When Brick and Mortar Stores Are Failing Don’t Blame the Internet, Blame Your Grandmother
Posted by 360 PSG | Posted in 360 PSG News, Uncategorized, Web for Business, Web Marketing | Posted on 09-01-2009-05-2008
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After her third knee surgery, but long before she got a computer or the “internets,” my Grandma Sue joined the innumerable hordes of introverted silver-topped at-home shoppers who turned to QVC as a safe haven from the long lines of crowded shopping centers.
Needless to say, our Christmases ever since have been filled with cigarette lighter battery chargers sans iPhone USB ports, heatless soldering guns (or as we call them in our house “The Blister Maker 5000”), and battery-free wind up flashlight stocking stuffers; a smorgasbord of gadgets that would leave MacGruber green with envy. But our gifts often end up being flimsy and break after only a few months (or uses).
In her defense, how was Grandma Sue supposed to know? She didn’t test those products before she bought them. Besides, some offers are exclusive to TV, so even if she had gone to the mall, chances are she wouldn’t have found a doohickey as innovative as a flashlight that doubles as a personal fan complete with Styrofoam propellers and belt clip.
Not everyone shops from home though, well not yet anyway. Whether we want to admit it or not, the recession is in full swing, but even in our current economic downturn there are shoppers who want to spend money. At-home shopping may be causing stores to close their doors all over the country but e-commerce is on the rise.
Part Two: Where Did All the Stores Go?
People are always asking, did I know about Grandma Sue. In all of her years of navigating unsavory winter terrain and battles with unruly last-minute shoppers and disgruntled Walmart workers, is it likely that Grandma Sue developed such a hatred for physical shopping locations that she unwittingly became a major contributor to a commercial consumer goods boycott? Could it be possible that Grandma Sue is somehow responsible for the downfall of brick and mortar shopping centers around the world? Is it even plausible to assume that she could have at least seen this coming? Or that she’s part of some underground senior secret society that has its sights set on taking down major corporations one Home Shopping Network purchase at a time?
Probably not. But maybe she was on to something after all…
According to this bleak CNN Money post, senior writer Parija B. Kavilanz reported:
‘There’s going to be a massive sea change in the retail landscape,” said Nina Kampler, executive vice president with Hilco Real Estate, which advises retailers on their property management.’
Michael Burden, principal with industry adviser Excess Space Retail Services, expects as many as 14,000 stores will close in 2009. ‘We could see among the highest ever number of closures,” he said.’
Kavilanz added:
‘Ideally, (Kampler) said a retailer’s occupancy cost should be equal to 10% of its sales. But a long stretch of slumping sales and rising mall vacancies can dramatically push up the occupancy costs. Once rent and occupancy costs hit the 20% to 25% of sales threshold, you are treading water,’ ” Kampler said. ‘You can’t run a viable business with those numbers’.
What do you do if you’re one of the thousands of stores that are closing their doors?
Kavilanz added:
I think the whole consumer economy is being recalibrated,” said Kampler. “It’s something that’s not been done in decades. I think it will be a three-year recalibration of consumer behavior and expectations.
What is that “recalibration” going to involve? It’s likely that consumer trends will turn toward e-commerce. But will you be there waiting?
Part Three: Broadband internet connections, 3G networks, and QVC.com! Cover your hair and your eyes, it’s the Apocalypse!
The Home Shopping Network was launched in 1982. QVC (Quality, Value, and Convenience) followed in 1986. A decade later, www.qvc.com was launched (1996). The JC Penny catalog has been around since 1963. At-home shopping is not new, it’s just better.
I know this because Grandma Sue knows this.
High-speed internet connections are quickly becoming more affordable, definitely more affordable than rent and property tax, making it easier for “small and medium-sized enterprises (SMEs) to engage in worldwide marketing and expand their outlook beyond their nations.” http://www.trade.gov/investamerica/ecommerce.asp
The economic slowdown could actually force smaller businesses to turn to e-commerce, which potentially means more visibility, and drive up sales especially from foreign customers.
According to the International Trade Administration*:
The Census Bureau estimates that total e-commerce sales in 2007 were $127.2 billion, an increase of 17% from 2006. E-commerce sales accounted for 3.2% of total retail sales in 2007, rising from 2.8% in 2006. eMarketer continues to estimate that retail e-commerce sales will increase an average of 18.6% in 2008 and 2009. That is strong growth, but is still down from the annual growth rate of 20.6% experienced between 2001 and 2005.
But if your stores are forced to close their doors, will your website hold up?
I am Grandma Sue’s waning sense of consumer responsibility.
Cautious consumers are likely more frugal on every retail venture, which probably means they are doing extensive research before making any big purchase on electronics, winter coats, or even food.** Where are consumers conducting their research? On the internet. Since they are already there, why not get them to your site?
Part Four: Get a Website!
Get a website, make it a good one, and make yourself as visible as possible. Great web design, quality content, and strong search engine optimization are keys to getting your page ranked highly on Google so your customers can find you. Use social networks to promote your products and services. Sign up for everything: Twitter, LinkedIn, Facebook, Myspace, etc. and link them all to your site; generate linkbacks to your site and make it credible.
The ITA report concluded:
The continued rise in the percentage of total retail sales occurring through e-commerce is one sign of buyers and sellers becoming more comfortable with e-commerce transactions, while the fact that only 3.2% of total retail sales take place through e-commerce reflects the significant potential remaining.
While you may be left without a storefront, don’t be left out in the cold. Tap into the potential of e-commerce and be one of the survivors.
Maybe it’s time to start from scratch, again.
*As of this blog’s publication date, the 2008/09 report had not been released.
**Pink Dot, a grocery store in Los Angeles, will deliver your groceries to your apartment after you order them online.