Changing shopping patterns needn’t spell doom for small town retailers, Mary Bosch of Marketek told some 50 local business persons Thursday morning.
The real challenge, Bosch said, is for local retailers to fill in niches left empty by the large box stores or to develop a business plan that meets the needs of a variety of customers, even in the smallest of communities.
Bosch was the opening speaker in what the Sweet Home Economic Development Group, Inc. hopes will become a monthly breakfast/speakers meeting.
Ron Moore, SHEDG president, said the event was co-sponsored by the Sweet Home Chamber of Commerce.
Although Sweet Home merchants may feel somewhat downtrodden due to the economic shifts of the 1990s, the community has already put several successful redevelopment efforts in place, Bosch said, most notably the formation and continuation of SHEDG.
“In fact,” Bosch added, “I’ve used Sweet Home as a model community for overcoming economic obstacles.”
Consumers age 45 and older will spend $1 trillion annually on restaurants, travel and recreation, health and personal care, housewares and gambling, Bosch noted.
Those 40 and under will spend $1.1 trillion annually on cars, apparel, entertainment. “They are still building their nest,” Bosch said.
On average, we will eat out 4.2 meals per weeks or 218 meals per year.
“Some 46% of a family’s food budget will now be spent eating out,” Bosch said. “That figure was 25% in 1955.”
Meeting the demands of consumers has pushed retail space to an all-time high, more than doubling in the last 25 years.
“There is now 20 square feet of retail space per capita,” Bosch noted. “It has given way to such terms as ‘shoppertainment’ or ‘eatertainment’.”
She pointed to Pioneer Place in Portland, which encompasses 290,000 square feet with 70 stores.
“There is a shift toward precision shopping, which is exactly what small towns can provide,” Bosch said. “Store sizes are getting smaller. Even Wal-Mart is now creating neighborhood centers. They opened 20 last year.”
Internet retailers did $3.7 billion worth of business last year and that number is growing. This past Christmas, internet sales were up some 13%, while many traditional stores posted negative growth.
“But, internet ‘etailers’ can’t close the sale like traditional stores,” Bosch said. “You can offer a shopping experience.”
Wal-Mart remains the nation’s top retailer with sales of $193 billion annually.
“It’s very important to know who your competitors really are,” Bosch said. “You need to find niches the big retailers can’t fill.”
Retail sales growth is slowing, Bosch said.
“During the 1990s, retailers enjoyed 9.4% annual growth rates,” Bosch said. “The last two years, that growth has slowed to about 4%.”
There is good news for small retailers, though, Bosch said.
The extra large super stores are turning off some consumers who can’t or don’t want to spend a lot of time sorting through aisles of items.
“Time pressures continue to drive spending habits,” Bosch said. “The majority of retail spending is after 5 p.m. Perhaps you need to adjust your store’s hours accordingly.”
Shopping motivators include price/value, 39%; selection, 37%; location, 33%.
“The secret is to provide superior customer service,” Bosch said. “The power is in being different. Innovate or evaporate. You must know your customers like you know yourself.”
For example, Bosch said, do you know what the Oregon Jamboree visitors need and want? What are the needs of the potential visitors at Salmon Run?”
Bosch said there are 12,100 residents within a five mile radius of the Jim Riggs Community Center. They earn 77% of the state income average with a median age of 40 (37 for the state).
Their main lifestyle groups are heartland, middle America and rural.
“The people who live here want first and foremost to have a good homelife,” Bosch said.
Those residents generate $94.5 million annually in potential retail sales. Of that amount, 37% goes toward transportation costs. But, Bosch said, they spend $22.5 million for food, $13.5 million for home furnishings, $8 million for apparel and $5 million for personal care products.
On a local basis, Bosch urged local retailers to shop locally, track purchases, develop a mentoring program among businesses, learn from each other and to make field trips to other communities to learn what they are doing right that can be used in Sweet Home.
“It’s important you talk to each other,” Bosch said. “You need to package your assets and plug retail gaps.”
Local retailers need to market together through frequent shopper programs, senior citizen days and downtown worker incentives.
Retailers must take every opportunity to make a good impression on potential customers, Bosch said.
“What do people driving by in cars see of your shop?” Bosch said. “You need to constantly evaluate your lighting, signage. Your storefront windows send a powerful message…all of these things should combine to say ‘Come In!'”
Bosch closed by quoting a successful economic developer, “If at first you don’t succeed, you haven’t thought big enough.”