The Power of Retail

We have a long list of items to buy this weekend, everything from a new set of curtains and cushion covers, to HDMI switches, audio CDs of Seal and Rod Stewart, some DVDs, a kitchen trolley and a couple of other assorted items like a shelf unit etc. The list of things we need to buy for our new home never seems to get done, and just as we finish off one list at one store, there are a few more waiting for us at another store. We’re past the fun stage of buying things now, and look at it just as a job that needs to be done. We did get some nice lamps from Ikea last weekend they look really nice and give a lovely glow to the room. Wish we had got around to buying them a week earlier so we had them when we had a nice get together of some of our neighbors here.

Online retailers are coming up with creative way to pull in customers while regular retailers are worried what the final few weeks before Christmas will bring them. Online sales have been tipped to increase by 20% this Christmas to a total of $39 billion, as per JupiterResearch, a New York based research firm. Online retailers are likely to come through the season rather well, and the tough economic conditions will not affect them as must as they will affect brick-and-mortar stores.

Online shopping has definitely cut down on the number of people going out to shop this year, a trend that was noticed even on Black Friday weekend. Many consumers are holding out till they see steep sales signs in store windows. Online retailers are ready for the rush of customers and have lots of creative ways to keep them happy, by adding features to their sites such as product reviews by other consumers, clearance sale pages and featured sale pages, all options that make it easier to make a decision.

According to a survey by Shop.org/Shopzilla, an estimated 72.5% of online retailers will let customers buy gift cards from their sites, and an estimated 76.6% will allow customers to redeem them on their site. Total sales from gift cards are estimated to touch $26.3 billion this year, with close to one-third of shoppers polled expected to buy at least one gift card this year.

Well, they just might be! According to industry experts this might be the case as discounters such as Wal-Mart, Southwest Airlines and Dell Computers are slowing down while regular priced retailers are seeing a growth spurt. While the 1990s were all about perfecting the low-cost model, whether it was for clothes or airplane tickets or computers, the current scenario has changed while discount retailers are struggling, regular priced companies are poised to surge past them.

Wal-Mart’s top line has remained weak, with its revenue and comparable store sales growing very slowly. The only section that has seen any significant growth has been its grocery section. Southwest has cut back on its expansion plans and is also changing its service model. Dell is now looking towards it founder Michael Dell to boost sales again.

Don’t be fooled into thinking that consumers don’t care about price anymore, instead it is that price discounters can only go so far in basing their entire USP as price and now have to come up with a newer model that will work in today’s environment. When these retailers launched their low price incentives, they stood apart from all the other retailers and companies, but others adapted and created more price conscious models of operations. Due to the success of low-cost retailers, a slew of competitors emerged which also challenged and took away some success from the original lot.

Discounters will continue to thrive but will need to shift their focus from only price to other aspects of the business as well. Merchandising is one such aspect that will play a key role to their expansion and growth in the future. While discount retailers have been focusing only on price, their competitors have become creative in offering a complete bouquet of services such as convenience, style, quality as well as superior service.

I’m always on the lookout for some good retail sites and I got linked by an interesting retail tech blog which is owned by Deepak Sharma. The Retail Technology Blog is all about aspects of tech when it comes to retail and has a good mix of IT, retail sites, sales forecasts, holiday shopping specials and much more. I tend to read a lot on retail via my email subscriptions and Bloglines feeds. Some of my favorite daily reads include the National Retail Federation (NRF) and the RetailForward newsletters. I also follow trends from the authors of Freakonomics, McKinsey’s newsletter and the Harvard Business Review.

Even though there was a bit of a slow down on certain retail sites on the Thanksgiving weekend, overall online sales and traffic did increase which is a good way to start the holiday season. According to Larry Freed, president and CEO of ForeSee Results, if consumer have a good experience early on in the season, they are sure to continue to shop later on as well.

