Consumers Punishing Physical Stores for Sins of Online Counterparts

Retailers have for years argued that their online and offline operations should be seen as one. A recent survey suggests that some retailers may regret it.

Retailers for years have argued that their online and offline operations should be seen as one. A recent survey suggests customers are viewing them as one and that some retailers may regret it.

The survey by Gomez, an Internet performance tracking company, shows that many consumers who have a bad online experience are avoiding the brick-and-mortar store.

In some instances, that truly is a Catch-22 situation, according to a group of analysts who discussed the trend in a retail blog audiocast Nov. 3. Nordstrom, for example, has a reputation for delivering extremely personalized and attentive customer service for people visiting their stores. That high-touch attribute is quite difficult to replicate online, setting the company up to disappoint online visitors. Those disappointed online visitors could then potentially punish the brick-and-mortar locations.

"Retailers have been very slow to understand that, to the consumer, its one brand," said Paula Rosenblum, a retail technology analyst for the Retail Systems Alert Group. "Theyre not structured for it. Theyre not compensated correctly for it, and, in many ways, their technology isnt set up to accommodate that."

Jupiter Research retail analyst Patti Freeman Evans said customers have a very high expectation of shared information, expecting, for example, store employees to know what they did online. Such data sharing rarely exists.

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"Though retailers philosophically understand that they want to be there, its very expensive to change those systems, to change their operating programs, to change their compensation packages in a way that really significantly is going to impact the way they do business," Evans said.

One of the authors of the Gomez report, Jessica Bryan, said the change in consumer perception is strong, and, often, its not at all fair. That lack of fairness manifests itself in consumers blaming retailers for many parts of the online experience that are beyond the retailers control, ranging from slow response time (which might be due to overall Internet traffic, the customers computer or the customers connection speed) to checkout issues (which the retailer likely has outsourced).

"The retail brand today transcends the channel," Bryan said. "When [customers] have a poor Web experience, as in poor page loads [or] unsuccessful transactions," its taken out on the storefronts, too. "Consumers dont understand the complexity of delivering an optimal Web experience," she said.

Rosenblum said that even though e-commerce sales are soaring—Jupiter is projecting about $32 billion in online purchases this year—its a footnote to overall retail sales of about $1.2 trillion. Jupiter projects that online sales will represent about 6 percent of many retail chains holiday sales and about 5 percent of their total annual sales.

"If its 6 percent of your business, its hard for these guys to put in the kind of money they need to put in to create the right online experience," Rosenblum said.

On Nov. 2, the National Retail Federation released its own customer service survey, which placed Amazon as the best merchant (online and offline) for customer service. Analysts argued that Amazons online-only status is the reason it can strategically justify spending so much online to deliver that level of customer service.

IHL President Greg Buzek looked at the Gomez report and drew a more holistic interpretation: "Now we have a quantifiable number, a specific cost for screwing up online."

Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com.

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