That decline is larger than the multichannel retailer’s overall 5.8% sales decline.
Is this the year of the big boxes on the Internet? Critics sneered at the first Web efforts of discounters Kmart and Wal-Mart, pointing to their cautious-at-best sites as proof that the big-box stores just didn’t “get” e-commerce. Well, that was then.
“Brick-and-mortar retailers woke up,” one observer told contributing editor Mary Wagner for our cover story, “and decided they weren’t going to let another Amazon happen.”
Now, both marts have gone portal, signing marketing deals with Yahoo! and America Online to offer free or discounted Internet service to their shoppers under cobranded banners. They’ve also rebuilt their sites and plan major hikes in their product categories and SKU counts. They’ve made pilgrimages to Silicon Valley and returned flush with venture capital. Why, they even moved their Web operations there and recruited Internet chiefs with solid e-commerce records.
Neither initiative is finished-or proven. Amazon is hardly standing still, and even catching up to its traffic numbers is hardly assured. But the marts have serious numbers of their own: 130 million customers combined. The Internet service deals are aimed at helping them log on, with built-in links to the retailers helping them stock up. That’s an attractive proposition for portals like Yahoo! In fact, the cobranding pact it entered with Kmart’s BlueLight.com is its first.
Other big boxes are rumbling their way into new Net initiatives, too. Among its recent cyber maneuvers, Sears, Roebuck & Co. (see p. 14) has signed its own cross-marketing deal with America Online (proving, by the way, that AOL’s accord with Wal-Mart wasn’t exclusive). Along with a cobranded version of AOL and links to the Sears site, the two plan to collaborate on putting broadband content on the Web. That means R&D;, one analyst pointed out in our story, and signals a deeper relationship. “It’s not just another portal deal.”
Though the marts are pursuing general-merchandise strategies, Sears has all along used the Internet as way to build niche strength, leveraging best-selling brands like Craftsman tools. Its second big Internet announcement, made just days ahead of the AOL agreement, shows it’s reaching even deeper into home improvement by launching a content and commerce site with Bob Vila, TV host and longtime pitchman for Craftsman tools.
All of these moves, combined with a category-by-category shakeout forecast by analysts, will make for an interesting year in Internet retailing. You’re already close to the action-if not in the middle of it. But I invite you to pull up a chair and enter a discussion on these topics and many others at our second annual Internet Retailer World, June 26-27 in Chicago. You’ll hear from BlueLight CEO Mark Goldstein, Sharper Image chairman Richard Thalheimer, CDnow chief Jason Olim and nearly 30 other speakers. For more information, call us at (800) 535-8403 or follow the conference link on our Web site, www.Internetretailer.com. See you in June!