Gas Prices May Drive Retailers to Rethink Cross-Channel Programs

 
 
By Evan Schuman  |  Posted 2006-08-17 Email Print this article Print
 
 
 
 
 
 
 

Opinion: As consumer purchasing habits change, retailers should question whether to continue offering in-store pickup and return options for online shoppers.

As gasoline prices continue to soar to ludicrous heights and consumers get more comfortable with e-commerce, some retailers are starting to question what programs to push—and play down—this holiday season. For example, the popular "shop online, pick up in store" and "buy online, return at store" options both end up forcing the consumer to use up that precious gas. Do these kind of approaches merit being thought through again? Two unrelated surveys released on Aug. 15—one from Harris Interactive that was paid for by vendor Newgistics, and one from BigResearch, paid for by the National Retail Federation—beg that question.
The Harris Interactive survey found that "given the option to return purchases directly from home with a pre-paid label, home shoppers are nearly five times as likely to shop with the retailer again as those who are restricted to a return process that requires travel to a mail center or drop box. Alternatively, if a return process requires consumers to travel to a mail center or drop box, only 13 percent of adults who shop from home would be very likely to shop with the retailer again."
Granted, that research was paid for by a company that offers just such a ship-from-home service, so Im not giving too much weight to the numbers, but there can be little doubt that gasoline prices make those stats quite reasonable and plausible. The BigResearch survey focused primarily on an expected surge in electronics purchased for students returning to college. (That part of the survey prompted many cries of "You paid how much for that research? You couldnt have figured that out of your own?") But it also explored an interesting brick-and-mortar aspect of the impact of rising gas prices: a sharp drop in expected traffic for smaller retailers, with more business going instead to one-stop-shopping locations.
Discount stores took a hit, down to 51.8 percent this year from 55.8 percent last year, drug stores dropped to 10.9 percent from last years 12.8 percent, office supply merchants dropped to 38.8 percent from last years 41 percent and college bookstores dropped to 56.8 percent from last years 59.8 percent. "In fact, the only two sectors that will see an increase in traffic this year include department stores (36.1 percent last year versus 39.3 percent this year) and specialty stores such as clothing or electronics shops (20.8 percent versus 23.5 percent)," an NRF statement said. "As consumers remain concerned about gas prices, they are more inclined to scale back on the number of stores they visit," said Phil Rist, vice president of strategy for BigResearch, in Worthington, Ohio. "College students, who are some of the most technologically savvy shoppers, will likely use the Internet to look for prices and research merchandise before setting foot in a store." Amazon.coms proposed patent for a new gift recommendation system raises privacy concerns. Click here to read more. Whether its consumers going to fewer stories or trying to eliminate brick-and-mortar interactions completely, this years holiday season is likely to look quite a bit different from last years. Alternative payment methods are becoming much more mainstream, as evidenced by the Aug. 16 announcement from Barnes & Noble.com that it will be accepting PayPal. The "shop online, pick up in store" method has always struck me as an excellent idea on paper, but one that doesnt cleanly translate to the real world. It means subjecting consumers to the long lines, the traffic and the gas prices that they are trying to avoid and its typically not free from technical glitches. But allowing customers to return unwanted online purchases to brick-and-mortar stores still makes a lot of sense, even with soaring gas prices. Often, the consumer has to drive no matter what, so whether its driving to the Post Office (or MailBoxes Etc.) and waiting in those lines or driving to the retailer and waiting in the retailers line, it should make little difference in terms of gas cost and inconvenience. Returning an item via the Post Office, however, forces the consumer to use his or her own packing material and to do his or her own packing (or to pay someone else to do it). Returning something at a retail store typically requires a lot less effort. Evan Schuman is retail editor for Ziff Davis Internets Enterprise Edit group. He has tracked high-tech issues since 1987, has been opinionated long before that and doesnt plan to stop anytime soon. He can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.
 
 
 
 
Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.
 
 
 
 
 
 
 

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