Know when to fold 'em; but know how to hold 'em

EDITOR'S NOTE: “Global View,” appears monthly in Playthings as a regular department.

Like those old science fiction movies, people are going to start disappearing—from stores, that is.

That's right; disappearing. You will be walking down a store aisle one day and see a lot of people. Then you will come back a few months later and they won't be there. In fact, the store might not be there either.

What's happening? Are aliens abducting them? Are they teleporting to other planets? No, it's scary but not that kind of scary. It's this kind of scary: they're going to the Internet.

Have you given thought to what is going to happen when the Internet siphons off enough consumers to start closing brick-and-mortar stores?

Well, it's time to think about it. It doesn't take a great deal of customer erosion to create a big problem. We're already over-stored, even in spite of the consolidations and bankruptcies that closed thousands of retail doors in the last decade-plus.

Stores and malls were built with the belief that the consuming population would continue to grow. While shoppers may be on the rise, they are not necessarily headed to the malls or even free-standing brick-and-mortars. In greater numbers, they are shopping from their keyboards.

In fact, there is a steadily growing constituency that likes the lower prices and loves not having to leave home or office. To an Internet shopper, all stores are local.

No matter what their size, brick-and-mortar stores' break-evens were based upon pre-Internet calculations that all consumers were foot traffickers. They anticipated future competition, they planned for economic downturns, and they even began to plan for Wal-Mart.

According to the Department of Commerce, 2004 was a very good year for retailing. Store retailers (bricks-and-mortar) experienced a 5.8 percent increase in 2004. Non-store retailers (online and mail order) experienced a 12.8 percent growth.

It's wonderful that both sectors experienced growth.

Its ominous, however, that non-store sales more than doubled the growth of store sales. At some point it seems logical that the pie will cease to grow larger and non-store sales will begin to cannibalize store sales.

Foot traffic does not need to be off that much; just enough to create a tipping point where there are not enough dollars to support the fixed costs of a 200,000 square-foot store with an enormous parking lot.

How can one determine a store's level of risk for losing foot traffic? The first step is to determine whether the store's average shopper is wired to the Internet. The more affluent and younger they are, the more wired they are. The more wired they are, the more at risk the store is.

Second, take a look at the store's on-line competition. Don't just consider the competitor's current market share but the potential market share, as well. Remember, 10 years ago both eBay and Amazon.com were just getting started.

Even in the face of growing online shopping, savvy brick-and-mortars can compete. How? Answer a few questions: How quickly, easily and pleasantly can consumers enter the store? Is the parking lot easily accessible? Is it clean? Is the surface smooth? Is it well lighted? Do customers feel safe?

In the same sense, how quickly, easily and pleasantly can consumers exit the store? Can a customer check out in minutes? Are there self-checkout lines? Do a high percentage of transactions proceed without having to verify a price?

Are the store's check-out clerks friendly? Are they trained in social skills as well as scanning? It's nice to have a greeter, but it's the impression leaving the store that lasts the longest.

If there is a concern about losing foot traffic, here are some ideas for making sure consumers continue to visit the store:

• Make shopping at the store a value-added experience. Ally with food establishments and cinemas in the area and offer a movie and or a show as a gift for a minimum purchase.
• Create an entertainment experience in the store. If the place of business is not convenient to people who want to order from the comfort of their living room, give them a reason to leave the house. Hire a sword swallower if necessary, but do something to create an experience!
• Create an e-commerce Web site for the store and use it to generate synergies between online and bricks-and-mortar shopping. Allow customers to order on the Web and pick up at the store to save on freight and time. Run special online coupons and advertise with a search engine so when a consumer is searching for a particular product, the store's ad comes up before any of the competitors' Web sites.
• Create Internet portals in the store. By doing so, the store can offer goods and services that it would normally not be able to handle.
• Guarantee a minimal wait to check out—and back it up. Consumers hate to wait to give you their money. Make sure they get out fast once they are finished.

Above all make sure that entering and exiting is pleasant and fast.

Retailing, like everything in the last quarter of the 20th Century and now in the 21st, continues to evolve at a rapid rate. Sharp business people stay ahead of the curve by being proactive. Are you staying ahead of the curve?