They survived the competition of big box retailers and now they’re trying to figure out how to compete in the age of the Internet. Increasingly, local retailers are selling online, with the personal touch that’s kept many of them in business for generations.
By Don Davis
In every city there are stores all the locals know, that for decades have been selling shoes or clothes, cameras or jewelry. Often passed on from one generation to the next, these stores are run by business owners who know their market and their product category.
Increasingly, they’re coming to know the Internet.
Small bricks-and-mortar businesses typically have been slow to embrace the web—only 44% of them even have a web site, according to a recent survey by online marketing firm WebVisible Inc. and research firm Nielsen Online. But each year more regional retailers begin selling online.
They do it because they see changes in consumer behavior. That’s what prompted Jeff Corey, president of New England jewelry store chain Day’s Jewelers, to step up his investment in e-commerce two years ago.
Tradition not working
“Our traditional advertising was not working as effectively as it had in the past,” Corey says. “And we were finding a lot more of our customers were shopping online before coming into a jewelry store.” Corey was aware of industry data showing 22% of consumers had researched online before shopping in a jewelry store in 2006, and expected that percentage would rise; in fact by 2008, it was up to 50%, he says.
Relatively recent converts like Day’s join another category of local, bricks-and-mortar merchants that began selling online in a big way in the 1990s, often migrating existing print catalogs to the web. New or old, they face the same dilemma: how do they compete not only against major retail chains like Wal-Mart, Best Buy and Gap, but also against web-only powerhouses like Amazon, Newegg and Zappos?
Such local merchants can have an advantage, especially when it comes to relatively expensive, considered purchases, such as furniture or carpeting, says Carl Prindle, president and CEO of e-commerce technology provider Blueport Commerce.
“Maybe it’s not as important if you’re buying a book or a DVD, but for those things where there’s a level of risk in the mind of the consumer it’s helpful to have someone down the street to let you touch and feel it, someone who’s a trusted source and who usually can deliver quickly,” Prindle says.
Some regional chains, like Day’s, do try to turn their multichannel profile into an advantage, using the web site to build trust and drive traffic to stores. But others’ web strategies focus on selling to out-of-market consumers. If there are common themes, they are a focus on offering deep selection and expert advice—and that there’s still a lot of experimenting going on.
How these local retailers fare online will be important, and not only for similar retailers considering entering e-commerce themselves. It also could affect the ability of web-only merchants to compete, particularly in selling higher-end merchandise that consumers often want to see before buying.
No disappointments
Day’s is a prime example of a retailer seeking to draw in customers who want to see and feel, and perhaps try on, a piece of jewelry before buying.
A special problem Day’s faced was that many of the 20,000 SKUs it sells are unique items only in stock in one store. A woman in Manchester, N.H., who goes into the local Day’s store looking for the diamond tennis bracelet she saw at DaysJewelers.com is likely to be disappointed to learn that the only piece is at the Day’s shop in Bangor, Maine, 184 miles to the north.
The Day’s web site addresses that issue by putting a form on product pages that asks, “Would you like to see this in a Day’s store?” A consumer is asked for her name, e-mail address and a daytime phone number, and which Day’s store she would like to visit to see the item and when.
“We get right back to the customer and say, ‘Yes, we have the item. We’ll set it aside under your name so when you come in you can be 100% guaranteed it’s there,’” Corey says. “If the item is in another store, we’ll transfer it.”
And it leads to sales—nearly 70% of the customers who reserve an item on the web site then come in to the store and make a purchase, says Corey. “I just sold a $4,000 ring myself,” he says. “A fellow had seen it on our site. He had never been into Day’s before.”
A new platform
That feature was one of several upgrades to the Day’s web site in the last two years, including a move to a new e-commerce platform from MarketLive Inc.
The company hired experienced jewelry photographers to shoot each of the items it sells online, and crafted descriptions of each product, says Ross Lasley, supervisor of e-commerce. The company began encouraging store associates to ask for customers’ e-mail addresses, and now has a list of 12,000 names, up from 2,500 early in 2008. Lasley says site content has been enriched with an eye to bringing Day’s up higher in search results for regional terms, such as “Maine jewelry store.”
The retailer now is producing biographies of each of the company’s 140 employees, which will be posted in the store locator section of the site. Corey figures consumers will be more likely to trust Whitney, the diamond specialist at the Bangor store, if they know about her training and certification. And including Whitney’s preference for Elle brand jewelry can help raise the Day’s site in natural search for that product, Corey says.
Day’s efforts are paying off. The DaysJewelers.com site attracted 80,000 unique visitors in the first four months of 2009, a 70% increase from last year. Web sales represent 2% of company revenue this year, double the percentage of last year.
Perhaps most important, store traffic is up this year and store sales are about the same as last year, good results given the hard times in the jewelry industry—17% of jewelry stores have gone out of business in the past 15 months, Corey says. What’s more, Day’s has reduced its spending on traditional advertising by 75% this year. “DaysJewelers.com has taken the position of the primary traffic driver to our stores,” Corey says.
Seniority counts
Like Day’s, Norman Camera sells items that consumers carefully research—cameras and video equipment. But its focus is more on selling through the web site than on bringing customers into the company’s two stores in Michigan.
