Last week I wrote about the success of Dollar General as they compete in the digital era. The company serves the poorest areas with small markets and declining population mix. On paper, the company should be a failure, but for the last 27 years they have been profitable and are expanding faster than any other retail store in the country. First, Dollar General has a relentless focus on controlling costs and enhancing efficiency. Second, they understand their customer and what they want and how they want it packaged and at what price.

“The internet is going to kill retail” is a constant refrain I have heard the last several years. However, it is important to remember that internet sales are only 11% of the total retail market. The percentage is growing, but brick and mortar retail is not going to go away anytime soon. But the world is changing and what brick and mortar stores do to change will mean the difference between success and closure. Here are a couple key principles:

• Customers are king. In our social media world, we sometimes lose our focus on customers and incorrectly think only prices and smartphones will drive success. The brick and mortar stores that focus relentlessly on customer service will win in the 21st Century.
• Great Employees. Southwest Airlines focuses on their employees first and then their customers. The airline believes great people and happy employees first deliver great customer service. The frontline sales staff is key. Watch some of the brick and mortar stores that begin to cut staffing to save money; those companies have begun the downward spiral to become obsolete.
• Add Value. There is a difference between price and value. E-commerce is all about price, but no value. The successful brick and mortar store has a deep under standing of how to add value to their offerings, and it gives them a successful advantage over the internet.
• Know Your Niche. Brick and mortar stores cannot be everything to everyone. Know who your customers are and who they are not. Not everyone is a customer. Stop wasting time and money going after people who are not a good fit as customers.

We are now entering the era of experiences. How shopping is connected to the experience of food, music, social interaction, engagement and enjoyment will be the benchmarks of the 21st Century. I have toured a couple of new shopping experiences in other markets, and it is exciting to see where retail is going. Here are a couple of key observations:

• Green space. The new power centers have lots of green space for interaction and engagement for all ages, from children, to millennials, to seniors. Examples are mini-amphitheaters that sit 30 people, giant yard chess games, mini-spray parks, farmers markets and other amenities.
• Food. The power centers offer a wide variety of restaurants and many include local chefs opening “cool vibe” eateries.
• Music. Many small venues (indoor and outdoor) are attracting and developing the local music scenes.
• Retail Changes.

The stores are smaller and well-staffed and are offering things found on the internet, but also items unique to the store and not found anywhere else.