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Bricks, Clicks and Catalogs Create Synergies While Online Sales Growth Surges, Business and Industry Trends Analysis

Global online sales have been supported by very strong results at Amazon.com, partly due to its competitive pricing, expansion of merchandise categories and free shipping for more than 150 million members of its “Prime” service, along with convenience of use.
On a U.S. basis, eMarketer forecasted ecommerce for 2023 at $1.15 trillion, up from $1.04 trillion during 2022.  (These numbers exclude travel and event tickets.)
Several factors have encouraged consumers to do more of their shopping online, including the difficulty of getting to and parking at retail stores, the fact that consumers feel pressed for time, the widespread adoption of high-speed internet access (both at home and on smartphones), and the fact that the lowest prices can often be found online.  Nonetheless, when Coronavirus restrictions were loosened, foot traffic at retail stores rebounded.  Many consumers had greatly missed the in-person shopping experience.
Online shopping sometimes goes hand-in-hand with in-store shopping, or at least in-store browsing.  A large number of shoppers browse web sites to gain information, later visiting a physical store to make a purchase.  The reverse is also often true—many store owners worry that shoppers look at merchandise in their stores and then go home to look for the best possible prices at online sites.  Some shoppers add the items that they are considering to their shopping carts on Amazon.com, but don’t click the purchase button.  Then they go to retail stores, smartphones in hand, and compare prices and features in the stores to their Amazon lists.  If the merchandise looks good in person and Amazon’s price is better, then they may decide to purchase via Amazon, especially if they belong to the Amazon Prime service that provides free shipping.  Best Buy successfully countered this practice by matching the prices of online competitors and emphasizing customers’ ability to see and touch the merchandise in-store, speak to experts in-person and take merchandise home immediately.  In addition, Best Buy emphasizes the availability of its experienced service people to install consumer electronics in the home.
Many of the most successful retail firms of the future will be those that take full advantage of the personal touch of traditional, store-based retailing and combine it with the growing popularity of catalog and internet-based retailing.

Best Online Practices for Retailers:
=         Seamless integration of store, catalog and internet-based offerings to consumers, providing choices of 1) place and method of purchase, 2) method of pickup or shipment and 3) place or method of returns, repairs and additional services as needed.
=         Communication of a seamless brand identity and level of service throughout catalogs, retail stores and web sites.

