RISBDC. (Tom Croke)
Small retailers can still find success — even in the shadows of the big box stores and eCommerce — but new businesses must find a niche, experts say.
“You need to find an industry niche, whether it’s a geographical location — Wickford is a good example,” said Douglas Jobling, program manager at the Rhode Island Small Business Development Center (RISBDC) at Bryant College. “The stores there know their clientele and customer base. The same in Newport — tourists, who are more willing to spend money on vacation.”
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RISBDC serves as a focal point for the coordination of federal, state, municipal, academic, banking, and other resources to aid small business and to promote economic development. It also provides free consulting and low-cost educational services.
As for competition posed by eCommerce, Jobling said that while the retail environment is changing dramatically, the old-fashioned form of retail can still survive.
“Large retail stores are using e-tail to expand their marketing,” he said. “Some people are not comfortable buying on the Internet, but they will use it as a resource.”
That connection can get that type of customer into a store, Jobling said.
According to a report released by Jupiter Media Metrix Inc. (an Internet research company headquartered in New York City) last month, online retail sales continue to grow.
Although the pace has eased, Jupiter projects that U.S. online retail sales will still reach $104 billion in 2005 and $130 billion by 2006, up from $34 billion in 2001. This compares with the Jupiter Media Metrix original forecast of $36 billion in 2001 and $118 billion in 2005.
The Jupiter report points out that among the top 50 retail sites (ranked according to unique visitors in the Media Metrix ratings reports), brick-and-mortar retailers outnumber Internet-only retailers. Of the top retail sites in March 2001, 56 percent were brick-and-mortar retailers, while 44 percent were Internet-only retailers.
The reverse was true for March 2000: Internet-only retailers dominated the top 50 retail sites at 62 percent. By September 2000, the number of Internet-only retailers and brick-and-mortar retailers in the top 50 was even.
According to Jupiter analysts, 52 percent of the online population will be making retail purchases online by 2002, up from 40 percent in 2000. That figure is expected to grow to 63 percent by 2006.
“Small business retailing went through a real decline over the past 20 years, but I think we’re seeing a resurrection of that in key areas,” said Ronald Kuntze, an assistant professor of marketing at Northeastern University who also spent 10 years as a consultant to small businesses.
Kuntze agreed with Jobling that the key is finding the right niche.
“They have to be very targeted,” he said. “Even the used and consignment places are very distinct targets.”
Used goods and items sold on consignment are hot, Kuntze said.
“The biggest retailer in Phoenix — Terry’s Consignment — sells used, upscale designer furniture,” he said.
With the growth of a number of used clothing retailers for both men and women, Kuntze predicts this trend “will move East, but property is so expensive — still the East Coast is strong on fashion anyway.”
Kuntze said he’s already seeing some businesses of this type in Boston’s South End.
Modern clothing for young women, ethnic or “hippie” style clothing, specialty greeting cards, retail stores that cater to gay customers and markets that carry Asian and Hispanic foods and products are some other niches that Kuntze said he sees doing well today.
“They are successful because big players are missing those niches,” he said. “There are still a lot of opportunities in retailing. A candle store doesn’t do it anymore, but a candle store with style can make it. It can be merchandise-driven, but it has to focus on a demographic or` lifestyle group.”
