May 31, 2011, 5:05 PM

Follow the money

(Page 2 of 3)

REI.com and Target.com, the e-commerce sites of chains Recreational Equipment Inc. and Target Corp., also show which local stores have particular items in stock, but do not allow shoppers to purchase items online for store pickup.

10 million orders

Though the buy online, pick up in store concept has been around for years, retailers like Sears Holdings Corp. that were early movers say more shoppers than ever are taking advantage of it. "More and more customers are looking for instant gratification and increasingly looking to avoid shipping fees," says Imran Jooma, Sears' president of e-commerce. He expects Sears this year will hand over the 10 millionth order placed online and picked up in a store. Once in the store, Jooma adds, customers often buy additional items, though he would not say what percentage of shoppers do so.

Sears has expanded on the order online, pick up in store concept in several ways since introducing it in 2001, including recently expanding the feature to its mobile commerce apps. Mobile app shoppers that make a purchase receive an e-mail confirmation with a bar-coded receipt when their item is ready for pickup. A shopper can either print out that receipt or simply bring her phone into the store and scan the bar code on a dedicated kiosk. Sears promises a $5 gift certificate to any customer who waits more than five minutes for a store associate to deliver her item.

Shoppers can also opt for curbside delivery or have someone else pick up the item. "Customers don't even have to get out of their cars," Jooma says. "We are always looking for a way to make it more convenient."

Citing its success with buy online, pick up in store, Best Buy also is planning to expand its multichannel strategy by increasing online merchandise selections and installing touchscreen kiosks in stores. 60% of Best Buy's store purchases are researched online and 40% of online purchases are picked up in stores, executive vice president Shari Ballard told analysts in April. For shoppers, "there is a new definition of convenience: the ability to interact with a company on your terms," she said.

Gap Inc. says it plans to soon enable consumers to pick up online orders in stores. The feature is also offered by Nordstrom Inc., Wal-Mart Stores Inc. and AutoZone Inc.

A bigger warehouse

Nordstrom has used its store inventory as an extension of its web fulfillment center stock since October 2009, enabling web customers to get products available anywhere in Nordstom's inventory.

"Before, if you were shopping online and our fulfillment center was out of stock of a Michael Kors handbag that you really liked, it wouldn't show up as available on the web site—even though we had 20 of them in our stores," a spokesman says. "Because we created this shared inventory platform, it's now able to show up as available on the site and we will ship it from one of our stores."

Nordstrom says making all its inventory available in all channels has contributed to its achieving 19 months in a row of comparable-store sales growth. "2007, 2008 and the front half of 2009 were difficult times in retail," the spokesman says. "We were running negative comps. But when we turned on this capability we started to see positive increases and we've stayed in positive territory until now."

Adding companywide inventory visibility makes it more likely retail chains can satisfy both in-store and online shoppers, as the chains typically have 95% of their merchandise in stores and only 5% in fulfillment centers, says Dias of GSI Commerce. Jones Retail Corp., whose brands include Anne Klein, Nine West, and Easy Spirit, implemented in 2008 a system that lets clerks at the retailer's 800 stores locate any item a store customer can't find, whether it's held at a store, distribution or web fulfillment location, and order home delivery of the item. GSI Commerce and VendorNet, a GSI subsidiary, provided technology and services for that deployment.

Some of VendorNet's other clients, including Sports Authority, Polo Ralph Lauren and Toys 'R' Us, are all implementing some form of this common inventory capability, and expect to go live with it in time for the holiday season, says VendorNet founder and president Sharon Gardner.

Macy's will as well, says Karen Hoguet, Macy's chief financial officer. Its current "Search and Send" program only allows for shipping items unavailable in a store to a customer from Macy's distribution centers. "We're also expanding the ability to access inventory from other stores to increase the probability of meeting a customer's needs," Hoguet told analysts earlier this year. "We need to continue to align our store and our Internet merchandising and marketing strategies."

Seeing the light

In addition to inventory initiatives, the chains are turning to other web and mobile technologies to make their stores more appealing places to shop.

City Sports, an athletic shoe and apparel retailer with 18 stores on the East Coast, for example, is working with vendor Global Bay Mobile Technologies to turn iPads into in-store kiosks. Customers can use the tablets to log on to the retailer's web site for additional inventory availability, as well as to check product videos, company news and local sporting events.

In February, J.C. Penney Co. Inc. deployed 42-inch touchscreen kiosks, dubbed "findmore" fixtures, in 120 of its stores. The kiosks have detailed product information with zoom capabilities, 360-degree views, and let shoppers locate out-of-stock items on Penney's e-commerce site or at nearby stores. "Offering an in-store digital experience that drives additional sales is a true differentiator for J.C. Penney and continues to build on our leadership in the digital space as we merge our online and in-store shopping experiences," says Tom Nealon, group executive vice president of J.C. Penney.

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