In its second-largest acquisition, Amazon buys the company for $970 million.
With retail locations shrinking, more retailers bet that clicks as well as bricks belong in stores.
Art Van Furniture had a size problem. The retailer, which operates an e-commerce site and 32 stores in Michigan, last year wanted to open a 16,000-square-foot retail location. That was less than half the size of the retailer's smallest store and would require Art Van to offer fewer recliners, beds, dining room sets and desks on its sales floor. The fix? Bring the web inside the store.
Art Van installed in the store a computer workstation with a 37-inch, high-definition touch screen that offers shoppers access to the retailer's virtual catalogue, arranging items by room, styles or other features.
"You can see this thing from dozens of feet away," says Donavan Marchywka, Art Van's web project manager. "It really draws the shopper into the process of viewing the product."
Lack of space
Art Van is hardly the only retailer facing the dilemma of how to present its full range of merchandise in smaller retail spaces. A certain retail chain from Arkansas known as Wal-Mart Stores Inc. faces the same problem as it pushes its way into big cities like New York and Chicago, and is testing using in-store web access to make up for a lack of square footage. Other retail chains are going the same route.
It could be a brilliant way to take advantage of consumers' growing comfort with the web. Or in-store, web-enabled kiosks and workstations could prove to be a modern-day Trojan Horse, convincing consumers there's no point trekking down to the local Wal-Mart if they are going to wind up shopping online from the store. E-commerce experts say either outcome is possible.
"If bricks-and-mortar retailers heavily rely on a kiosk or in-store online shopping system, the in-store selection could gradually diminish, and then it is possible that it'd be more convenient to shop online instead of going to the store," says Scott Wingo, CEO of ChannelAdvisor Corp., a provider of e-commerce technology and services that help retailers sell through multiple online channels "However, we're seeing implementations that improve the in-store experience by bringing web content such as consumer product reviews into the store, which then strengthens the in-store experience by marrying it with online content."
There's also the possibility that, before there's enough evidence either way, the question will be superseded by the reality that consumers are bringing the web into the store themselves in the form of their iPhones and other smartphones. At least one retail chain has already halted expansion of its in-store web kiosk program because of the proliferation of web-enabled mobile devices.
For now, there is evidence that large numbers of retailers are placing self-service devices in stores. A survey of 138 retailers last fall by research firm Aberdeen Group Inc. showed that 42% of respondents deployed customer self-service technology such as kiosks. "Consumers can shop anywhere today," says Sahir Anand, a retail analyst for Aberdeen. "The way to hold onto a customer, you have to offer a buy-anywhere, fulfill-anywhere environment."
For retailers that sell both through stores and the web, Aberdeen estimates that 80-85% of their sales come from bricks-and-mortar locations. At least one retail chain that's investing heavily in web-in-store technology is not concerned that the strategy will lead to consumers avoiding stores—at least when they're buying high-consideration items like flat-screen TVs.
"If you are buying an expensive TV, you never really know how crisp and bright the picture is unless you see it in person," says Gilbert Fiorentino, CEO of Systemax Technology Group, which owns the consumer electronics retailer CompUSA as well as CircuitCity.com, the e-commerce site that survived the retail chain's demise. "I love the Internet, but there are things you need to see in person."
As part of an initiative it calls Retail 2.0, CompUSA has deployed kiosks at the end of every aisle in nearly all its 35 stores, Fiorentino says. The kiosks include bar code scanners so consumers can scan merchandise to call up more information. Additionally, the desktops, laptops and televisions on display are connected to dedicated computers so they can display product information, such as warranty details, on their screens.
Fiorentino would not release recent figures about the impact of Retail 2.0. But last year, after a test of the concept in CompUSA's Miami store, he said the location experienced a 20% increase in conversion on store traffic. He estimates that Retail 2.0 costs about $100,000 for each store.
As well, the technology enables CompUSA to keep staffing levels stable—Fiorentino says Retail 2.0 has resulted in no layoffs of store clerks, but reduces the need to hire more—and that the kiosks and other displays help employees learn more about the products they are trying to sell.
Investing in equipment such as kiosks also is paying dividends for retailers such as Art Van that want to reduce their store sizes and overhead but still attract increasingly sophisticated consumers by offering expanded selections and personalized service.
At Art Van, the kiosks cost about $5,000 for hardware and software. The retailer, which is deploying similar equipment in all its stores, estimates that each kiosk drives one or two in-store orders per day, which would translate into about $50,000 in annual sales.
Wal-Mart Stores Inc. also hopes to use workstations to win new customers. The retail chain wants to put computers in store aisles that shoppers could use for ordering goods via Walmart.com, which could help make up for the smaller sizes of stores located in urban areas, one of the last frontiers for the retailing giant. Wal-Mart executives, in fact, have told analysts that multichannel integration will be a strategic priority over the next five years. They aim to use stores as an edge over web-only competitors, notably Amazon.com Inc., even as Wal-Mart opens smaller stores in urban locations.
Wal-Mart is testing the concept at a store in the Chicago suburb of Mount Prospect, Ill., where overhead signs direct shoppers to small, black computers—one near the restrooms in the back of the store, for instance, and another on a counter in the consumer electronics department—where consumers can order from the web or look up product information. Consumers can pick up web-ordered items at a drive-through window or a desk in the front of the store.