Experts See Web Sales Leveling Off After Quick Growth

by Mark Friedman  on Monday, Mar. 3, 2014 12:00 am  

Bill Martin, the founder of ShopperTrak of Chicago, which measures foot traffic in stores, said consumers are evolving and will use both the online and brick-and-mortar stores to do their shopping.

He said one trend for customers now is to research an item online and then go into a brick-and-mortar store to buy it.

“So instead of walking store to store as they did in past years and window shopping, we’re doing a lot of that on the Internet,” Martin said.

ShopperTrak said foot traffic at national retailers dropped 14.6 percent in November and December compared with the same period in 2012.

Going Small

Shopping center owners have noticed the shift to online sales too, said Jesse Tron, a spokesman for the International Council of Shopping Centers of New York. He said retailers now don’t need as much room as they did in years past. But Tron said the reason for the downsizing was not necessarily tied to the shift in online sales but improvements in distribution networks so that stores are closer to their warehouses.

“Retailers no longer need vast amounts of storage space in the stores to be able to restock,” Tron said. “They’re able to get fresh shipments within a day.”

As a result, the total share of shopping center space devoted to uses other than retail stores or restaurants is climbing. It was 20.6 percent in the fourth quarter of 2010, and three years later, it was 22.4 percent.

“I know a 2 percent jump doesn’t sound huge, but we’re talking about a pretty vast retail landscape here,” Tron said. “To have a 2 percent shift is something that’s definitely noticeable.”

He said the space is being filled by businesses such as movie theaters, barber shops and fitness centers.

Wal-Mart said it’s doubling the number of small-format stores it had planned to build during this fiscal year as part of its strategy to boost online sales.

Wal-Mart expects to build between 270 and 300 smaller stores this fiscal year. The smaller stores include the approximately 38,000-SF Walmart Neighborhood Markets and the 15,000-SF Walmart Express stores. The Walmart Supercenters are about 182,000 SF. Walmart U.S. will continue its plan to open about 115 supercenters this year.

“Our customers’ needs and expectations are changing,” said Bill Simon, president and CEO of Wal-Mart U.S., in the Feb. 20 earnings call. “Through the intersection with, we can connect our physical asset base to the broad assortment that is available online. These increases will nearly double our small-store fleet, driving retail growth as we enter the next generation of retail.”



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