• by Erik Sass  @eriksass1, February 7, 2007

Deloitte Touche Tohmatsu is forecasting a cash crunch for brick-and-mortar retailers this year and beyond, thanks in part to the Web.

In a report issued this week, Deloitte cited online commerce, greater transparency in product information, and the PR ramifications of sites like YouTube as among the leading threats to traditional retail.

"In some ways," the report states, "consumers have reached a level of information parity with retailers," making comparison shopping and product quality research easier. This, in turn, will further reduce "the value of, and need for retail workers who actually try to sell the consumer something."

The Deloitte survey also points to the growth of consumer-centered auction sites: "IT parity also means more consumers will become retailers through auction sites or other means of electronically-facilitated commerce, taking market share from traditional retailers."

The Internet presents a third threat by allowing consumers and activists to rapidly disseminate damaging information or opinions about companies, including retailers--a capacity amply demonstrated in 2005-2006. Angry consumers can use blogs and sites like YouTube as platforms for their frustrations. Meanwhile, Deloitte warned retailers that "the use of child labor, environmentally unfriendly suppliers or other questionable activity can and will be unearthed by business-hostile NGOs to discredit your brand."

This, in turn, could help fuel political pressure on retailers to choose "politically correct" suppliers, driving up costs even further. Although Deloitte doesn't draw the connection explicitly, in a separate analysis of trends in globalization the authors predict that "the combination of political and economic forces will increase the cost of, and reduce the access to, imports coming into the US, Japan, and Europe." Widespread criticism of labor practices via the Internet could speed this process.

However, the outlook isn't all gloomy, according to the same analysis. Returning to YouTube, the authors noted that "at any one time, three to five of the top 100 most frequently watched videos will be ads." Indeed, "Some of the more effective advertisements on YouTube are both entertaining and so subtle that it's hard to even tell if they were meant to be advertisements."