flux right now). On big ticket items, saving 7 to 9 percent is a big deal.

A new software company, FaceCake, has just been launched to make shopping easier at retail outlets. It’s a virtual dressing room, so folks don’t have to go through the hassle of “trying on” multiple outfits. Who would have thought of a virtual dressing room? Except now it won’t be long before websites will provide this service to Internet customers who happen to have a web cam attached to their computer. A recent Internet shopping survey by Lab42 found several key items:

• A huge motivator for Internet shopping is free shipping;

• 70 percent of those surveyed said they shop online because of better sales and promotions;

• 95 percent shop from a computer but only 4 percent from a smartphone. This is temporary. Smartphone shopping will dramatically increase in a short time;

• About 68 percent of Internet shoppers don’t return purchases, but sites offering free returns get big play; and

• Two-thirds of shoppers “overwhelmingly agreed” that online shopping was a big winner, as it was easier and more convenient to browse.

Even as brick-and-mortar stores face unique hurdles, online shopping also walks a fine line. To market regularly without becoming annoying is the new challenge. A daily presence in consumers’ inboxes can easily urge them to unsubscribe.

Social consequences

There are grave social consequences to big box and Internet shopping. For example, 25years ago, a front-page story in the Wall Street Journal was titled “The Death of Main Street.” Pawhuska, Okla., was, by all reports, a thriving, Norman Rockwell, Main Street town—the butcher, the baker and the candlestick maker. Well, the town council voted approval of a new, 140,000-square-foot Walmart just a few miles out of town. Within two years, most of the mom-and-pop stores were gone. It was impossible to price compete with the purchasing power of the giant category killers.

Pawhuska paid a huge social price to save a few cents on a bottle of aspirin. It lost its heart and soul.

Shopping on Main Street is as much a social experience as it is a need to purchase consumer items. However, it’s often the case, nowadays, that more than half the patrons at family-owned restaurants, both families and couples, are spending their time texting or otherwise using their smartphones rather than engaging with their friends or family at the dinner table. It seems the next generation is becoming reclusive behind its electronic gadgets. Therefore, Internet shopping is right up its alley.

The power of technology

The theme here is change. Someone will always build a better mousetrap, so businesses dealing with consumers need to keep up or get out. Some, like King Norman, simply can’t compete.

Smart, savvy retailers integrate the tool of technology with their product lines to enhance their brick-and-mortar locations. They don’t deny the power of technology. They use it in different ways. We can all be grateful that the remaining brick-and-mortar locations will prevent the entire world from becoming at-home, cavemen shoppers, supporting vast warehouses in cheap valley canyons. Successful, small retailers, like regional players Liquid Marin and Toss Designs are doing their share of digital advertising (e-marketing) to drive traffic to their locations in Marin and the greater Bay Area.

Liquid Marin, located on Fifth Avenue in San Rafael, uses “Deals of the Week” videos on its email blasts to hype its current offerings, which are basically high-quality items at a great value. Its website announces “Live! Learn! & Play!” Owner Melissa McLane believes in making a personal connection with everyone who enters her store—thus her theme of living life inspired. McLane salutes her sister-in-law, Shawna Perloff, video personality and the face of Liquid Marin, for being so good behind the camera on the weekly video blasts that get the word out about the ever-changing product mix. “Customer service is the key. Having really great quality products at a good value—like Zohba [high-performance activewear] and Melissa & Doug Arts & Crafts [toys and books]—all of that brings customers into our store. It’s psychological. People need to get out and have that interaction,” says McLane.

Acknowledging that each sales platform has its pros and cons, McLane, through Liquid Marin’s website, encourages an inspired lifestyle with both online and in-store deals, but also workshops and art classes for new experiences, community and fund-raising (being “present” in every moment in our environment—to “be a part” of where we are). Its one-of-a-kind items range from home furnishings and accessories to books, luggage and contemporary fashion for men, women and children. Whether it’s the huge tented parking lot sales, which it has on a regular basis, or preparing its next video, McLane’s business relies on a dedicated staff that embodies her dream and theme. “Besides having great products, we have great people who I work with. We all work our butts off, we value our customers and have fun,” she adds.

Toss Designs, which now numbers six stores throughout the Bay Area, specializes in unique, fresh design looks for its quality line of totes, travel bags and accessories. Prominent on Toss’ website is this introduction: “Since 2004, the girls at Toss have been living and breathing handbags!” Its unrivalled assortment of merchandise has specific, target markets in mind. It personalizes and customizes for sororities or just one’s own “one-of-a-kind” tote. Its product line—both as presented on the Web and in the stores—is chic, unique and carefully chosen. Its owner, Jennifer Hogan, promotes a “flair for fashion and an eye for detail.”

She credits the company’s success in retail to their constant brainstorming on new and unique product ideas and concepts. Says Hogan, “We change our store windows weekly and we flow new products in at the same time. Customers love newness and a fresh assortment.” When asked what drives people to visit her store, she says, “Many people use shopping as entertainment. They get ideas from displays. There’s also nothing like instant gratification when leaving a store with a new purchase.”

Other savvy retailers invoke a variety of Internet tools (such as social media, videos, coupons, online and in-store specials, membership and clubs) to increase popularity, loyalty and demand.

On a more national level, the Apple Store, as a technology giant, is a firebrand that shows collaboration between virtual and “real” stores. Its very successful Apple retail stores are often the busiest locations in the mall or on the commercial street, capturing that appetite of a public ready to learn and embrace change. Again, education and inspiration are part of the formula.

Other retailers defy the odds merely by being great merchants and presenting an attractive assortment in great locations to a buying public that returns again and again. An example is Sole Desire shoes, which has grown to an impressive 12 stores this past year, having recently added a store at Bon Air Shopping Center in Greenbrae and also one in Sebastopol. That’s an anomaly for a regional, family-owned shoe store to be in expansion mode. President Dave Astobiza says, “The number one thing for us now is customer service. It’s all of our focus. As an independent retailer, that’s the big key.”

He says the store’s motto is: “People First, Products Second” and focusing on its successful niche is what’s helped it survive and thrive. “Do what you’re really good at and own it,” he says. The customers are mostly 45- to 70-year-old women who like fashionable shoes that are comfortable. When asked about locations, Astobiza says, “We choose lifestyle centers and cute downtown boutique areas, not malls. We also hold ‘Ladies Night Out’ wine and cheese parties in the stores, as well as ‘Spin the Wheel’ raffles for a fun, relaxed atmosphere in our stores.”

Also, one-off Madison boutique on Main Street in Tiburon creates high demand and return visits, because owner Karen Johnson has a good eye and is an exceptional merchandiser, which she has proven time and again. Johnson is old school—way behind the times in technology (no website)—and likes it that way. She says, “People want to connect. Shopping is a tactile, social, interactive and even community experience. My customers count on my eye for design, creativity and honesty in putting their wardrobes together for them. Online shopping lacks the ability to take the customers’ personal attributes and lifestyle into account.

“My store is located on the water in Tiburon. All it takes is a little sunshine for someone to want to leave their ‘cave.’ People stop in on their way to brunch, on their bike ride or take a long walk and make it their destination. It’s part of getting out and enjoying their surroundings and the lifestyle we all treasure in Northern California. Online shopping or mall shopping doesn’t offer the same sense of fulfillment.”

Looking forward

Yes, there will always be retail stores, one-off boutiques, fashion designer labels and, of course, items that require test driving, such as cars and mattresses. Retail will continue to survive and thrive where the good buyers and good merchants make good choices—creative, innovative ideas and trend spotting.

Savvy retailers mustn’t forget the words of Heraclitus: “Change is the only constant in life.”