     For good examples of companies that are evolving toward such “seamless” strategies, study Costco, Walmart, REI, The Gap, Staples and Pottery Barn.  At Pottery Barn, customers find enhanced flexibility and customer service thanks to the opportunity to shop via the web, Pottery Barn catalogs or Pottery Barn stores.  Pottery Barn stores hand out copies of catalogs—which feature the web address of Potterybarn.com, as well as phone ordering options.  The point is to create loyalty-inducing convenience for customers, giving them options for purchasing when, where and how they please.
Staff members at Men’s Wearhouse are using smartphones to interact with online customers through messaging and video chat, creating an interactive, multi-channel experience for shoppers.  Store personnel can send photos of clothing and accessories, field questions and make suggestions, and are paid commissions for the online orders that they facilitate.  Men’s Wearhouse (which is owned by Tailored Brands, Inc.) is using an app developed by Hero that connects online shoppers with instore employees.  In-store staff can wave their smartphones over merchandise tags to generate web links for their online customers.  Hero has been improved so that it offers an enhanced shopping experience.  Retailers can use it to offer the customer greater product understanding through live product demos, videos and photos.  Customers can utilize links within Hero to complete a purchase, while the store employee remains available online to answer questions.  Hero was acquired by Klarna, a provider to stores of consumer payment options, in July 2021 (www.klarna.com/us/business).
Nordstrom is experimenting with very small stores that stock no inventory while allowing customers to try on samples, with purchases to be delivered to their homes. These new stores also feature a high level of personal service.
Walmart offers “Pick Up Today,” a program in which Walmart customers order items online and then pick them up at their local stores the same day.  Best Buy has similar services, as do Bloomingdale’s and Macy’s.
These shop online—but pickup in the store strategies were born because retailers were fighting a practice called “showrooming,” in which shoppers browse for merchandise in stores but buy on rival retailers’ web sites, especially Amazon.com.  Amazon not only has a vast selection of items and free shipping for Prime members, its prices are also highly competitive.
One thing in favor of brick-and-mortar stores is their ability to accept payments in cash.  There are a large number of consumers who are called “underbanked,” that is, who are without bank accounts or credit cards.  Walmart offers customers the ability to order items online and then pick them up in stores using cash for payment.
Department stores are making a major shift in operations to support online orders.  In yet another effort to compete with Amazon.com’s success, Macy’s converted many of its stores to include expanded storerooms with cutting-edge technology to track inventory and generate shipping labels.  Excess store inventory is shifted to highlighted positions on the company’s web site, and merchandise that has sold out at the online distribution center may be found in stores, thereby remaining on the web site for sale and delivery by UPS.  Online orders are being filled by stores closest to consumers, increasing efficiency and lowering costs.  More and more, brick and mortar stores are being used as local warehouses that deliver goods directly to customers.
Macy’s is taking the technology a step further in select stores, where it is displaying merchandise with only one item of each style (instead of cramming the racks with every size available).  Shoppers can look at the sample, and then use an app on their smartphones to let staff know what size and style they want to try on.  Staff members collect the items from stockrooms and send them to fitting rooms via special hatches.  Customers are alerted as to which fitting room is theirs via their phones.  The practice allows Macy’s to display more styles and avoid a cumbersome tangle of vast numbers of coat hangers.
Some brick-and-mortar retailers are opting to make selected merchandise available for online purchase only.  Shoppers can browse samples in the stores and then place orders on their phones or at in-store computer stations.
At the same time, a growing number of formerly online-only businesses have opened brick and mortar stores.  Examples include women’s clothing site Boston Proper (a subsidiary of Chico’s FAS) and online eyeglass retailer Warby Parker.  Likewise, Bonobos (a clothing retailer now owned by Walmart) has samples in showroom stores but no inventory on-hand.  Bonobos has opened these “Guideshops” in dozens of major cities across the U.S.  It remains to be seen if this trend will continue after the Coronavirus pandemic.
Another twist to online shopping is to retrain and enable brick and mortar store personnel to connect with shoppers via text, phone, email, Facetime or online chat to personalize the digital shopping experience.  Neiman Marcus Group, for example, has an online quiz to match shoppers with store style consultants.  Questions include “What do you feel is missing from your closet?” and “Who are you shopping for?”  Beauty company Estee Lauder Cos. is hiring online advisers (called online talent) while cutting in-store positions.
As more and more people embrace online shopping, brick and mortar retailers must evolve to offer more convenience and speed.  Shoppers are spending less time in stores as they prefer browsing on web sites and social media such as Facebook, Pinterest and Instagram.

Employees at Retail Stores are Fulfilling Online Orders: A Big Logistical Challenge
Walmart is relying on many of its stores as distribution centers for online orders.  Target is also fulfilling many of its online orders through its stores.  This requires retraining employees to be stockers, packers, shippers and product specialists.  Supermarkets are doing the same thing:  employees are being retained to first pick items ordered online off the shelves, and then pack and hold them in large, special areas within the stores for delivery or drive-through pickup.  The problem with this strategy is that these buildings were designed to be retail stores, not warehouses. 
It is unlikely that this fulfilment of online orders through existing stores could ever be as cost-effective or efficient as fulfillment through warehouses that are specifically designed for this purpose.  Growing numbers of Amazon competitors are outsourcing logistical needs.  Businesses including Shopify, Wix.com and Squarespace offer payment processing while ShipBob and Quiet Logistics fulfill orders through their warehouses.  Robotics manufacturers such as 6 River Systems and GreyOrgange Pte. offer equipment similar to Amazon’s automated internal package systems.


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