Nimble, service-oriented retailers winning the battle for customers

When the first J.C. Penney store in Columbus opened at the corner of Fourth and Washington streets on Sept. 9, 1924, advertisements promised Bartholomew County shoppers that its name would be “your future guide to better values.”

However, the person who directed the Center for Business and Economic Development at IUPUC for the past three years says “better values” has evolved into something far more complex than anyone imagined nearly a century ago.

“You have to be on your toes 24-7 in the retail business. And once you fall behind, it’s hard to catch up,” said Greg Knudson, who recently retired from IUPUC and moved to Charlotte, North Carolina.

“Stores have to establish themselves as unique and always work to grab attention,” Knudson said. “Otherwise, the shopper is going to turn on the computer.”

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Knudson’s expertise extends beyond academics. With more than 30 years of private-sector experience, the former Columbus resident was managing director of Rocket Ventures, an early-stage venture capital firm and entrepreneurial assistance organization based in Toledo, Ohio.

Like his counterparts at other major retailers, J.C. Penney CEO Marvin Ellison has cited online competition as one of the most significant threats to traditional retail stores.

Since online retailers have substantially lower overhead without the costs of bricks-and-mortar stores, they have a price advantage that has hurt middle-market stores such as JCPenney, Knudson said.

That helps to explain why online retailing giant Amazon posted a 23 percent increase in revenue during the first-quarter, he said.

With five children all under the age of 14, April Pruitt of Columbus said it’s much easier for her to buy merchandise online than load up all her kids up in a car for a shopping trip.

But not everyone feels the same way.

Shopper Billie Ruiz of Columbus said she has two teenage daughters who always prefer to try clothing on before buying it.

“I don’t like online shopping because I’m worried my items will get stolen or they’ll send me the wrong sizes,” Ruiz said.

Traditional stores have a tremendous advantage in customer service and should expand on that wherever possible, Knudson said.

That’s exactly what a number of specialty stores in Columbus are trying to do, which has led to a resurgence of small independent retailers among customers wanting more than just the lowest price, said Jeff Baker, owner of Baker’s Fine Gifts and Accessories, 433 Washington St.

Baker said he teaches his staff details about what they are selling. His gift shop also offers gift-wrapping, delivers items in town and ships them out of town. He even offer to write out handwritten messages on cards, he said.

But the most valued service is a store’s willingness to provide refunds and exchanges with minimum fuss and inconvenience, Baker said.

“All we are doing is solving problems,” Baker said.

While online shopping continues to gain traction, Knudson said shopping choices are not as simple as digital vs bricks-and-mortar.

“Ask yourself why Amazon recently bought the Whole Foods store chain,” Knudson said. “And why are both the online and retail stores at Walmart doing fine?”

Today’s successful retailers are the ones who watch their customers better than their competitors, immediately stock unique and in-demand products, and constantly have promotional bargains they know, rather than hope, will draw in the most shoppers, Knudson said.

Large box stores are often unwilling to take risks with unproven merchandise that smaller, independent stores are willing to take, Baker said. That often makes the smaller stores trend-setters that corporate outlets follow, he said.

“And once they start stocking those items, I don’t want ‘em,’” Baker said.

The most significant example of bucking the current online trend is Zara, Knudson said. With sales of $15.9 billion last year and almost 2,200 stores worldwide, Zara is currently preparing to open an additional 450 retail stores, he said.

What makes the Spain-based international retailer stand out in apparel sales is its ability to bring in high-end fashion styles every six to 10 days, rather than every six weeks like traditional American retailers, Knudson said.

“While most stores offer four seasons of clothing choices, Zara offers something like 15,” said Knudson, who maintains a frequently-evolving inventory is especially important to young shoppers now developing customer loyalties and shopping habits.