business news in context, analysis with attitude

The Wall Street Journal this morning reports on how chains such as Walmart and Target are working to avoid the “showrooming” trend, in which people go into bricks-and-mortar stores to look and feel products, and then use their mobile devices to order them online. This is a big deal, since “today half of shoppers who buy products online first checked them out in a traditional store, according to a recent study of 900 shoppers by Minneapolis-based research firm ClickIQ Inc. While the majority of survey respondents favored Target and Wal-Mart stores for researching merchandise, half of the online consumers wound up making their purchases on Amazon.”

Target, the story says, is trying to get suppliers to provide exclusive product that cannot be bought elsewhere, and “also has quadrupled the number of items available online and is sending special coupons directly to customers' mobile phones.” Walmart is “emphasizing in-store pickups for online orders - many available the same day they are purchased - allowing customers to avoid shipping fees.”

However, such approaches may have limited impact: “The real hurdle ... is pricing. Lower prices are one of the main reasons people pick Amazon and other Internet-only emporiums over traditional retailers. If brick-and-mortar stores can't compete on price, it is unclear how successful they can be with tweaks to merchandising and customer service.”

And here’s the pricing reality, as reported in the Journal story: “Amazon's prices are 9% lower than's when sales taxes are excluded for Amazon, but shipping is calculated for both, according to a William Blair & Co. study. In the same matchup, Amazon beats by 14%.”

The story goes on to say that while “traditional retailers hesitate to emphasize the price differences between their websites and their stores because they don't want to compete against themselves,” this attitude may be evolving to some degree “as stores realize that the competition isn't between stores and websites, but between their websites and those of other online emporiums.”
KC's View:
To me, the most important thing for bricks-and-mortar retailers to do is offer front line service that is simply so compelling and inimitable that people don’t price check on the internet, or don’t care if they pay a few cents or dollars more in the store. This all ties together with the Ad Age story that Michael Sansolo referenced yesterday in his column, about how there is no such thing as a menial retail employee performing an inconsequential job. Rather, these people may be the difference between a sale and a pass.