The Retail Dilemm?... and what will we do to change it?

TTtusne ts No industry that does not transition every decade or so. Preferences change. I D..og.uphics change. Over the last 10 years, a bad economy had its impact, as has the Internet, drawing an ever-increasing volume of sales away from brick-and-mortar stores.

As a country, for years we have benefited from the culture perspective of excess, sroked by deepir and deeper discounting by just about anybody and everybody. Indeed, sometimes shopping is so much easier online, sitting at home and not fighting for parking or a clerk's attention-and still getting a lower price.

Yet, there is a frustration and sadness to see Main Street continue to decline and malls start to empty (some 157o of malls are expected to close in the next l0 years) or become places to hing out rather than buy. One of the joys I have when traveling internationally is io be in counlries where the baker, butcher and candlestick maker are still valued in the town center.

Overall, looking at Wall Street, it is clear the retail sector has not been a reason to invest. Whether back to school or holiday season, results do not seem to improve the meter significantly. Indeed, the holiday season seems to start earlier and earlier, which, coupled-with early discounting to attract buyers, seems like the retail sector putting a knife in iiself. The mentality of "build it and they will come" has certainly hurt many of the major retailers that have been forced to close stores. The "build them big" mentality has also gone by the wayside.ln2Ol4, retail sales are expected to slow to 3.4Vo_ growth-a disappointing rebound following our Great Depression of the last six years. Many stores are seeing year-on-year declines.

Sometimes it takes guts to understand times have changed and that you need to change, too-although a declining bottom line will often do it for you! Considering all the insta6ility of recent years, low inflation, the panic button set to "discount, discount and discount again," e-commerce now accountingfor 6.5Vo of sales, and perhaps understanding that m;ny stores have become too lalge to support themselves (and to really enjoy shopping in), there is a sense that retail has seen its best days.

My orn feeling is that all things are cyclical. What goes around comes.back another day, tirough maybe not looking the same. And this is where innovation continues to make some retailers thrive. Without touting ourselves, I enjoy reading Carla Waldemar's column ("Competitive Intelligence"), where you can see our industry's retailers changing their environment and doing what they need to do to increase their business, as well as their customer interaction. They recognize that to compete and stay in business, they have to change. Consumers have not gone away, they're merely shopping in a different way. You cannot survive today by being in the discount trap. Discounts should be special and a bonus-not for everyday shopping. Otherwise, like me, you wait until something's on sale, because it sure enough will be. Lower average transaction value only aids the spiral down. That being said, as JCPenney discovered, it's not easy to get out of the bunker once you're in it!

Maybe stores are too big-and too plentiful. I read a statistic recently that the U.S. has 52 sq. ft. of retail space per head of population vs. about 16 sq. ft. in Germany-perhaps why revenue per foot is also declining in an economy with only marginal wage growth. Our economy cannot support more, but it can and will support better-whether that means delivering a better sales experience, not a forced one, or providing what your customers want when they want it.

In our industry, I love to read about customer education sessions on decking, laying tile' or...? How do you take advantage of the web? Let customers choose online and then let them come to the store to pick the items up? Use the retail store as the warehouse for the online store?

Alan Oakes, Publisher aioakes@aol.com www.building-Products.com

A publication of Cutler Publishing 4500 Campus Dr., Ste.480, Newport Beach, CA 92660

Publisher

Alan Oakes ajoakes@aol.com

Publisher Emeritus David Cutler

Director of Editorial & Production

David Koenig dkoenig@building-products.com

Gontributing Editors

Dwight Curran

James Olsen

Carla Waldemar

Advertising Sales Manager

Chuck Casey ccasey@building-Products.com

Administration Director/Secretary Marie Oakes mfpoakes@aol.com

Circulation Manager Heather Kelly hkelly@building-products.com

How to Advertise

Chuck GaseY

Phone (949) 852-1990 Fax 949'852'023'l ccasey@building-Products.com

Alan Oakes www.building-products.com

Phone (949) 852-1990 Fax 949-852-0231 ajoakes@aol.com

CLASSIFIED

David Koenig

Phone (949) 852-1 990 Fax 949-852-0231 dkoenig@building-Products.com

How to Subscribe

SUBSCRIPTIONS Heather KellY Phone (949) 852-1990 Fax 949-852-0231 hkelly@building-Products.com or send a check to 4500 CamPus Dr., Ste. 480, Newport Beach, CA 92660 U.S.A.: One year (12 issues), $22 Two years, $36 Three years, $50

FOREIGN (Per year, paid in advance in US funds): Surface-Canada or Mexico, $48 Other countries, $60 Air rates also available.

SINGLE C0PIES $4 + shipping BACK TSSUES gg + shipping

Building-Products.com