Retail sales have a whole new look

0
946

Sandra Bullock’s character in the 1995 movie “The Net” rarely left the house during her daily routine. The computer programmer worked at home and even preferred to order her pizza online.

Bullock’s movie persona was far from mainstream back then, but today her character’s choices are quite common as virtually anything can be purchased online. Many consumers have drastically changed their shopping habits — even groceries can be bought online and either picked up at the store or delivered to one’s doorstep.

Amazon.com was a game-changer in retail, as the e-commerce company expanded from a book-selling operation out of a Seattle garage into the online behemoth that can deliver just about everything from AA rechargeable batteries to a zucchini spiralizer. And nearly anything you buy can be on your porch in two days.

“Online retailers have certainly changed shopping and the ways in which Americans conceive of finding what they need,” Kristina Lybecker, an assistant professor in the economics and business department at Colorado College, wrote in an email. “Much of this stems from the simplicity and efficiency of using online searches. I can consider six, 17 or 319 products in a matter of moments, focusing on what I want and narrowing my search very quickly.”

Amazon’s success has weakened sales for many local and national retailers, and helped lead to store closures across the country by such prominent companies as Sears and Macy’s.

“Online retailers are able to operate at a scale that lowers prices,” Lybecker said. “Since they can deal in such large volume, they can offer significantly lower prices.

“Finally, online retailers offer undeniable convenience and speed. I can find, order, wrap and send a birthday gift to my sister in a matter of clicks. I can order the replacement printer cartridges that I need and have them delivered tomorrow. These benefits save time and money and have largely driven the popularity of online shopping.”

Battle between bricks and clicks

Walmart, the unquestioned leader among brick-and-mortar retailers, has responded by spending more than $4 billion to buy several e-commerce companies, including Jet.com 11 months ago. Other companies are expanding and promoting online shopping more than ever to combat Amazon’s success.

That resulted in web sales jumping to $394.86 billion in the United States in 2016 — an increase of 15.6 percent or $53.1 billion, according to Digital Commerce 360. About 66 percent of that growth came from Amazon.

“Fundamentally, online retailers have made the marketplace (real and virtual) more competitive,” Lybecker said. “Consumers benefit from the additional selection, the cost savings, and the efficiency of these technologies.”

Lybecker isn’t predicting the end of brick-and-mortar stores.

“Traditional sellers still have a role to fill,” she said. “If they are able to offer unique products, specialized items and individualized service, they will maintain their competitive edge and survive in the marketplace.”

The National Retail Federation has forecast that 2017 retail sales — excluding automobiles, gasoline and restaurants — will increase between 3.7 and 4.2 percent over 2016, driven by job and income growth coupled with low debt.

“Overall, I see room for both types of retailers for years to come,” she said. “Consumers are tremendously savvy and adapt to the shopping platform that best suits their needs.”

Grocery market also changing

The new battleground is in groceries, as Amazon’s purchase this year of Whole Foods sent shock waves through the retail industry.

Walmart, the nation’s largest seller of groceries, began to dominate the market after opening its first supercenter near its corporate headquarters in northwest Arkansas in 1988. Walmart corners 26.2 percent of the grocery market, while Amazon and Whole Foods combined are less than 3 percent. But that could change.

Many supermarkets have dressed up their storefronts, added coffee shops and banks, and are now offering online shopping and curbside pickup. King Soopers calls its curbside pickup “ClickList.”

“It’s something we’re excited to talk about, because it helps people become aware of it,” said King Soopers spokesman Adam Williamson. “It’s a growing business, for sure.”

The King Soopers on Centennial Boulevard has 10 employees dedicated to serving customers who use ClickList. Customers can order and pay online, drive to the store and park in a designated spot, where a sign provides the phone number to call so that employees can bring the groceries to their vehicle and load them.

“We started doing this in October and it’s been a very good service,” said Glenda Hamilton, a 20-year King Soopers employee who is manager of the Centennial store. “We’ve been able to reach out to the community and give a service that I think was lacking for a long time. We’re making it better and better. It really helps our elderly people, and people who just got out of the hospital because they don’t have to come in, plus moms with babies and kids.”

Hamilton’s store averages about 45 ClickList orders per day, and tops out at about 70 a day. Coupons are still honored, as is the King Soopers loyalty card that provides gasoline savings.

“The computer keeps track of your orders and, if there are items you purchase a lot, it will make those easy for you to select,” Hamilton said. “We take extreme care in how we shop, how we substitute if necessary and in the selection of fresh products. We take the employees through extreme training. We try to shop as if we were buying it for ourselves.”

Shop online, get it delivered

Decades ago, milk and eggs were often delivered to family doorsteps — and now you can get those items again, thanks to Instacart.

Apoorva Nehta, who hates to shop for groceries, founded Instacart.

“He found shopping burdensome and annoying,” said Instacart Operations Manager Jodi Montoya. “He was our first shopper and sold it to his friends. He wanted to solve his own problem and it’s grown into a big company.”

Instacart came to the Springs a month ago, and created about 100 jobs, Montoya said.

“Shoppers will go online, pick their favorite retailer, place the order and pay online,” Montoya said. “The goal is to have delivery within an hour.”

Springs stores working with Instacart include Costco, Target, King Soopers, Whole Foods, Safeway, Albertsons, Natural Grocers, Petco and CVS Pharmacy.

Prices are usually the same as shopping in the store.

“We’re in 70 markets now,” Montoya said. “The goal is 180 markets by end of the year.”

Despite success of other options, Lybecker said some shoppers need to go to the store themselves.

“Many consumers still like the experiences of looking and touching before purchasing — at least for some items,” Lybecker said. “While online grocery delivery is fast, easy and convenient, I want to be able to personally pick my steaks and thump as many watermelons as needed, until I find one I like.”

According to Dr. James Tompkins, chairman and CEO of Tompkins International, who wrote “Food Fight: Discovering Eight Truths of the New Era of Retail,” consumer aren’t loyal about where they shop. And all the competition has helped grocery prices drop, Tompkins wrote. The competition — whether it’s with groceries or clothing, or between the bricks and clicks — benefits consumers, he said.

But the internet is far from a perfect solution.

“The simplicity of online ordering is lost if I end up making numerous returns because the jeans don’t fit quite right,” Lybecker said. “For some items, shopping at a brick-and-mortar location is unbeatable.”

NO COMMENTS