18962 Wed, 06/16/2010 - 2:47pm
The ’em in this case refers to those dastardly guys who were going to destroy retailing as we knew it: e-commerce.
Remember back in the late 1990s when every forecaster worth his Blackberry and Brooks Brothers suit predicted that the Internet was going to kill conventional retailing, taking 30, 40, 50 percent market share, creating new retail powerhouses, putting gazillions of stores out of business and changing everything forever?
Well, those predictions tended to be just a tad off. The Internet now accounts for somewhere between five and ten percent of all retail sales, depending on who you’re talking to and exactly what you are counting. That will keep going up, but it’s certainly unlikely to get into that 30 to 50 percent share anytime in our business lifetimes.
And yes, while plenty of stores went out of business this decade, it had a whole lot more to do with their own ineptness and the general economy than it did with the web. Most of these guys would have shut down even if Al Gore hadn’t come along and invented the Internet.
And yes, too, there were some new retail powers that were created out of the e-commerce wave, operations like Amazon and eBay that are major players today in the business of selling stuff. But curiously enough, most of the rest of the biggest online sellers have turned out to be the very same retailers who were doing business conventionally: Walmart, Penney, Target, Macy’s. The tidal wave of replacement retailers never really panned out.
So now having survived, the really good stores are starting to take the best of e-commerce and adapt it to their brick and mortar stores. That will be huge.
Look at what Sam’s Club is doing. Taking a page from the individualized selling pitches that Amazon has made a foundation of it’s business, Sam’s has come up with a new program called eValues that tailors discounts for specific customers.
Using an in-store kiosk, members can print out coupons for individual products that have been selected based on their buying patterns. Normally the store says its redemption rate on coupons is one or two percent. With eValues, it’s 20 or 30 percent. The retail rocket scientists call this predictive analytics. The rest of us just call it smart.
But it’s not the only technique picked up from online. Saks Fifth Avenue, which got slammed about as much as anybody a year ago when the better market collapsed, has traced at least part of its comeback to a program of limited inventory on selected goods. In other words, the customer knows if they want something they better buy it right there and then or it’s not going to be around the next time they shop.
That’s been a cornerstone of the online pop-up or sample sale sites like Gilt, One Kings Lane and others. They purposely taunt the customer with small stock—at least they say they do—to create the buying frenzy that drives their businesses.
Elsewhere, suppliers of point-of-sale materials are introducing customized signs that will react to individual shoppers based on a number of factors, again much as Amazon or eBay give suggested products based on customer buying patterns. There’s going to be lots more of these techniques mutating from online to in-store.
Conventional retailers have met the enemy and just as Dr. Strangelove learned to stop worrying and love the bomb, stores have adapted their business models to live with the Internet ... and love it.
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