What's pushing stores to such desperate steps? "It's driven by mobile devices," says Dias. "When the Web is in my hand, the traditional economics of retail finally starts falling apart."
In November 2010, she says, came the wake-up call: "A third of the sales Thanksgiving week
happened online. That's up from 10 percent," Dias said, the standard for several years. After Thanksgiving dinner, shoppers took their newly acquired smartphones, went online, and started buying, instead of waiting for stores to open in the wee hours. "To have a third of the transactions online, that made retailers see - something has changed," Dias said.
There's a second "shocking" change that also "speaks entirely to the impact of mobile," she added.
"Before this holiday season, if you saw a thing cheaper at Target, Wal-Mart would price-match, as long as it's a brick-and-mortar competitor in our area.
"But last year, shoppers started taking their mobile devices in and showed on their iPhone how Amazon or Drugstore.com was '5 bucks cheaper, and I can buy it right now.' "
That's how Best Buy explained disappointing store sales last Christmas season: instant online price-matching - and ordering - by smartphone-ready shoppers.
So this year, Dias says, more chains have agreed to price-match, not just local competition, but online retailers, too. "They see the physical walls are irrelevant," Dias said. "You'll have to bring the websites into the stores."
How can you make money like that? Best Buy sees what's coming: The chain has stopped its big-store expansion in Britain and canceled plans to add more in Europe, concentrating instead on small display-and-service stores to support products purchased online.
But they can't go the next step and scale down their big U.S. stores, Dias says: "How do you get out of hundreds of 15-year leases," short of bankruptcy?
While Borders closed and Home Depot is curbing expansion (plowing the money into share buybacks instead), online retail giant Amazon.com keeps building new distribution centers, hiring thousands in upstate Pennsylvania and other low-wage regions near major population centers. The company is spending heavily, sacrificing profits but boosting market share. Dias says the next step is clear: "They're moving to next-day delivery. Potentially same-day delivery. They'll have their own trucks."
How can big stores compete? "Even Wal-Mart prices are 15 to 20 percent higher than Amazon on any given day," Dias said. "So forget about differentiating on price. You have to differentiate on service." Like Best Buy's Geek Squad, or PetSmart's in-store grooming.
"And I'm inspired by what Nordstrom has done in the last couple of years," Dias adds. Logistics software is the difference. "[It] turned their stores into warehouses full of inventory," Dias explained. "They can fulfill orders in the store or on the Web that way. They'll take the order and ship it to you from another store," if the local store is out of the item, cutting the warehouse delay.
That's new? "Before," she said, "store managers always guarded their inventory, especially for top-selling items. Nordstrom's started this before their competitors. That's why their sales are up. That, plus free shipping."
Contact columnist Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD on Twitter.