RAPID CITY, SD (SOUTH DAKOTA NEWS WATCH) — South Dakota retailers hope to capitalize on a national trend this holiday season to increase in-store shopping by improving customer experience and integrating online offerings into their business model.
An annual survey by the National Retail Federation and Prosper Insight & Analytics found that of the estimated 115 million Americans who planned to shop on Black Friday (the day-after-Thanksgiving retail extravaganza) this year, 67% expected to personally shopping, up 64% in 2021.
That modest increase can be attributed in part to fewer concerns about COVID-19 contagion and, according to South Dakota shoppers interviewed by News Watch, a growing desire to reconnect with family and friends by enjoying in-person shopping together in a time when retailers across the state are taking steps to improve the overall in-store experience.
The personal uptick goes against the conventional wisdom that brick-and-mortar stores have faced a bleak outlook in recent years due to the rise of digital retail giants like Amazon and many retailers’ shift in emphasis to online sales.
“When I took this job four years ago, the story was the death of retail, online is going to take over,” said Nathan Sanderson, executive director of the South Dakota Retailers Association. “But what we’ve seen for decades, even centuries, is that the retail industry is constantly evolving. What I think you’re seeing now is a real hybrid between online shopping and in-person shopping. Online will stay with us, but that doesn’t mean it’s happening to the exclusion of what’s happening in stores.”
Stores had cause for concern as the COVID-19 pandemic coincided with the increasing interest in online shopping among Americans in recent years.
According to the U.S. Census Bureau’s annual retail sales survey, e-commerce sales nationally increased by $244.2 billion or 43% in 2020, the first year of the pandemic, from $571.2 billion in 2019 to $815.4 billion in 2020.
South Dakota v. Wayfair, a 2018 U.S. Supreme Court decision helped to level the playing field for personal retailers, removing the requirement that a seller must be physically present in a state to be forced to collect and remit sales tax to contribute to that state. . Requiring ecommerce sites to pay the same tax rate as retailers reduced some of their competitive advantage, Sanderson said.
“I don’t think the impact (of the court ruling) can be overstated,” he said. “If you don’t have to pay sales tax, that’s a 4.5% difference between the price of a product online versus a (physical) store, and that’s significant.”
A national inflation rate of 7.75% in November helped boost sales tax, but retailers are watching the percentage increase between total sales tax and remote sales tax reported by online merchants.
According to the South Dakota Board of Revenue, sales, usage, and excise tax revenues grew 13.8% between 2020 and 2021, while distance sales tax revenues grew 22.6% during that period.
The search for balance rather than outright competition between those revenue streams is part of what Sanderson calls the “hybridization” of online and brick-and-mortar shopping.
The combination of online and in-person buying is the latest example of changing retail trends, he said, “from outdoor markets to general stores to department stores to malls, and now online retail and the Main Street resurgence. There is always an evolutionary process and it will continue to be we see.”
Improving the in-store experience
On the afternoon of November 18, there was a palpable pre-holiday buzz at the Great Outdoor Store in downtown Sioux Falls. Owner DeAnn Echols moved quickly among the newly strung Christmas lights, chatting with customers and sorting merchandise as he tried to focus on a winter outdoor sports sale that evening at the Washington Pavilion.
The outdoor specialty store sells online, but the website is primarily for regional customers who can’t make the trip to Sioux Falls. Since moving into the former Rock Island Depot building in 2009, DeAnn and her husband, James, have focused on in-store service for those looking for brands such as Patagonia or North Face, as well as camping and mountaineering supplies.
“Being able to fit, touch and feel things, see the exact color, see what another person is interested in to get ideas for gift giving, you can’t do any of that online,” said DeAnn Echols. “Many of the products we sell are somewhat technical or specific to a particular sport or activity, so it’s great to be able to talk to someone who has used that product or has experience or training within that activity. It’s about the personal touch.”
The Great Outdoor Store was temporarily closed for personal business for about six weeks in March and April 2020 after COVID-19 hit, but they still let people buy and pick up orders by appointment. The company’s momentum — providing apparel and equipment for outdoor activities — wasn’t impacted as much as others during the pandemic, as people grew tired of isolation and looked for ways to explore the great outdoors.
“People are looking not only for shopping, but also for camaraderie and involvement.”
However, for most retailers, maintaining social distancing during COVID-19 has led to more online options for customers, whether it’s curbside pick-up at major stores or expanded remote options and contactless payment in supermarkets. Businesses learned to use social media more efficiently to be part of the community conversation and keep customers informed.
Much of that progress translated into post-pandemic behavior, which forced businesses to maintain an online presence. But the focus turned to the personal experience as people began to leave their homes and return to boutiques and booksellers in search of the kind of shopping excursion that a computer, for all its convenience, cannot provide.
Formerly the Rushmore Mall in Rapid City, Uptown Rapid features Bar K-9, an indoor dog play center and beer and wine bar as part of a renovation under investment firm RockStep Capital, which took ownership of the Rapid City mall in 2021. also Happy Hills Painting, which “combines professionally led painting classes with an energetic environment and a few drinks.”
“People aren’t just looking for shopping, they’re looking for camaraderie and engagement,” says Sandy Brockhouse, general manager of Uptown Rapid, adding that women’s clothing store Böhme offers customized group shopping experiences with a personal assistant. “We’re bringing people from the four-state area to do some weekend shopping and have some fun.”
Balanced camaraderie and ease
On Nov. 20, Erica Berghammer and her 15-year-old daughter, Elizabeth Kvanvig, carried bags from Bath & Body Works and luxury clothing retailer Francesca’s after a shopping trip to Uptown Rapid.
They were in good spirits after spending a Sunday afternoon shopping between mother and daughter. The communal aspect of in-person shopping is a big reason why they sometimes eschew online purchases, Berghammer said. They feel freer to be outside these days now that the pandemic has eased, she said.
“We like to shop because we also like to go out for lunch and get coffee,” says Berghammer, 42. “It’s something to do together.”
But Berghammer said she often uses the convenience of online shopping and uses coupons, price-matching and free shipping to save money. She can buy household goods online and collect Kohls’ Cash Coupons that offer discounts and sometimes free merchandise that she can have delivered or picked up at the Rapid City store.
As a girl about to turn 16, Kvanvig said the ease and convenience of shopping online is also an incentive for her to shop by phone. “You can do it from your bed at home,” she said with a smile. “You don’t have to get up and get ready to go out.”
Kym Hop of Rapid City said she does her best to shop in person at local stores to support businesses run by people she considers her neighbors.
“I’m willing to pay a little more for things on a local level,” says Hop, 57. “I grew up in Kansas in a small town, so my thought is always to give back to the locals and because we want to keep our city great for our business people trying to make it in the world of Amazon.”
Like many people, Hop also shops online for convenience and to get better deals, especially on products that may be less accessible in the local community. For example, Hop said her husband recently saved money by buying her a Fitbit health monitor from Amazon.
But more often, especially as the COVID-19 pandemic has eased, Hop is trying to support Rapid City retailers by shopping in person at local stores. The social, family aspects of shopping are also big reasons why Hop likes to shop in person, she said.
“We’re really back to normal in how we go out and get together,” says Hop, who is married with two grown children who will be visiting during the holidays. “My husband likes to come along because we have a crazy, funny family, and I like seeing people while we’re gone, running into people I don’t normally see.”
— News Watch reporter Bart Pfankuch contributed to this report.
ABOUT STU WHITNEY
Stu Whitney is an investigative reporter for South Dakota News Watch. A native of Sioux Falls, Whitney is an award-winning reporter, editor, and novelist with more than 30 years of journalism experience. Contact Stu at [email protected]
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