NEW YORK CITY-Traditional retailers will need to boost their online advertising presence to keep up with Internet-only players that are gaining sales momentum, said speakers on a panel yesterday at SG Cowen's Consumer Conference here at the Westin New York at Times Square. Retailers who now spend single-digit percentages of their advertising budgets on the Internet may have to increase that number to around 30%, says Rich LeFurgy, principal at San Francisco-based consulting firm Archer Advisors.

"We're in the middle of a massive transformation." However, television will continue to play an important role in marketing and most advertising agencies still focus on that medium, LeFurgy concedes.

One thing that retail executives can do is familiarize themselves with search-engine advertising that brings up a company's name after a consumer enters a product they are looking for on a site such as Google, said Michael Jones, chief operating officer of North Carolina-based consulting firm Channel Advisors. It's important for retailers to catch on to this trend now, or "you will have smaller players that could be biting at your heels faster than you know."

Meanwhile, retail executives told attendees their expansion plans and strategies for the near future. Many speakers represented companies that have slowed growth due to recent tough financial performances.

One company that is evaluating its real estate strategy is mall-based, music-oriented teen chain Hot Topic. The City of Industry, CA-based retailer posted a year-over-year same-store sales slide of 4% in 2005 and has had trouble introducing its 121-store Torrid chain in new markets, acknowledged Betsy McLaughlin, the company's chief executive officer.

In its 663-unit namesake chain, executives are concentrating on better in-store marketing, a continued focus on novelty T-shirts and other strategies. "Everybody in the company has to be focused on comp-store growth and getting back to the level where we were two years ago," she said, referring to a period when the retailer's sales soared.

Another company that is slowing its store count is Oakland, CA-based Cost Plus World Markets. The 266-store chain has also identified about 40 underperforming stores and will focus on their improvement individually, said Barry Feld, the company's president and chief executive officer.

The company plans to open 20 to 25 new stores this year, down from about 35 in the current fiscal year. Cost Plus executives will also stop entering new markets and concentrate more on filling in regions where it already has a presence. The retailer is also testing boxes smaller than its usual, 18,000-sf stores to put into lifestyle centers and urban areas.