With the Web stealing holiday sales, brick-and-mortar retailers fight back | “Retailers got lazy. ... Now they have to get more out of each box”

Matt Townsend, with Sapna Maheshwari and Cotten Timberlake


Target is embracing a strategy this holiday season that the discounter has long resisted: matching’s prices. “We wanted to be in the game,” says Chief Executive Officer Gregg Steinhafel. For years, brick-and-mortar retailers have played down the online threat. After all, Web shopping accounts for only about 7 percent of U.S. retail sales, and last year about half of Americans didn’t even shop online, according to Forrester Research. E-commerce, however, becomes a much bigger slice of the pie during the holidays. This year shoppers — comparing prices on their smartphones as they troll the aisles or avoiding the mall altogether — will push online sales to 16 percent of the $586 billion total, forecasts the National Retail Federation.

That’s why Target, Macy’s, Nordstrom, and others are trying to thwart online rivals such as Amazon, Gilt Groupe, and EBay. They’re matching prices and offering same-day shipping; making their physical stores more Web-like with kiosks and mobile checkouts; offering experiences — free family portraits at J. C. Penney in November — and merchandise shoppers won’t find elsewhere. Most of all, they’re trying to be “omni-channel,” industry lingo for the seamless integration of the Web and the store. “This will be the first holiday shopping season where [stores] are making a more concerted effort to avoid bleeding sales to online retailers,” says Ken Perkins, president of Retail Metrics. “The question on everybody’s mind is how are they going to fare?”

In the wake of the recession, many retailers fired sales staff and postponed store remodeling to shore up the bottom line. As a result, customer service and the overall shopping experience deteriorated while e-commerce became easier, faster, and cheaper. Since then, many merchants have repaired their balance sheets and are opening fewer stores, giving them resources to match the Web’s speed, pricing, and wealth of product information. While they once feared physical stores could become an albatross, many chains now see them as a competitive advantage. Stores give shoppers “the full brand experience: the environment, selection, service,” says William Taubman, chief operating officer of Taubman Centers, a luxury mall owner.

Many retailers once operated their stores and websites independently. Increasingly, they’re meshing them. Nordstrom, Macy’s, and other department stores have linked their online and store inventories. That helps salespeople close a sale by offering to ship out-of-stock products from another store or the website free of charge. Borrowing a tactic perfected by Amazon, Wal-Mart Stores is starting to view its 4,000-plus U.S. locations as distribution centers and is testing same-day delivery on Web purchases.

Toys “R” Us, which lets shoppers pick up online purchases at a local store within three hours, has added a holiday service: If an item isn’t available right away, the toy seller will ship it to a nearby store for free. Shoppers can also search a specific store’s inventory on the Web before making a trip. To ensure they do make that trip, Toys “R” Us has started a reservation list for its hottest toys, but shoppers have to sign up at the store.

J. C. Penney, Nordstrom, and Sears Holdings are among retailers deploying touchscreens and tablets in stores to make consumers aware of all their products and offer recommendations, much as Amazon does. The trick is to combine technology with the human touch only a well-trained salesperson can provide, says Paul Price, CEO of Creative Realities, a digital experience consultant to Macy’s and Foot Locker.

Chains including Target and Saks have accepted that consumers will be online while in their stores and are making it easier by adding free Wi-Fi. Part of that calculation is to encourage shoppers to use the retailer’s own mobile app while roaming the aisles. Barnes & Noble has already added Wi-Fi and lets owners of its Nook tablet drop by stores and sample e-books for up to an hour a day. The hope is that, once there, they’ll buy something.

Retailers are also investing more in the basics, such as extending layaway programs and making stores easier to maneuver with quicker checkouts, while adding food and services like Staples’ computer repairs. Macy’s has gone in the opposite direction, offering celebrity appearances with Rihanna and others. “Retailers got lazy because all the growth was just throwing up new stores,” says Paul Swinand, a retail analyst for Morningstar. “Now they have to get more out of each box.”

Gilt, the luxury fashion site, helped pioneer limited-time “flash sales” online. Now, Saks and Neiman Marcus Group are doing it, too. Neiman Marcus calls such sales “Midday Dash” and offers two-hour discounts of, for example, 50 percent on selected merchandise. Nordstrom went so far as to acquire flash-site operator HauteLook for $180 million last year.

Nothing, analysts say, is more important for old-line retailers than selling exclusive merchandise — products shoppers can’t compare prices on. Next month, Target, a pioneer on this front, will start selling a line of luxe designer goods in partnership with Neiman Marcus that includes a Marc Jacobs scarf for $70 and a $20 Tory Burch lunchbox. The discounter has also asked vendors for items that differ from those sold by online rivals and pressed them to institute minimum prices to help stop extreme discounting by competitors. Says Steinhafel: “This isn’t something we’re going to solve overnight.”

The bottom line Brick-and-mortar retailers are trying new ways to counter the appeal of Web stores, which are expected to win 16 percent of 2012 holiday sales.


Magazines Review offers you a broad range of popular American magazines online. Browse an extensive directory of magazines, covering most important aspects of your life. Find the most recent issues of your favourite magazine, or check out the oldest ones.

About content

All the articles are taken from the official magazine websites and other open web resources.

Please send your complains and suggestions through our feedback form. Thank you.