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TheStreet Open House

10 Bricks-and-Mortar Stores That Beat Online

NEW YORK ( TheStreet) -- For a small-business owner these days, it can be hard to tell whether opening a physical retail store is even worth it.

Store closings can be seen across the retail space, including such big-name chains as Borders (BGP), while large discount stores and chains including Wal-Mart (WMT), Target (TGT) and Best Buy (BBY) shrink the size of some stores.

There are retail stores that still -- and will -- need a physical presence, experts say, especially those where people have an emotional connection with the product they want to buy.

Retailers continue to be affected by the recession of the past years, which slammed right into consumer spending. There is a bigger trend at play, though: Retailers continue to lose ground to e-retailers such as Amazon (AMZN).

"So many stores are doomed. Web and pure-play retailers are killing them," Forrester Research analyst Sucharita Mulpuru says.

According to a February report by Forrester Research, U.S. online retail sales rose 12.6% last year, to $176.2 billion. The report, written by Mulpuru, expects U.S. e-commerce sales to reach nearly $280 billion by 2015.

"Every year, e-commerce sales have been growing at the expense of physical brick-and-mortar retailers as consumers increasingly look to the Web for its selection, prices and convenience," the report notes.

New shoppers are indeed a component of the overall growth in online shopping, but "a bigger component of the growth is the increased wallet share among existing Web shoppers who increase their spend in 'traditional' online categories like books and media products and ... categories that are frequently high-touch, high-consideration goods, like furniture or home appliances," the report says.

In addition, several new business model types have emerged to lead consumers into more online transactions, including: flash sale sites such as Gilt Groupe and Groupon; digital downloads of media content; and "made-to-order merchandise," Forrester says.

But before small physically bound retailers accept defeat, consider that online retail sales account for just 8% of total retail sales -- but excluding grocery sales, the penetration is 11% overall, the report says, even with categories that experience significant sales online, such as computers and software.

Over the next four years, Forrester projects 11% of overall sales to be transacted through the web channels.

Experts say retailers, regardless of what they sell, will have to offer a combination of digital, physical and mobile options. It's possible the final sale may not take place in the physical store.

>>>The Retail Store of the Future

"Our perspective is that there is a convergence of business models, not a replacement of business models," says Kasey Lobaugh, a principal with Deloitte Consulting and head of its direct-to-consumer and multichannel retail market group. "You probably ought to be thinking about the business model and not thinking 'I have a store, I'm trying to defend it.'"

Rather, business owners should question, 'What does my customer want to do and ideally what can I offer digitally, what can I offer physically and what would the best of both worlds offer?" Lobaugh says.

That being said, here are 10 examples of retail stores that still -- and will -- need a physical presence:

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