ForeSee conducted a survey on which customer satisfaction decreased slightly by 1.3% on Cyber Monday as compared to last year. The slight decline was partly due to high traffic on Cyber Monday, which caused several sites to slow down. According to ComScore Inc., online buyers increased by 38% on Cyber Monday, with sites such as Buy.com and Eddie Bauer seeing a slowdown in traffic.

This year Cyber Monday received a lot of traffic due to the increase in promotions that drove sales, which could ultimately cut down on retailers’ margins. On Cyber Monday alone, sales increased by 21% for a total of $733 million as estimated by ComScore. The biggest gainer was shopping.msn.com which saw an increase of 261% over the past few weeks. Overstock.com saw an increase of 139% and Cuircit City gained by 136% on Cyber Monday.

We love to watch movies at home on the weekend and have built up a really nice collection of movies. Lately we seem to be turning on the dvd subtitle even though the movie was in English. We did it when we saw Amadeus, which is based on the life of Wolfgang Amadeus Mozart, and has several dialogues that are spoken so low and in an accented English that it just made it simpler to turn on the subtitles. It does take the focus away from the figures and the photography, but in an historical movie, each and every word is so important that if one misses anything at all, it can change everything. I told a friend about turning on the subtitles in an English movie and she said that’s what they did as well, since half the movies now days have actors mumbling and muttering stuff under their breath and you can only understand it if you have the subtitles on.

Technology retailers are facing a new trend, where consumers love to visit the stores just to see the merchandise, test it out, play with it, but not necessarily buy it. Apple stores are the one to have started this trend with its array of products displayed across tables and customer service people that encouraged visitors to try the gadgets out. Other electronic retailers such as Best Buy, Curcuit City, Sony and even Wal-Mart are following the trend and are already seeing an increase in visitors.

What makes this format of selling work is that consumers become familiar with the products and are likely to become long term consumers, and even will end up becoming addicted to using them. Electronic retailers are likely to see an increase of 8% in sales to $160 billion this year, with big screen TVs as the number one holiday wish list item.

Consumers these days are also spending more time researching products on the web before heading to a store to purchase it or just get a feel of it. The trick is that once a consumer gets hooked onto a product, it will be purchased sooner or later. Another factor is that technology has become more user friendly and has brought in people who would not normally be comfortable with it.

It’s not just regular gift retailers who are going all out trying to woo customers this season, grocery store chains are also creating ways to bring the holiday shopper to their stores as well. Kroger is one such grocery store that is pushing items such as blankets, computer bags, stuffed toys and so on, and selling them for attractive prices. The retailer is also offering special gift cards that can be used for a variety of uses, such as eating out, airline tickets, clothing etc. Supervalu is offering a selection of electronic items such as GPS systems, printers, besides is food and holiday decorations to bring in customers who are all looking for ways to cut costs this year. It’s definitely a good move on the part of these grocery retailers, since consumers are becoming more adventurous when it comes to searching out new places to buy holiday gifts.

The real estate market in the country has radically shifted to cater to seniors in the past twenty odd years or so. When it comes to senior living, Florida and other southern states are some of the most attractive destinations for seniors. By providing seniors with all the amenities and throwing in lots of extras as well, real estate developers are attracting record number of senior citizens to live there. The entire economy of the regions populated by seniors has changed due to this and retailers and service companies have made changes to cater to suit this segment of the population.

Cyber Monday resulted in 4.6 million online visitors a minute with 72 million shoppers going online to shop on the day, according to Internet monitoring firm Akamai, which monitors North American visitors. The most searched item on the internet was the Transformers Bumblebee toy, which replaced Nintendo’s Wii as the top searched item on the internet on Cyber Monday. Traffic was up by around 80% to sites such as jcpenney.com, Bestbuy.com, Circuitcity.com and so on.

ComScore Networks has predicted that Cyber Monday sales will cross $700 million this year and will set the tone for future holiday shopping. The NRF estimates that 72 million consumers will be shopping from home of office on Cyber Monday, up from 61 million online visitors last year. With 72% of online retailers offering specials on Cyber Monday along with free shopping incentives, the rise in sales and visitors is expected.