Brick-and-click retailers mount challenge to dot-coms
Although online holiday sales remain a relatively small pie, brick-and-mortar retailers this year aim to get their piece of it. Each of the big-three retailersWal-Mart Stores Inc., Kmart Corp. and Target Corp.has full-fledged Web storefronts for the first time this holiday season, and each is banking on banner sales.
"People are more comfortable shopping at the big-brand retailers sites," said Dave Karraker, a spokesman for BlueLight.com, the online arm at Kmart, of Troy, Mich. "They like that they can return items they buy online to the store if theyre not happy."
All told, theres an estimated $10 billion to $12 billion at stake in retail e-commerce this holiday season. Although the U.S. economy appears to be slowing, online retailing is growing. It rose more than 15 percent in the third quarter from the same period a year ago, according to the U.S. Commerce Department, and the first post-Thanksgiving week of the holiday shopping season saw a 140 percent increase in online retail sales from last year, according to a survey released by The Goldman-Sachs Group Inc., of New York, and PC Data Inc., of Reston, Va.
The big-three retail stalwarts arent alone. Sears, Roebuck and Co., of Hoffman Estates, Ill., has been selling online since 1997, but this is the first holiday season the retail giant will have an online store selling a broad range of merchandise. Early indications are that the site is doing three to four times the traffic and sales it did last year, officials said.
Nordstrom.com, of Seattle, has seen a 300 percent increase in sales so far, while Target.com is seeing sales and traffic increases of about 50 percent week to week.
One key to the success of the established retailers is their ability to address customers in more than one sales channel. Rather than detracting from its in-store sales, Sears has found that its Web presence is having just the opposite effect, said spokeswoman Ann Woolman.
"Ten percent of our in-store appliance sales are influenced by customers looking at the products on our Web site," Woolman said. "Were talking upwards of a half a billion dollars in revenue."
Laurie Windham, CEO of San Francisco-based e-business consultancy Cognitiative Inc., calls this the year of the multichannel model. "Consumers like to have choices, and each channel can play a role in one transaction," said Windham, who predicts that brick-to-click retailers will take some sales away from dot-coms this holiday season.
A study that will be released this week by Active Research Inc., of Burlingame, Calif., also bodes well for brick-and-mortar retailers that have moved online. The survey concludes that after price, the most important factors for where holiday shoppers go online are a familiar brand, followed by having stores offline.
But to date, brick-and-mortar vendors havent necessarily been better than dot-coms at overcoming the challenges of selling online. Some are finding that shipping orders to individual customers is a different ballgame than sending bulk shipments to retail stores. In addition, BlueLight.com and BestBuy.com, both new to the online world, have seen their page load times drag considerably as holiday shopping traffic has increased.
Online-only retailers are not ready to concede the space to the newcomers, either. "We feel we can hold our own, but its becoming an unbelievably competitive environment," said Mitch Hill, chief financial officer at Buy.com Inc., of Alisa Viejo, Calif., the second-largest online retailer. "Theres room for all of us, but probably not much more room."
Nielsen/NetRatings Inc., in Milpitas, Calif., reported that e-tail leader Amazon.com Inc. had five times the traffic of any other online retailer in the first four weeks of November, a total of 54 million visits. Despite three site outages since Thanksgiving, Seattle-based Amazon has sold nearly 20 million units since Nov. 2.
Buy.coms traffic is up this holiday season "more than 20 percent but less than 100 percent" over last year, Hill said, pointing to Buy.coms recently being ranked by Forrester Research Inc. as the top consumer electronics site in Forresters PowerRankings, which measure total customer experience. But score one for the bricks-to-clicks, too. Last week, Forrester, of Cambridge, Mass., gave TowerRecords.com its top rating for online music sites.