by Jack Deal

Created on: August 12, 2008

The total cost of renting a small store is going up.

Taxes are up. Triple Net, maintenance, parking fees and other fees associated with commercial rentals are up.

Commuting costs to and from work are up. Gas is up. Some customers in some markets may have to choose between going to Your Store and going to Wal-Mart. Or not going to any store and buying what they want online.

Meals at work are up. Childcare, up. Business attire, up. Utilities, up. Furnishings and decor, up. Janitorial and cleaning, up. Employees and office help, up.

This means that a smaller retail store must sell higher ticket items as there is just not enough shelf space to sell discounted items. And most small retail spaces are too small for service businesses like restaurants or beauty salons.

Being too small means one can't squeeze out enough margin and ultimately profit, the lifeblood of any business. Cash flow-wise the store rental numbers don't match; hence the old expression 'working to pay rent'. The small retail business model is often flawed.

Increasingly many small businesses and professionals are realizing it is not necessary for them to have a physical presence where they must meet always meet customers and clients. There are alternatives.

These smaller businesses that once were located at a specific physical location now locate themselves at a specific location online.

In downtown San Jose, California it is not uncommon to see an outside business sign that is a website address. In San Jose at least the line between real and virtual is becoming thinner and thinner.

Have you recently heard someone tell you on the phone, "go to our website and it explains everything?"

The drop in local commerce is due in part to an increase in web-based commerce. As web sales pass the 10% of total sales mark, it is certainly expected by almost everyone that this number will increase.

As consumers continue to search for product and service information they will replace "local" as the baseline for their purchasing decisions. The concept of local has changed.

As cultures and values change, so do priorities. In some circles it is more acceptable to not have a physical store and less acceptable to have a weak web presence. For many, it is worse to have a bad Google footprint than not to have a "physical" sit-down store.

Besides, small stores look small. A BIG web presence makes one look BIG. Where is the better ROI? In a Search world, which makes more sense?

So it is not surprising to see half empty strip malls.

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