September 27, 2007, 12:00 AM

Why same-store sales fall and web sales rise

Consumers want a shopping experience that is quick and efficient, that they are in control of and that they can conduct on their terms.

By Kurt Peters

I am not much of a store shopper any more. The Internet is my medium of choice. But recently, I had a few minutes to fill between when I bought movie tickets and when the movie began, so I stopped into the department store-owned by a major chain-across the mall from where we were seeing the movie.

The experience only confirmed why I do not shop in stores. The floor in the footwear department was littered with inserts from shoeboxes, as if the customers or the clerk had simply thrown the inserts on the floor and no one could be bothered to pick them up. Other merchandise was displayed haphazardly. Shirts and sweaters had been dropped on displays with no attempt to fold them or present them neatly, apparel was on the floor and the store had a general feeling that no one-not the salespeople, not management-cared about the customer’s experience.

Shortly after that, I had the opportunity to shop in another department store, owned by a different chain. I was looking for a pair of jeans and had been lured into the store by a sale. I sorted through the stacks for several minutes, trying to find, among what appeared to be a haphazard arrangement of merchandise, my size and fit. Never once was I approached by a salesperson, even though there was a clerk behind the cash register counter-unencumbered by other customers-the entire time. I finally found what I was looking for, but resolved I’ll go to Levis.com the next time I want new jeans.

These twin experiences within two weeks of each other confirm why the retail channel is shifting to online. Stores have become unpleasant places to shop, no matter what senior management believes about the experience. Consumers want a shopping experience that is quick and efficient, that they are in control of and that they can conduct on their terms. They don’t want to have to track down a clerk and explain what they’re looking for, knowing all along that the answer in most cases will be that it’s out of stock.

Already, anecdotal evidence is piling up that consumers have made that decision. Same-store sales in plenty of chains are flat or down while online sales grow. A few recent examples: Gap Inc.’s second quarter, same stores sales were down 5% from a year earlier while web sales were up 26%; Kohl’s Corp.’s Q2 same store sales were up 1.3% while web sales were up 60%; Staples Inc.’s same store sales were down 2% while web sales were up 18%. And even at Williams-Sonoma Inc., which has great stores, same store sales were up 1.2% while web sales were up 11%.

In spite of consumers’ demonstrated desire to shop online, many retail chains are still approaching the Internet as an after-thought. Most either don’t report online sales as a separate line item or bury them so deep in their financial filings that you’ve got to wonder what they’re trying to hide.

To be sure, some chains have stepped up their commitments to selling online, notably Wal-Mart Stores Inc. with a handsome new design that it unveiled this spring and J.C. Penney Co. Inc., which has built a thriving web business on its catalog roots.

But others have a long way to go. And simply replicating the store-doing what they’ve always done-is a sure recipe for online death.

kurt@verticalwebmedia.com

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