By Philip Haldiman, Independent Newsmedia
The carnage is real.
Brick and mortar merchants such as Macy’s, Radio Shack and JC Penny have shuttered dozens of locations this year, and businesses of all stripes are dying slow deaths as online sales take over the marketplace.
Or are they?
E-commerce sales in the first quarter of 2017, accounted for 8.5 percent of total sales, according to the Department of Commerce. It accounted for about 3.5 percent in 2007.
But many West Valley brick and mortar businesses are bucking the trend and relying on a variety of means to adapt in an ever evolving retail landscape.
Michelle Ahlmer, Arizona Retail Association executive director, said the retail industry has changed and evolved over time and it is in the middle of another game change. Years ago, independent merchants dominated the marketplace, then corporations proliferated and then malls changed the dynamic once again.
She said merchants must be adaptable and in the future and that technological opportunities will be divergent, diverse and vast. But it will always be retail, she said.
“The customer experience will still be crucial and the survivors will adapt,” Ms. Ahlmer said. “Retailers now have an opportunity to reach out and touch their consumers and they can find them, but how does your business stand out and get found? New businesses, to get found can’t rely on staying in their own neighborhood any more. They will need to reach beyond, and most small retailers are finding a way. There are cheaper ways to find a presence.”
Raoul Sada, president and CEO of the Surprise Regional Chamber of Commerce, said things are definitely changing. He said he has seen a number of West Valley businesses use the internet to their advantage.
“A retail business must maintain relevancy in the digital world, so physical stores need to adapt,” Mr. Sada said. “Some are doing this well by implementing phone apps to build customer loyalty. The businesses that take advantage of technology to improve their business will be the ones who maintain a competitive edge.”
About five years ago, Golf 4 Less opened in Glendale’s Tanger Outlet and then opened a second location in Sun City West two years ago. Owner David Lyman said he recently downsized to focus on the 6,000-square-foot location in Sun City West. Early on, he said he struggled with the online aspect of running the business, but contracting with a marketing firm that helped him shore up time for what is really important in his business plan — creating relationships with customers and networking with golf groups.
Golf 4 Less utilizes a number of tools to reach customers — website, Facebook, email campaigns, blog entries, the Sun City West Independent, among others. However, the company has not yet jumped into e-commerce.
Mr. Lyman said rather than blaming the internet for the demise of brick and mortar retailers, be a present business owner.
“Things are not as bad as people think,” he said. “Having right person to help you with Facebook, your website, social media and selective marketing is tremendously important. It takes so much time off our hands.”
Texas-based marketing company Dex Media worked with Mr. Lyman to streamline Golf 4 Less’ internet activities and manage online marketing. Christopher Amos, a marketing consultant with Dex Media, said he helps Golf 4 Less keep up with the many ways consumers are using the internet.
Mr. Amos noted there are thousands of platforms on the web and makes sure business information is accurate and updated. While big corporations are taking over the marketplace, Mr. Amos reminds consumers that small businesses are the heart of America, and they are about service.
“In our evolving economy and society, it is challenging. The Amazons and Walmarts are monetizing almost every industry and putting their foot in the door, and they have more money to put into it than small businesses,” Mr. Amos said. “But every business has its own unique story and it is up to them to tell that story, or Amazon will tell the story.
Before businesses consider online advertising several things should be considered with any advertising medium, said Kevin Mahoney, National Account Manager for Independent Newsmedia’s Arizona newspapers, including the Daily News-Sun.
“Who is your audience and what is your message and what is the best vehicle to reach that audience and deliver that message,” Mr. Mahoney said. “While online advertising has its place and is certainly a powerful tool it should also be noted that when you look at big, national advertisers you will find print, especially on a local level, will always be present in their media mix.”
Guy Erickson. president/CEO of the Peoria Chamber of Commerce, added that having a diverse marketing portfolio can allow certain businesses to properly target their audiences.
“A retailer who is doing well would be continuing to advertise in print and then has added the online component,” he said.
Worldwide, the market for food delivery stands at nearly $100 billion, or 1 percent of the total food market and 4 percent of food sold through restaurants and fast-food chains, with an overall annual growth rate estimated at just 3.5 percent for the next five years, according to global management consulting firm McKinsey & Company.
The same thing is happening in the West Valley, and it is not just limited to restaurants — grocers like Fry’s, Safeway and Walmart have jumped into the food delivery market. And if a grocery or restaurant doesn’t deliver itself, services in the West Valley, like Surprise Express, which opened in April, are popping up all over.
When Firehouse Subs, 13820 W. Bell Road, No. 11, Surprise, opened in January, owner Ed Cunningham jumped into the online marketing game, following Surprise-related pages like Places to Eat in Surprise and Surprise Matters and creating a presence online. The franchise also offers a phone app so customers can earn free subs and rewards.
Going into the opening, Mr. Cunningham said there was a lot of discussion about the power of pick-up orders.
He said online ordering and take-out has eclipsed 50 percent of sales for the franchise. This made exploring the food delivery component a good option.
He knew that food delivery was a component worth exploring, so he signed up with Surprise Express.
The Surprise Express charges a $5 delivery fee to the customer and a service fee to the restaurant, which goes to delivery company operating costs. Out of the $5, the driver gets $4 and dispatch gets $1. Gratuity is optional.
Mr. Cunningham said most restaurants use a delivery service, and it will take a year to be able to determine, effectively, if the service is profitable.
“The (delivery) trend is increasing. For us, using the service is about us adapting, and having the third party doesn’t really increase our labor or liability,” Mr. Cunningham said. “Also, Surprise Express is mom and pop business, and in the spirit of Surprise, we are trying to support local businesses.”
Holly Kurtz, retail director for the Center for the Future of Arizona, said as time moves on, retailers will need to adapt to stay strong in the marketplace.
“The store is a front line defense. It is why you come back, whether online or in person,” she said. “In the future, stores will need a diverse customer base, and you will still need a personal face on retail. Businesses will need to be agile like never before. Embrace it.”