LIFE AT THE MARGIN

   It’s earnings season for many retailers who ended their fiscal years at the end of Jan. Results have been lackluster at best. Walmart, for instance, sold nearly $1,000,000,000,000 – that’s a trillion – in 2013.  (Of that amount, only $30 billion – about three percent – was online. Amazon did about $75 billion.) Though biggest in the world, Walmart's sales actually fell for the fourth quarter in a row in the US. Best Buy saw sales drop 3.5% for the year. JCP sales fell 7.4% after falling off a cliff (25%!) in 2012. Target saw sales slump 2.5% in 2013.

   Are people buying less? Nope – there’s simply more competition than ever before. It’s a tough world out there.

   Retailers may focus on margin but they also live on the edge. They don’t create demand; they fulfill demand. And they compete ferociously for every dollar. They win when shoppers come to them and become buyers, either online or in-person. They and the brand marketers from whom they buy strive to win shoppers’ attention and then their dollars. None of it is easy.

   Though online options draw much attention these days, the in-store environment remains where the game is largely won or lost. Do it well there and win; do it poorly and lose.  Stores are a high-stakes game.

   As they scrap for every penny and percent, shoppers benefit from that intense competition. Great store interiors, inviting environments, knowledgeable staff, ample supplies of the right products – these are the factors that spell success. The right packaging, displays and fixtures are key parts of that equation.  At the margin, it all matters. 

SEAMLESS RETAILING

   Global consulting company Accenture just came out with research that documents what we’ve been saying for years: online and in-store are converging as shoppers demand bricks-and-mortar stores evolve to provide the benefits of online and vice versa.

   Specifically, the report highlights these insights:

1.    Online Experience In-store: More people are buying online but picking up at a store.  Some are also ordering in-store and having delivered to their homes.

2.    More Webrooming, Less Showrooming: The study found that 78 percent of U.S. shoppers had webroomed (browse online then visit a store to make their purchase) in the 12 months before the latest survey, while 72 percent had showroomed (visit a physical store to see a product and then search online for a better price and make  purchase online).

3.    Free Beats Speed of Delivery: Though people have expectations of faster delivery, 57% of respondents preferred to wait rather than pay for next-day service.

4.    Retailers Aren’t There Yet: Survey respondents noted that they find offerings vary too much between online and in-store.  Retailers who figure this out – and many are working feverishly to do so – may enjoy a competitive advantage.

   As Chris Donnelly, global managing director of Accenture’s Retail practice, says, “Delivering a seamless experience across all retail touch points remains both a key challenge and prime opportunity for retailers today.”

   As long as shopping remains a vital part of the American economy, retail stores will, too.  Those retailers that deliver seamless shopping experiences - whether from one's phone, PC or shopping cart in an aisle - will remain vital to American shoppers as well.