The Retail Store of the Future

NEW YORK (MainStreet) — The Internet killed the music business, ruined the newspaper industry and has effectively brought the whole publishing world to its knees, and for years, there has been speculation that it would do the same to bricks-and-mortar retail stores, as consumers began to flock online for their shopping needs.

These fears reached a fever pitch in recent months as major retailers like Blockbuster and Borders, once thought to be powerhouses in the industry, have been forced into bankruptcy largely due to competition they faced from online services like Netflix and Amazon. But even with these setbacks, rumors of the death of the bricks-and-mortar store may be vastly overstated.

“Way back when the Internet first started up, lots of people were calling me asking what we will do with all the empty retail stores,” said Mike Gatti, executive director of the Retail Advertising and Marketing Association, a division of the National Retail Federation. And now, more than a decade since the first major retailers set up shop online, bricks-and-mortar stores are still here, and many continue to thrive.

Of course, that doesn’t mean it’s business as usual for retail shops around the country. Each year, more and more consumers venture online to do their shopping, lured by new websites and smartphone apps that make it easier than ever before to spot deals, compare prices, research products and ultimately make a purchase while on the go or from the comfort of their own home. In 2010, online sales increased by nearly 10% from the previous year, far outpacing the retail industry’s overall growth.

Just because more people shop online though doesn’t mean they’ll completely stop shopping at stores. Indeed, for most retail sectors, a physical store can serve a fundamentally different function, giving consumers the ability to see, taste and touch the products in a way that is impossible online. The challenge for retailers in the future, according to industry analysts, will be to figure out a way to play up the strengths of the bricks-and-mortar store while figuring out ways to incorporate new technology into the experience.

“Everyone is saying the store is dead, but I say long live the store,” said Lisa Gomez, a senior manager who studies the retail section at Deloitte, a consulting firm. “The physical store is going to remain central to the shopping experience, but the walls are coming down. Customers are going to want an updated, unique experience in stores and retailers will need to figure out what exactly they want and how to give it to them.”

Already, big and small retailers in the U.S. and abroad are beginning to adapt to changing consumer demands by adopting new technologies to make their stores stand out even in the face of online competition.

Many stores like Staples (Stock Quote: SPLS) and JCPenney (Stock Quote: JCP) have introduced Internet-enabled kiosks in their stores in recent years to help consumers research the products, and Kraft (Stock Quote: KFT) is working on a special kiosk that goes one step further and actually offers customers suggestions about what they should make for their next meal.

Barnes & Noble (Stock Quote: BKS), now the last of the major bookstore chains, has tried to embrace the online world by putting Wi-Fi in all of its stores and encouraging customers with e-readers to sample digital books in the store. And Disney (Stock Quote: DIS), perhaps the most ambitious of all, is in the process of overhauling every one of its stores to incorporate interactive video screens and mobile payment options that let consumers pay simply by swiping their phone at the register.