It's getting harder and harder to keep the buying fires lit during the year-end holiday season. Savvy shoppers know the drill: Those 25 percent discounts that look so good after Thanksgiving will soon morph into 30 and 40 percent reductions -- and maybe more. Just delay your year-end shopping urges and you can save big money.

While discount-oriented shoppers are causing havoc among the Nation's retailers, a more-difficult problem is also looming: Cyber Monday.

"Cyber Monday" is not a national holiday or the result of a presidential declaration, instead it's representative of the growing trend toward online buying.

Cyber Monday is all about the first Monday after the Thanksgiving holiday, the start of the year-end shopping frenzy. What happens is this: People go to the malls during the Thanksgiving weekend -- and then on Monday go online with faster Internet connections back at the office to place their orders with whoever has the best prices.

There are a lot of attractions to online shopping -- no parking hassles, no crowds, more selection and sizes, and easy ways to comparison shop. And shopping on the company clock surely saves a lot of precious personal time ...

Cyber Monday also has another attraction: There are no sale taxes on Internet purchases, so buyers can make big discounts even bigger, especially when merchants throw in free shipping.

However -- and you knew this was coming -- all this electronic retailing is not without impact. If store volume declines, retailers will pay less for mall locations and other retail sites. Retailers will also employ fewer local people -- a concern for every community.

If mall and retail outlets have lower revenues, rental payments to property owners decline. In turn, the value of mall and retail properties softens.

Many businesses do 40 percent or more of their annual sales in the period between Thanksgiving and New Year's Eve. As Internet retailing becomes increasingly acceptable, there's no doubt that in-store sales will be challenged.

In 2005, for example, a Shop.org survey shows that "more than one third of consumers (37 percent), or 51.7 million people, said they will use Internet access at work to browse or buy gifts online this holiday season. The survey found that more than half of young adults 18-24 (51 percent) and nearly half of those 25-34 (49 percent) will be shopping online during work hours. The survey also found that men (42 percent) are more likely than women (32 percent) to shop at the office."

The real problem with Cyber Monday, however, is not the instant movement of sales offline. Instead, the problem is the widespread adoption of a new shopping strategy, the creation of Cyber Tuesday, Cyber Wednesday and so on.

Given that schedules are busy and hectic year-round, why shop online only during the holiday season? If buying a toaster, shirt or book works so well at the end of the year, why not at the start of the year or in the middle? And if electronic transactions work well at year-end, if your identity isn't stolen and the merchandise you ordered arrives as promised, then why not use the same system with other merchants and at other times?

In 1999 a St. Louis shopping mall adopted a rule that prohibited its 165 tenant retailers from advertising Internet websites on mall property. The rule evaporated within a few days, but the mall owners saw the right issue: How does a bricks-and-mortar emporium benefit by sending consumers elsewhere?

The Internet is now siphoning off retail dollars from local and regional malls -- and sales taxes from the states. People will still go to local supermarkets and pharmacies, but a growing volume of items can now be ordered online with little fuss or muss.

NetFlix, as one example, has attracted nearly 3.6 million movie renters, folks who order DVDs online and no longer fill video store parking lots. In 2004, says Shop.org, "online retail sales rose 23.8 percent to $89 billion, representing 4.6 percent of total retail sales. Including travel, online sales also rose 23.8 percent to $141.4 billion. Online retail sales will reach $109.6 billion this year. Online sales including travel will rise to $172.4 billion this year."

What can traditional mall and retail owners do to spur growth and rents in the Internet era?

Have a mall website that offers coupons and provides community information.

Make physical locations web-centric -- that is, make the local mall or store the place where people can pick-up and return goods ordered online.

Look for fewer shopping trips -- but try to increase revenues per trip. This approach explains why larger malls increasingly see themselves as "destinations" and "attractions" rather than as shopping enclaves. The theory is that more time spent at a mall results in more dollars disbursed to mall merchants.

Convert retail space into cyber centers. Free WI-FI access to the Internet explains some of the success and cachet of Starbucks. Instead of erecting hurdles, join the revolution. Encourage online shopping from mall facilities and get a piece of the action each time an electronic order is placed. Imagine an Internet center in a shopping mall where shoppers can order goods, get help with homework, play online games and check e-mail.

Like bookstores, car dealers and travel agencies, the Internet will impact retail real estate. The question is not when, it's how much. To a large extent, mall and retail owners will determine how such a question will be answered.

For more articles by Peter G. Miller, please press here.

Published: December 6, 2005

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