Retail Expert Warns: Ignore Internet and 'Writing Is on the Wall'

Wednesday, 06 Aug 2014 04:48 PM

By John Blosser

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The Web has become an ominous spider's web for America's bricks-and-mortar retail stores as more Americans turn to the Internet to do their shopping.

And for retailers who ignore the Internet, "the writing is on the wall," says Brian K. Walker, Hybris Software senior vice president, writing in Forbes.

The Wall Street Journal notes that shopper visits to stores have dropped an average of 5 percent per month in the past two years, and plunged 7 percent in June.

The result is a rash of closing stores, big-box retailers making plans to open smaller stores and delaying the opening of new stores, along with shrunken sales, while chains offer steep discounts in an attempt to lure customers into their doors — often resulting in even lower long-term profits.

Target has suffered through six quarters of declining walk-in traffic, reporting flat growth in stores open for more than a year; Walgreens saw a 2.6 percent decrease in in-store traffic in June; and CVS experienced a 0.4 percent drop in walk-in shoppers.

Retail giant Sears closed 12 percent of its stores in the last three years and plans to close another 80, and RadioShack is on track to shutter 200 stores this year.

"There is a crisis in retail," Walker wrote in the Forbes piece. "U.S. retailers received approximately half the holiday foot traffic they experienced just three years ago, according to ShopperTrak."

He notes that the grim statistics indicate a "tectonic shift in the way consumers shop and buy."

Reuters took note of a 14.6 percent decrease in in-store shoppers during the holiday season in 2013. "It's a result of more and more technology in the hands of the consumer, which allows them to virtually window-shop," ShopperTrak founder Bill Martin told Reuters.

Looming on the horizon, the Journal reports, is the expiration of about two-thirds of office-supply store and half of retail-store lease agreements in 2018, which will give over-built retailers an opportunity to walk away from under-performing stores.

Already, Staples has announced plans to close hundreds of physical stores, with the CEO Ronald Sargent telling the Journal that stores now have to "earn the right to stay open," as the company focuses more on Internet sales, which make up about half of the company's business.

Walker suggests that retailers equip salespeople with Internet-connected tablets, allowing them to research reviews, prices, and availability of items online as quick as smartphone-toting customers, and turn their stores into fulfillment centers to draw business.

"Shopping for fun is not dead — customers still enjoy exceptional brick-and-mortar events," Walker writes. But retailers who "ignore opportunities for transformation" do so at their own peril.

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