“I started the store to provide those products and to educate people on the unique techniques a professional uses in their business,” said Ms. Reichert.
About two months ago, she considered opening two more brick-and-mortar stores to expand her cleaning business. But she’s changed her mind about buying the stores.
“All retailers are seeing a decrease in the foot traffic in their stores,” said Ms. Reichert. “Even Target and Wal-Mart are showing sluggish in-store sales. This is occurring because of the online purchasing by their customers. Amazon has made it so easy for people to purchase anything that has a SKU number. And they offer free shipping on items over $35 or totally free shipping for Amazon Prime customers. They have also negotiated Sunday delivery with USPS (U.S. Postal Service) so that there will be no delays for their customers. You will also notice that if you Google a product, the search may come up with a large retailer showing it available ‘online only.’ Yet if you look closely, the item is actually being shipped by another company.”
Her shop, Floral Elegance, has been in business since 1985. But with 75 percent of her company’s business coming over the phone or placed to her company’s website, www.graftonflowers.com, it did not make economic sense to keep her brick-and-mortar store open.
“When I took a good look at all the channels of incoming business, it was clear that our clients who know and trust us and those ordering for the first time were ordering more and more by phone and Internet,” she said via email.
On June 30, she closed her store at 204 Worcester St. in Grafton. She plans to rent a much smaller space, an art and studio space where customers can pick up orders, at the Grafton Inn in the center of Grafton, starting tomorrow.
“It was a difficult decision, as we will miss seeing our wonderful clients who liked to come in and browse,” she said. “People say they will miss our window displays and being able to pop in to choose from our extensive stock of fresh exotic flowers.”
Ms. Reichert said she found that there are two distinct customers in her business: Those who embrace online shopping, and those who detest it. The climate is such that, for her, the benefits of moving her business solely online outweigh the benefits of having a brick-and-mortar store.
Ms. Reichert isn’t alone. Rather, she’s part of a movement to take the overhead, the hassle and the face-to-face customers out of the equation.
According to Jon Hurst, president of the Retailers Association of Massachusetts, the state is one of the most expensive places to run a store in the nation. Mr. Hurst rattles off the reasons for the difficulty: High labor costs, including the soon-to-be-highest minimum wage in the country; unique “Blue Law” requirements that increase those costs; the highest small-business health insurance costs in the nation, as well as the highest energy costs and the highest rent average.
“You can mitigate all of these by selling online from a cheaper and smaller location,” said Mr. Hurst, “with fewer customer service employees, while not having to staff your operation seven days a week. Sundays are particularly expensive, and customers want to be served on Sundays. Sunday afternoons are the biggest sales-per-hour periods of the week. Websites are always open and don’t have to be constantly staffed for customers.”
Ms. Reichert said the business climate changed so fast that she essentially sidestepped a potential catastrophe by rerouting her business plan and not buying the stores.
“Things changed so very quickly and I was lucky to have not invested my money in those stores,” she said. “I found that most of my vendors were online, selling at Amazon and at a better price than I could offer as a retailer.”
As a manufacturer, Ms. Reichert said, it makes perfect sense to stock products at one location such as Amazon and pay them the 10 to 20 percent fee to sell your product.
“It increases their profit by 30 percent, and there is no risk of not getting paid,” said Ms. Reichert. “Smaller online companies can get into financial difficulty and not pay their vendors for products. By selling on Amazon, they get a larger profit margin and guaranteed payment.”
Online sales have jumped to double-digit percentages almost every year for nearly a decade and a half, said Mr. Hurst. Massachusetts consumers, too, are more tech savvy, on average, than consumers across the country.
“The smartphone will only accelerate this trend,” said Mr. Hurst. “If you are looking for a particular name brand, good — such as a brand and model of a vacuum — you don’t have to see it in person or try it on.”
Sales taxes, too, are another factor.
“Until such time as Congress acts to fix the disparity,” said Mr. Hurst, “stores must charge the sales tax, while online sellers marketing out of state can avoid collecting the tax. Even when — and if — this is fixed in Congress, requiring online sellers to collect the tax from the state of the purchaser, there is likely to be a small-business exemption. The ultimate price difference of taxed transactions versus non-taxed can obviously be significant, as with high-end vacuums. All of this is very disturbing for the future of our Main Streets, and we believe our public policy leaders, landlords and others need to start understanding these points and trends and work diligently to help make it less costly to operate from a storefront.”
Her longtime customers are disappointed, Ms. Reichert admitted. Those who already buy online “get it,” she said, and will continue to do so. She is counting on the idea that the website ultimately will offer a better combination of support, products and services than she could have managed in a physical store.
“Our new website will try to ease the pain of those who love my advice and expertise by giving them online demonstrations, honest product feedback, instructions and recommendations of other items that may also work for them,” said Ms. Reichert. “I believe that I’m at the crest of a crashing wave. I consider myself lucky to be able to make a switch so quickly without taking on any debt by trying to keep my brick-and-mortar store alive.”
Ms. McClure said that florists especially will consider going online only.
“We are the first generation of florists to have this option,” she said. “Twenty years ago, florists could not have survived as an online-only business, and today we can’t survive without online business.
“My prediction is that you will see more and more empty storefronts as many businesses find they don’t need them to have a thriving business,” she added.