If you’re just joining us, I recently wrote a blog post with some thoughts on how the Internet is killing brick and mortar retail spaces.  This is not a new idea and it makes sense that people will flock to an easy-to-use source where they can save money on purchases.

There is nothing wrong with making purchases on-line, but it does pose a fairly large problem.  We are humans and live in a physical world where going to certain retail stores can be fun and very enjoyable.  There are certain stores that I love and make me feel good.  I walk in and just really enjoy the shopping experience.  I’m sure that you feel this emotion as well from time to time.

As the Internet continues to grow, it threatens to cannibalize the brick and mortar shopping experience.

So the main problem is that we like going to retail stores, but don’t like spending money with them.  How often have you heard, “I bet I can find this cheaper on-line.”?

The entrepreneurial opportunity comes in figuring out how to take advantage of the abundance of open retail space available in cities across the country, while also creating a physical retail environment that produces a reasonable profit.

Here are some ideas on how to succeed with a physical retail space:

1. Specialization – A store should only sell a very narrow line of products. We sell bicycles. We sell guitars. We sell coffee grounds for at-home use…we have the best coffee from all over the world…we host coffee classes in our store….etc. In general, specialization is very hard to maintain because revenues might be low and there is a myth that increasing the variety of products will increase sales.  The goal here is to become the best in the world in one particular area.

2. Expertise – The on-line world (at this point) does not provide experts available to meet my needs, answer my questions, and make recommendations. The physical retail space should offer experts who can listen to my needs and respond accordingly. In the coffee ground store example, the sales people would ask questions about my needs and help me pick the best coffee.  They would join me in sampling the various blends and guide me on the journey.  Choose an area where you have passion and excitement for the product…perhaps something where you are already an “expert”.

3. Experience – I want a fun and entertaining experience in the retail environment. There are some good examples here: a store that sells cigars and they have a person sitting in the window hand-rolling cigars….a store that sells caramel apples and allows customers to make their own treat….Build-a-Bear….a ceramics studio where I can make something right in their store…people love taking part in the retail experience. They want to watch an expert do something…or they want to do it themselves.  Think: Retail-tainment.

4. Offer the Best – In some situations, I want the very best available…and I’m willing to pay for it. I want the best running shoes possible.  I want the best coffee.  I want the best beer.  The store should offer the highest quality available.

5. Customization – Offer advanced levels of customization. If they sell something that is 17 inches, they can make the same item 18 inches, based on my needs. Ideally, it would be one main product with numerous options for customization.  In the coffee grounds example, there could be an endless variety of customization based on the size that I want, packaging options, and the desired blend that “speaks” to my palate.  A real world example might be Teavana (http://www.teavana.com/).

6.  Embrace the Internet – The retail store should have a strong connection to the Internet.  This might include on-line product ordering, but more importantly the on-line presence should be an extension of the physical retail environment.  Customers should be able to interact with each other to share ideas and best practices related to your specialization area.  Poll questions are posted publicly to understand preferences. There should be a blog where the owner can share ideas and receive customer feedback.  The owner of the store and key employees should be individually and personally connected to the website.  It would be an on-line community.  Information about news and new products is shared.  The website should make it easy for people to share information about the store with others…ie:  click here to email this article to a friend, etc.

7.  Replicate – There is a huge opportunity available to take advance of open brick and mortar retail space across the USA.  When the business model is proven, it should be expanded to a regional or national audience. Begin with the end in mind and think about retail businesses that could be profitable and lend well to replication.

This is part two of a three part series about the brick and mortar retail industry, in the last entry I’ll share some predictions on how retail will change in the future.