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Retail's Changing. So Should You.

retail sales
Steven Puetzer | Getty Images
retail sales

Small retailers are in serious trouble.

All over America, they have been pushed to the brink of extinction. The assault began with mall stores and continued with big-box super stores, but the final blow may come from aggressive Internet merchants.

Do small businesses have a future in the retail environment? Can small retailers be saved?

One group is trying to answer that question, starting with one of the most challenging types of small businesses: an independent bookstore. Independent bookstores are the poster children of the endangered retailer: in the past two decades, about 75% of all independent bookstores have closed.

One of the most beloved local bookstores is Kepler's in Menlo Park, Calif. For 55 years, Kepler's has served as a community gathering place, intellectual wellspring and literary salon.

But it's in deep trouble. So owner Clark Kepler asked Praveen Madan, a former management consultant and bookseller himself, to form a group of community leaders to "re-envision" Kepler's future.

Madan presented his early thinking at a session of the Tools of Change publishing industry conference in New York. Madan's concepts are still in the formative stage, but they represent the kind of out-of-the-box thinking small retailers may need to survive.

Kepler's challenge is daunting, given the way many consumers treat local retailers. For example, a recent survey of Kepler's customers found the thing that they valued the store for most was "browsing and discovering new ideas."

"Even with all of Amazon's merchandising programs, a well-curated bookstore is still better at discovering the thing you didn't know you're looking for," Madan said. "People still need showrooms 18 years after Amazon."

But that's the rub.

People don't pay to come to showrooms. They browse; they discover; they ask salespeople for recommendations. Then they go online and buy from a company that didn't invest in the selection and staff.

If you run a retail store, you know what I'm talking about. Shoppers come to your store where you sell electronics, luggage, shoes, whatever. They quiz your staff, touch and try the merchandise, then walk out and buy from an online vendor.

Perhaps they don't even walk out. Mobile apps make it possible to compare prices in the store.

Brazenly, Amazon ran a promotion during the all-important holiday season, giving an extra discount to shoppers who used their comparison shopping app while physically in a bricks-and-mortar store. In other words, they gave shoppers a bonus for using your store as a showroom.

Small booksellers can't survive as showrooms. But that reality is not going away. Keplers' group is trying to envision a new future accepting that fact.

Kepler's is looking at new approaches that could work for other booksellers and retailers:

Diversify the revenue stream.

Kepler's long has hosted numerous author events. Recently, the store began charging for such events. But this portion of their income could be extended through a more aggressive events and seminars program.

Many large retailers know that they have to give shoppers an "experience," and small retailers may have to experiment with this concept as well. Sell something that can't be sold on the Internet — an experience.

Enlist members.

Madan suggested creating a nonprofit arm of Kepler's to attract community support for community activities. Kepler's has partnerships with 120 schools and nonprofits to bring authors to schools, essentially a nonprofit activity. Kepler's began its membership program a few years ago and already has 5,000 members.

The concept of membership for retailers is not entirely novel: The sporting goods retailer REI, for example, has memberships.

Create new relationships with vendors.

This may be the toughest item of all. But enlightened vendors may need to find innovative ways to support brick-and-mortar retailers, especially small businesses. Otherwise, they will find themselves at the mercy of a handful of online retailers demanding deep discounts.

Of course, all this begs the question of whether it's reasonable to demand these kind of responses from local retailers.

Is it realistic to expect that someone who went in to business because he or she had a passion for the merchandise now has to be an event coordinator and entertainer as well?

Perhaps it's time to learn. Perhaps survival will depend on adapting.

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