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|Online Sales Drive Brick & Mortar Store Closings|
CNNMoney.com - Why big retailers are shuttering stores [money.cnn.com]
OfficeMax is closing 110 of its 950 US stores, Toys-R-Us is closing 75 outlets... the list goes on. The successful home improvement chain, Home Depot, has said they'll focus on growing sales in current stores rather than opening many new outlets. Only the Wal-Mart juggernaut continues to grow, with 270 new stores planned for '06.
Online sales, along with energy prices and retail overcapacity, are cited as a factor in the trend toward brick & mortar closings. (It's fair to say that some of the examples cited in the articles have been troubled for years, and suffer from a variety of ills.)
E-commerce sales are pegged at $143.2 billion in 2005, up 22 percent over 2004. It's hard to believe that this will have no brick & mortar impact over time. Already, stores are doing multichannel marketing. Half the solicitations I get from office supply firms like Office Depot, OfficeMax, and Staples push online ordering. It's easy to see how they could close a money-losing store and just redouble their efforts to encourage web orders.
Circuit City, Good Guys, Best Buy, Fry's, etc. The list goes on and on.
This is the only thing I disagree with, pageone. These types of stores are all making wads of cash on the current TV explosion -- and the one thing you cannot do on their web sites, that you can only do in their stores, is compare picture quality. I think their stores are pretty safe, because there are still plenty of electronics products that you want to see/hear before you buy -- TVs, computer monitors, speakers, other audio gear, etc.
I have a brick and mortar customer that I have worked with for the last 5 years.
This client is a very smart business person.
Together we have taken what has worked instore and capitalized it on the web.
The combination of instore and web sales has given ther client opportunities that one of these alone couldn't.
The instore and online sales success share two key things.
Proper product selection.
And having qualified people available to explain product options and specifications.
I get it at least once a day..."where can I go buy it locally?" I tell'em...wherever you choose...they say.."is he price the same?" HA HA!
not very likely fruitcake !
|Something that's a major problem in some sectors is consumers who shop in person to decide what they want, then order it online from a discounter. |
I would have to disagree with that statement - a LOT. At least for any of the sectors I have looked at.
In fact, it seems to be the other way around - well over half of our walk in customers at our B&M store tell us they found us and selected what they wanted online, then drove over to buy it.
A study was done a while back that showed that something like 75% of all electronics purchasers got info on the products, often selecting exactly which product to buy, then getting it from a physical store.
That might be true for electronics, but it's definitely not true in all sectors.
|This is a very important aspect of doing business online. More and more businesses are realizing that real time operator services along with a phone number to call are a big plus for the consumer. And for online sales. ;) |
I wanted to point out that the above is just a natural progression from traditional buying to online buying. Many still need the personal touch before feeling comfortable with their online purchasing. Those who offer it will see the benefits. ;)
|This is the only thing I disagree with, pageone. These types of stores are all making wads of cash on the current TV explosion -- and the one thing you cannot do on their web sites, that you can only do in their stores, is compare picture quality. |
"The current TV explosion".
That's not going to last long. It's one of many areas that they have diversified into. What's next? I agree, shopping for picture quality is still a requirement when purchasing a TV. Same goes for sound quality. But, we've reached a point where quality issues between brands may be somewhat moot. You have those who buy brand name, and then you have those who buy features, brand doesn't matter. Quality may be last on the list. Most everything is Made in China these days and the quality is there.
|I think their stores are pretty safe, because there are still plenty of electronics products that you want to see/hear before you buy -- TVs, computer monitors, speakers, other audio gear, etc. |
Agreed. But then you have the price sensitive shopper who may be using the storefront as their testing ground and who does not buy at the store but goes home and purchases online from the low price leader whomever that may be. No loyalty whatsoever! ;)
|In fact, it seems to be the other way around - well over half of our walk in customers at our B&M store tell us they found us and selected what they wanted online, then drove over to buy it. |
I see this a lot with local clients who have a tangible product. It's usually a product that has a higher dollar value too.
Remember, we are going through big changes in society due to technology. We have a generation gap to contend with that is slowly migrating over to the "new way" of doing things. Once that generation migrates, brick and mortar businesses who have not diversified and who have not established an online presence will suffer.
Yes, of course some brick and mortar stores are closing. Even large web stores like Roxy.com (who had warehousing) went out of business. Manufacturers (being the hypocrits that they are) are hand-selecting the 'exclusive web stores' they want selling their products online and locking everyone else out. The 'exclusive' web stores buy direct at lower prices -period!Its the people with the money who make the rules. In most cases, they are giving better pricing to the likes of BestBuy, Amazon, Walmart etc.. and are even screwing their regional distribution channels through higher pricing thus injuring the retailers&etailers that source through them. I know this because I communicate with those distributors and they are fed up!
Back when my web business was really taking off, I reached that point where I had to decide if:
I wanted to take it to the next level from being a drop-ship outfit to a stocking drop-ship outfit i.e.,warehousing and possibly a brick and mortar front. And obviously it is extremely expensive to start stocking products - in this case electronics. Look how long it took Amazon to actually turn a profit!
The problem was that its a double-edged sword. If you don't start to stock, you are relegated to competing for product with the other web stores who use the same distributors as you. You are also seen by the industry as just an independent 'webstore'. They(Manufacturers and Distributors) do not respect you no matter how many sales you make for them - PERIOD! Then they start placing 'restrictions' on the products you're allowed to sell online. This is happening in almost all product sectors on the internet. And they are doing this to consolidate their sales channels and get COMPLETE control over their product lines. I know that Harman Kardon severed relationships with several of their distribution houses and started shipping certain speaker lines (Infinity) direct to the reseller in an attempt to cut off internet sales of that product.
If you decide to stock, you are taking a HUGE risk as margins spiral, fees increase etc... Knowing what I know now I'm glad I didn't take it further and put myself in a finacial tailspin.
I know I may have gone off base a little in this thread. But there are a lot of unseen undercurrents that are affecting the ecommerce market that people aren't privvy to.
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