Weeks after another anchor-store closure at Eastland Mall, Bloomington-Normal business leaders are grappling with the future of retail.
The changing retail landscape was the focus of the McLean County Chamber of Commerce's recent BN The Know event. In a panel discussion moderated by the Chamber’s John Walsh, the challenges identified were much more complex than just Amazon versus brick-and-mortar.
Take Paul Sherman, the owner of Sherman’s, the appliance, electronics, furniture, and mattress retailer. He's got 170 employees in four locations. When asked to predict the future of retail, he's quick to reflect on the recent past.
"My understanding and thoughts on where our company needs to be from a promotional versus branding perspective and traditional media versus digital, has changed dramatically since April," Sherman said. "How we structured some other things internally changed dramatically from last December. How we staffed our floors, and the things we need to do, totally different thoughts. We have learned many things since last May.
"If you asked me 18 months ago where we would be today I would not be able to predict where we are," he said.
Retailers like Sherman say the pace of change is relentless. It's not just online shopping that's changed. Retailers also have to meet changing customer expectations for the in-store experience, such as investing time and resources into digital payment tools like Apple Pay. Retailers say their workforce is changing too—and the low local unemployment has led to a hiring shortage for some stores.
But the threat and opportunities of online shopping was the elephant in the room at the BN The Know event last month at Eastland Suites.
Another panelist was Kohl's district manager Cristin Lee. Kohl’s will soon be the lone remaining anchor store at Eastland Mall in Bloomington. Sears is closing this fall.
Lee said there are many different types of customers now. They've got the brick-and-mortar shopper, the ship-from-store customer, and the buy-online-pick-up-in-store customer.
"And then we have a new customer the buy-online-ship-to-store customer. So that's gonna be a newer customer for us. Where they shop at home, they don't want it delivered to their house because maybe they are in a neighborhood that's not quite safe or they don't really want to pay shipping cost. So they are just gonna ship it to our store. So then when have that customer coming in," Lee said. "My associates have four different customers now that they are trying to help."
Sherman said those customers who do make it into his stores are more informed and more serious than they were in the past.
Still, the shift is clear. Sherman said mattress industry sales have dropped from 95 percent brick-and-mortar to 75 percent today.
"Ten to 15 percent of the appliance business is transacted online, and we are at about 2 percet. If that doesn't bother you as a business owner, it should," Sherman said. "One of our major initiatives is to have a better online presence so we can catch up with that. As that number goes up if we don't improve our presence in that space, our ease of checkout and information we provide, that business will surely go somewhere else."
Lee from Kohl's said Amazon isn't always an adversary. Her company recently brought one of its newest experiments to the store in Peru, about an hour north of Bloomington-Normal.
"We have an Amazon return center, so if you purchased something on Amazon and you did not like it and did not get it at Kohl's, you just bring it the Kohl's store. You don't have to package it. We do that for you and will ship it to Amazon," Lee said. "We trying to test to see what additional traffic that will bring. We want to see from a customer standpoint those who are shopping on Amazon online, if we make it convenient for you to return it to our store, it will force you to come into to our store."
Hy-Vee’s 2015 opening in Bloomington was met with great fanfare. But even Hy-Vee faces competitive challenges that require evolving, according to Marketing and Merchandising Director Sarah Holck. That includes grocery delivery, a growing business that's being offered by more and more stores, not to mention third parties like Instacart.
"I think fast and free delivery is very important and you have absolutely need to offer it to be competitive and be in the game. But that is kind of what everyone is doing right now and what everyone is striving for," Holck said. "I think you can do more to be competitive. With us, the little bit extra could be if you order groceries, we'll bring it in and put it in on your counter or freezer, or whatever the customer wants."
Lee started with Kohl's as a part-time associate while going to college. She said seeing all those anchor stores close around Kohl’s—from Bergner's to Sears to JCPenney—has been sad, even if Kohl's is doing fine.
Kohl's is watching like the rest of us what happens at Eastland Mall. Owner CBL is redeveloping a few spaces for new purposes; the JCPenney is becoming an H&M and a Planet Fitness. A new Outback is being built in the parking lot.
"You have to create a different experience," she said. "The layout of the current mall is awful, just awful. You have a food court that is nonexistent. But look at the location of it. From a convenience standpoint. If you are going into the mall and shopping, you are on a mission. We no longer have time to leisurely shop and, 'Let's go the mall and I'm gonna spend my money.'
"We don't have time for that, so we got to be able to come in and come out and if I wanna come in and eat something I just want it to be right over here, not down four corridors, turn right and find the food court. It's the convenience and layout that I think is hindering some malls," Lee added.
Lee said Kohl's is moving toward smaller stores. That requires less inventory and fewer employees, and Kohl's is finding they're more profitable too, she said. The typical Kohl's (like the one in Bloomington) is about 80,000 square feet. Kohl’s is experimenting with stores as small as 35,000 square feet, Lee said.
That evolution isn't confined to the mall. Holck said HyVee opened a new concept store in downtown Des Moines, Iowa, last year. It's about 35,000 square feet, half the size of the HyVee in Bloomington.
"It's like the neighborhood-type place that offers a lot of local, and it's something you can walk to and it's right down the street," Holck said. "We also just opened a standalone health market in Des Moines that is also a neighboorhood setting. It's supposed to be fast and fresh. You can stop in and get something healthy for lunch. Obviously, that doesn't pertain to us in a lot of markets, but we are starting to do some of that."
But even if you have a smaller store, you'll still need employees. And Lee said finding, training, and retaining employees isn't easy these days.
"Hiring is really going to be one the biggest challenges. It's increasing minimum wages and just competitors from a retail big box standpoint," Lee said. "We are always looking at what Target is doing, or what Mejier is doing and how much are they paying. There is definitely a wage gap and it's going to stretch a lot of retailers' dollars quite thin over the next 10 years depending on how high we get.
"I know locally we have a big hiring shortage, which is surprising with the amount of retailers closing. Throughout my district and countrywide, low unemployment is good but from a retail perspective, it makes it hard to get talent into our stores."
BN The Know sessions take place quarterly throughout the year. GLT is a co-sponsor of the series.
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