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Will the internet kill the retail store? May 3, 2011

Posted by Sean Tufts in Articles, Blogs, Research/Data, Retail News.
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Over the last couple of years we have had what seems to be weekly conversations about the impact the internet has on retail centers. Retail Traffic’s article today from David Lynn of ING Clarion sheds some terrific light on how the dynamic seems to be unfolding.

The argument is made that the internet is actually a complementary tool instead of something that is going to be the downfall of the retail sector. Lynn explains it this way:

The Internet has become a supplemental tool for savvy retailers. Many retailers are successfully incorporating their own websites into multi-channel strategies by offering multiple means for a consumer to obtain a particular good. Although retailers may face execution challenges, multi-channel retailing can effectively increase overall profitability… The technology enables retailers to maintain smaller inventories and more efficient stores, but this does not directly equate to smaller floorplates and less real estate.”

I would add that the impact is similar to the question about tenants surviving the recession. Those that have made it today have proved that they can adapt and have a much higher probability of long term success. Even some of largest tenants did not survive the downturn because they could not handle the change brought on by the recession. They may not have lasted long anyways under their current strategy with or without the recession. When’s the last time you rented a movie at a traditional movie store? As in all businesses, it comes down to the business model and they adaptability of the retailer. Consumers are never going to buy everything online. In fact, the article makes the claim only 4.2% of total retail industry sales were online.

Read the full article here. While you are there, check out another worthwhile article, “Costar Sees Stability in the U.S. Retail Scene“.

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