Adaptation: Small retailers shift plans as online sales grow

By Joyce M. Rosenberg
AP Business Writer

NEW YORK (AP) — When shoppers walk into JAM Paper, they can choose from hundreds of holiday bows, rolls of wrapping paper and gift bags, in addition to thousands of everyday stationery items. Yet the store will account for just 2 percent of the company’s business this year.

JAM Paper now gets so much of its revenue online that the company has scaled back from five stores to a single Manhattan location, owner Andrew Jacobs says.

“The second we launched the website in 2007, we became national,” Jacobs says. He estimates that online sales will be up 30 percent this year, while the store located near the East Village neighborhood is likely to have just an incremental increase.

Some small and independent retailers feeling the impact of the growing preference for online shopping have adapted by focusing more on their web business, including diverting more advertising dollars to those areas. Online and mail order sales nationwide rose 11 percent in October from a year earlier, compared with less than 2 percent growth in overall retail sales, the latest Commerce Department figures show.

There’s room for both types of retailing, but the increasing competition means store owners must be able to meet customers’ demands for the right merchandise, convenience, good service and an enjoyable experience whether it’s in a store or on a website, says Bob Phibbs, CEO of The Retail Doctor, a consulting company based in Coxsackie, New York.

“No channel you want to sell in is going to be easy,” Phibbs says.

Retailers also must make sure both their stores and websites can help bring sales in for each other. Jacobs, with an eye to that necessity, says he’s not planning to close the remaining JAM Paper location.

“I almost look at my retail store as billboard advertising,” he says. Some customers come into the store, buy a number of items, and then place a larger order online.

Antique dealers used to make most of their sales in stores or at trade shows. Now, when customers visit a store, they are very likely there to inspect in person items they already checked out on the retailer’s website.

But customers of M.S. Rau Antiques are also willing to spend even millions of dollars on an antique or artwork they see only online because they’re able to view multiple photos of an item from different angles and zoom in to examine it closely, owner Bill Rau says. So the 104-year-old retailer, which operates a store in New Orleans’ French Quarter, has shifted its advertising budget to online from magazines and other print publications.

The trend toward online becomes more pronounced this time of the year. Rau sees visits to his website surge 20 percent during the holidays, although foot traffic to the New Orleans store is little changed.

“We made four sales this week from the web, going from $2,000 to $60,000, and I love it,” says Rau, whose antiques include jewelry, furniture, ceramics, silver and paintings. “It obviously reaches the whole world.”

“I still look at it as manna from heaven,” he says of the internet.

There remains a place for small retailers who give customers the service and emotional experience they want, says David Clarke, a retail consultant with PricewaterhouseCoopers. Stores where sales associates are friendly and take time to explain the merchandise can appeal even to customers who buy online because it’s cheaper and/or more convenient, Clarke says.

“People do want to spend in an environment where they like the people and what they’re offering,” he says.

Magic Beans, a chain that sells baby merchandise, gets 25 percent of its sales online, owner Eli Gurock says. That figure hasn’t changed much over the past few years because many parents, especially those with a baby on the way, need information and reassurance as well as strollers, cribs, bottles and other items.

“We need to give them an experience that is better than online, better than Amazon,” says Gurock, who has five Boston-area stores and one in Fairfield, Connecticut.

Gurock anticipates that as Magic Beans increases its online marketing, its internet sales will grow. And as with antiques, many people see merchandise online and then come to the stores to look at it in person before they buy. So he’ll keep devoting time to both types of stores.

“If you’re not innovating and you’re not trying to sell on multiple channels, you’re not a current retailer,” Gurock says.