Selling online helps the stores in that it allows Norman Camera to stock a deeper selection of products. For instance, the retailer may carry an $8,000 camera lens in the stores, knowing it will offer that lens online as well.
“Someone can walk into the store and see that $8,000 lens,” says Chris Norman, a company vice president who is no relation to the brothers who started the business in 1957. “If we were just retail, we probably couldn’t justify keeping that lens in stock.” Norman, whose e-commerce and POS technology is supplied by CoreSense Inc., says nearly 30% of the company’s sales are made online.
Norman says the retailer gets better discounts from manufacturers because of the additional volume sold online. And there’s a big benefit from being in business a long time: Norman Camera is usually among the first to get new products and may have a 30- or 60-day window to sell an item at full price before web discounters obtain the item through wholesalers and cut prices. “With photo specialty stores, there’s a little bit of a lead time in getting those products,” Norman says.
The price is right
C&W Shoes is another retailer seeking to take advantage of the extensive inventory in its five warehouse-type Shoe Gallery stores in Georgia, Mississippi and Oklahoma to build a profitable e-commerce business.
The company, which has been operating Shoe Gallery stores since 1992 and whose owners had been in the shoe business for decades before that, went online in September 2008.
C&W would have sold online earlier but it first had to install a modern point-of-sale system in its stores so it would have an accurate count of store inventory. That’s because its strategy for the web site is to sell store inventory, which is shipped from each store, says Will Brooks, the company controller and son-in-law of company founders Jim and Medora Ware.
Brooks says that allows the company to turn inventory more quickly and to offer online shoppers a wide selection without over-ordering. “The beauty for us is that across the five stores we have a pretty good size run,” Brooks says. “In any one store we may be missing a size 8 or 11, but across all the stores hopefully we’re going to have the size in that style.”
Shoe Gallery aims to compete on price online, feeding products it has in stock to comparison-shopping web sites. Brooks says he can undersell a major online shoe retailer like Zappos.com by not attempting to match perks like free overnight shipping. “If the shopper is interested in the same product, at perhaps a lower price, and is willing to wait for it to come ground shipping, we hope they’ll give us a look,” he says.
Brooks says the e-commerce site, which like the store POS system is supplied by Celerant Technology, is generating good results and should pay for itself in less than a year, although he wouldn’t disclose sales.
But he has encountered an unanticipated customer service issue: because shoes are sold from store stock, they may appear less than pristine to a web buyer, even if it’s only the tissue paper in the box being rumpled. Brooks says he is trying to figure out how to set customer expectations. One idea under consideration is to state on the site that shoes are sold from store inventory, and ask customers to check a box to make sure they see the disclaimer.
Call first
Another e-commerce newcomer feeling its way is Leiberts Royal Green Appliance Center, a 20,000-square-foot appliance store in the New York City suburb of White Plains, which began selling online late last year.
Leiberts, which opened in 1955, is trying to build its web business by allying with kitchen designers around the country who may not have ready access to stores with a wide range of appliances. The retailer’s affiliate program gives a participating designer its own branded microsite within the Leiberts domain, each with a customized selection of appliances and a 2% discount for customers, says Rob Satran, director of business development. About 20 kitchen dealers have signed up in the first six months.
Leiberts has done no paid search advertising for the e-commerce site, preferring to let business grow gradually so that it can learn the intricacies of selling online before having to handle large volumes of orders.
One thing Satran has learned is that it’s important to call each customer who makes a purchase online to make sure the buyer understands what she is getting and how long it will take for the item to arrive. Depending on where the customer is located, an item may not arrive for 10 days or two weeks.
“We’re selling high-priced items and we want to make sure they’re comfortable with what they’re buying and that their expectations are in line with our ability to fulfill them,” he says.
And in an effort to drive local customers to the web site—and ultimately to the store—Leiberts for the first time last month began running radio ads in the New York area that mention the store’s web site address, rather than its street address and phone number.
Personal touch
It is personal attention, such as a call with each order, that most distinguishes these local retailers, and many of them play up this aspect on their e-commerce sites.
For instance, Nebraska Furniture Mart, which operates two large stores in Omaha and Kansas City and a smaller one in Des Moines, and which began selling online in 2006, displays at the bottom of each page a photo of its founder, Rose Blumkin, along with her motto: “Sell cheap and tell the truth.”
The company history includes a page devoted to the story of Mrs. B, as she was universally known, a Russian immigrant who founded the company in 1937 and worked there until she was 103. The company is now run by her son Louie and three grandsons.
On the contact information page of the Day’s site, visitors are invited to “Go Straight to the Top” by e-mailing or calling company president Corey. He responds each day to eight to 10 e-mails and a smaller number of calls. “How important is it for me to have a true, unfiltered understanding of the customer? I think it’s critically important,” Corey says.
Whether that kind of personalized attention will enable regional retailers to compete against online retail giants with the buying power of Wal-Mart or Amazon remains to be seen. But a retail philosophy like Mrs. B’s, if backed up by attentive customer service, could play as well on the web as it has in Omaha.
don@verticalwebmedia.com
