Commentary

Internet Vs. Retailer: Round 12

At least once a day I face in the direction of the last known location of a Crazy Eddie store and bow my head to thank what gods there be that I am not in retailing. It's not the women who can shoplift 80 lbs of product wedged between their thighs, or the increasingly frequent power failures that melt everything in the display cases and in the cold locker. Nor it is the employee who stuffs a percentage of each cash sales into his waistband. Not even the shopper who allows his/her dog to take a crap on the new showroom floor carpet. Or the new Walmart, or increasing Chinese labor and shipping costs (Although it could reasonably be any of those). No, it is the Internet.

Just when store owners got used to customers bringing in printer paper festooned with online prices they expect to be met or beat, from giant warehouses that can buy at crushing volume or ship grey goods like they didn't "fall off the back of a truck" -- warehouses that don't pay for storefronts or parking or sales staff and often don't collect sales tax -- comes showrooming. This is where consumers see (and feel and perhaps try on) a product in the retail store, then search for a better price online, often on their mobile devices. It is no wonder that some retailers are installing devices to block cell signals in their stores.

There are lots of tactics retailers use to fight back -- from loyalty programs, to offering unique products that cannot be bought online, to stepping up their customer service hoping that killing them with kindness will outweigh the savings from buying elsewhere. This of course in addition to moronic promotions like "free ice cream for your kids while we try to sell you $1,000 suits."

All this attention is lavished on folks who even bother to go into stores anymore. If you are like me, your default is to try and find it online first, then trudge into a local store. Not very supportive of my retail community, I admit, but it is hard to beat that Xmas-morning thrill of opening up an item just ordered the day before from Amazon. And for every retailer that has stepped up customer service, there are five who have cut back on head count and are now staffed by high school dropouts who know less about products than my dog, Emma. Are you listening, Best Buy?

Just when you are about to write off retailing as we know it today (thanks to the Internet) comes a report that says retailers in the study saw double-digit increases in both the number of shoppers and the amount of time they spent in stores when the owners ran Google AdWords campaigns.

RapidBlue apparently maps shopper behavior in stores and shopping centers: how many visitors, where they go, how long they spend in the store, what they look at. For the study, after gathering baseline data, RapidBlue asked retailers to conduct a Google AdWords campaign. Then, while controlling for time-of-day and day-of-week variability, it rechecked shopper metrics. (After pausing the campaigns, it continued gathering baseline data, in order to control for other variables that could be causing shopper behavior changes.) “What we’ve found and what seems to be quite encouraging," the CEO told the press "is that online campaigns for retailers seem to have a brick-and-mortar impact."

While RapidBlue used the finding to promote its tracking technology -- and there is, to my knowledge nothing to verify its findings -- the study must certainly count as one lonely positive note in the retail vs. Internet contest.

Unless your reasoning follows along these lines: "I use my money to pay for a Google AdWords campaign, which drives more traffic into my store -- traffic that then showrooms and goes back to Google and uses natural search to beat my prices. I knew I shoulda been a dentist."

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2 comments about "Internet Vs. Retailer: Round 12".
  1. Rob Schmults from Intent Media , August 10, 2012 at 9:27 a.m.
    Great column George! Definitely an interesting report worth bringing attention to. And it aligns well with fact that while there are retailers who wish the Internet (especially the Amazon part of it) would just go away, for a lot of retailers it's not retail vs. internet but retail + internet. Companies like Lowes, Target, and ToysRUs -- aren't just rightly following the advice you give on how to avoid showrooming, but are aggressively moving to leverage online and mobile to increase their shoppers satisfaction, loyalty, and spending.
  2. Barr Seitz from McKinsey & Company , August 14, 2012 at 2:30 p.m.
    You're right that the Internet challenge is the defining issue for retailers now. What brick 'n mortar retailers are trying to do is figure out how to make all those bricks a bigger asset than a cost. We published a piece about this, if you're interested (and please send your feedback): http://www.forbes.com/sites/mckinsey/2012/05/22/seven-strategies-to-beat-the-retail-store-apocalypse/