As technology progresses and society needs human interaction less, opting for a text-don’t-call approach, retail stores see more and more business being done online. For local brick-and-mortar stores, this can mean being forced to close their doors for good.

 

“When I think of shopping online, I think of cultural deforestation,” Sean Moor, owner of Gatsby Books, said. “The clear-cutting of local jobs and the small businesses that give our town its character and continuity.”

 

Moor is not far off. Around Long Beach and across the nation, vacant storefronts are not an unusual sight – with certain locations seeming to be a revolving door for business after business to fail – as more and more small businesses are forced out by the likes of Walmart, Target and heavy-hitting online retailers such as Amazon.

Rand Foster, owner of Fingerprints record store on 4th Street in downtown’s East Village, does not foresee a future where record stores will be forced out of business by online shopping or corporate retail stores. His store stocks new and old music releases on various formats, books and even has a conjoining restaurant, Berlin Bistro. (Photograph by the Business Journal’s Larry Duncan)

 

“Right now there is a popular trend of unimaginative people who shop online, date online, get a college degree online and count their friends by the number of likes they have when they die,” Moor said. “If your life is simply a trail of analytic data to be scooped up and bought and sold by corporations, then you’re not being human enough.”

 

The 2016 eCommerce Industry Outlook report by Criteo, a digital advertising company, illustrates this growing trend by comparing the two heaviest shopping days in the United States: Black Friday and Cyber Monday. In 2013, Cyber Monday sales reached $2.3 billion nationwide, while Black Friday sales were only $1.2 billion. Fast forward to 2015, and, while both days saw growth, Cyber Monday saw more – reaching $3 billion, while Black Friday only grew to $1.7 billion.

 

Though ecommerce sales made up less than 8%, or $92.8 billion, of total retail sales during 2016’s first quarter, according to the U.S. Census Bureau, it is still not good news for small businesses, which typically do not have full web stores.

 

Rick Freeman, chief executive officer of 2nd Street Beauty, has noticed a decline in foot traffic at his three Long Beach locations and his Seal Beach store since ecommerce has been on the rise. He admits that only 50%-60% of his inventory makes it onto his web store, though some of the products do not reach the site because vendors have asked for them to be sold in-store only.

 

But whether his products are in-store or online, competing with online retailers that can slash prices lower than a brick-and-mortar store’s cost has reduced business noticeably over the years. He said that the downside to the ever-growing tendency for shoppers to purchase goods online is most of the products are not guaranteed and customers will get “burned” when their expectations are not met.

 

“[Amazon] is the largest retailer in the world, not much else to say about it,” Freeman said. “They cater to certain people that don’t care about customer service. We are education-driven. Our people are on a continual education program. So, people who want to be serviced and want to be helped, that’s our customer.”

 

Freeman said that his stores are still “come-in-and-see-us” family businesses and that 97% of sales are conducted face-to-face. The small chain of beauty shops offer its customers tips and tutorials on products and how to use them – something that Freeman prides himself on, since online retailers do not offer such personalized service. That’s not to say that he does not wish to be just as helpful to his online customers, who he said are typically out of state.

 

“We’re working very diligently to get our education to these online customers,” Freeman said. “We do now give a lot of tips and a lot of tutorials, but we need to do more and that’s our big emphasis online, education to the online buyer.”

 

For his team’s knowledge to reach and educate online shoppers, 2nd Street Beauty has a blog linked on its website where they post beauty tips, video tutorials, how-to guides and product reviews.

 

Much like Freeman’s effort to provide hands-on service, record stores are notorious for giving their customers an ambiance that is impossible to provide online. Music is always playing and there are often like-minded people browsing the shelves to start conversations with.

 

“We try to inject value that you don’t get in an online experience,” Rand Foster, owner of Fingerprints record store, said. “I think we can fill those kinds of voids. We all, speaking for the other stores in town, try to create a place that’s a reflection of the community and gives people a space that they can go and meet people and talk about Beatles versus Stones, or whatever their passions are.”

 

Foster recalled the ’90s and what it was like for record stores competing with big-box retailers such as Best Buy and Target. He mentioned that these stores would get “preferential pricing” and be able to sell new releases for less than local shops could buy them.

 

Regarding online shopping, Foster seems hopeful saying, “We’ve overcome in the past. I’m certainly putting our money on us, but I think ultimately it’s going to come down to consumers. Do people value the experience they get when they come into their local store?”

 

The difference in mentality for companies with deep pockets seems to be drastic. These companies have the monetary means and workforce to keep up with technology and demands and take risks on new ventures.

 

“We’ve been able to look at it in terms of an opportunity. It’s been a significant strategy shift that we began making back in 2007,” Stephen Holmes, the Home Depot director of corporate communications, said. “Interconnecting the digital and the physical space, where our online supports our stores and our stores support online, has been a key driver in that strategy.”

 

For Home Depot and other large, nationwide retailers, their online presence isn’t just beneficial for online sales but also to stock more products than they could possible store physically in their facilities.

 

“It’s the expanded aisle,” Holmes said. “We have about 35,000 SKUs [products] in the typical store. Online now we have more than a million SKUs.”

 

Retailers who are strictly online have the ability to stock an outlandish number of products. Amazon, for example, currently stocks upwards of 450 million products – a number that no brick-and-mortar store can fathom and national chains with booming web stores cannot come close to.

 

However, for omnichannel stores (utilizing in-person, online and mobile markets) an online presence also means easy price comparison before shoppers set foot in their stores, advertising new products which can bring new customers and getting customers into the store for pickups and purchases, which could lead to more sales.

 

“About 40% of our online orders are completed at the store,” Holmes said. “Of that 40%, about 20% of customers buy something else while they’re in that store.”

 

Home Depot’s greatest challenge with the rise of online shopping’s popularity and the introduction of its Buy Online Deliver From Store program, according to Holmes, is keeping up with demand. He also explained that being able to store Buy Online Pick Up In Store purchases is a challenge due to space and trying to make the experience as convenient as possible for customers.

 

According to the Year Ahead 2016 report by Bloomberg Intelligence, “The growing use of technology by consumers is driving major changes in consumption, inventory management and delivery in the retail industry. Traditional brick-and-mortar retailers are being pushed by Amazon.com and ecommerce peers to invest in technology and enhance omnichannel capabilities, from content to payment, to boost sales, while margins may be pressured.”

 

“Our average store is 105,000 square feet,” Holmes said. “No one’s pretending it’s simple to find anything in the store, but with the Home Depot app, you can literally say to your app ‘faucets’ and it will show you where the faucets are – what aisle and where in the bay that particular product is.”

 

Getting into the online shopping universe seems to be an easier transition for large, nationwide retailers. It opens up new opportunities for sales and they have the funding to try new things and not go bankrupt if these new ideas fail. But for small local shops, which add character to communities, it’s becoming more and more difficult to keep up.

 

“It’s an existential choice,” Gatsby Books’ Moor said. “You can sell out or buy in. Let’s buy into our local communities and make the place where we live better.”

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