• by Seana Mulcahy , August 29, 2005

We advertisers and marketers have dubbed this time of year summer's end. It seems like everyone is in that back-to-school rush, be it parents and guardians, kids, teachers, or just about anyone trying to navigate through a retail store (let alone find a parking space) this past weekend. To top it all off, gas prices have made everyone with a set of wheels aggravated.

Prices have risen 10 percent over the past month. I'm sure this won't ring a bell with most of my New York counterparts, but I've never really paid this much attention to gas prices. I wondered if my jaunt down a highly trafficked strip of a two-lane highway cost me more money even though I ultimately found a lower price at that store.

Retailers are becoming increasingly wary as consumers are already spending less per shopping cart. Not to mention the increase in gas and oil cause operating expenses for these brick-and-mortars to operate. According to a recent Washington Post article, Howard Davidowitz, chairman of Davidowitz & Associates Inc., a retail consulting and investment banking firm, said a combination of escalating gas prices, heavy consumer debt, and low savings "will affect every retailer in America."

Wal-Mart chief executive, H. Lee Scott Jr., told the Washington Post that he feels "good about the economy, but I worry about rising oil prices." The increase in the cost of gas could mean fewer gains for the discount chain, as its consumers are primarily lower- and middle-income families.

Other top-line findings of the article include:
-Shoppers are shying away from impulse buying as well as many purchases
-Shoppers are focusing on basic needs versus wants.
-Wachovia Securities estimates that a 30 percent increase in gas prices reduces discretionary spending by $243 per average discount-chain shopper. The firm also found that gas prices have increased 36 percent this year.
-Wal-Mart said higher fuel prices pushed its utility expenses up by $100 million and freight costs up by $30 million during the second quarter. Wal-Mart's second-quarter profit rose 5.8 percent, to $2.8 billion. Most retailers are eating the costs of higher fuel rather than raising prices.

So is there hope in this economy? Well, if consumers are really starting to think long and hard about how and where they drive, then yes. My prediction is that eCommerce will benefit from fuel increases. This does, however, put the pressure on eTailers. They must pay close attention to the basics:

-Consumers are concerned about privacy.
-Pricing for products/services as well as shipping must be competitive.
-Aggregator/comparison sites like Froogle and Shop.com are popular with bargain hunters.
-Tools like one-click shopping and offers like free shipping are a plus.
-Return policies must be easily recognizable on the site. The process for a return needs to be easy for the user.

I'm sure you could add a lot more facts about the dos and don'ts of eTail today. If you'd like to share, post them on the SPINboard. In the meantime, although I'm a disgruntled consumer with a mid-size SUV, I'm conscious about the money I spend on gas. As an online advertiser I'm confident that eCommerce dollars will steadily increase and the holiday season will rock! What do you think?