Target and Toys R Us posted overall sales declines during the holidays.
After failing to make its mark online, Lucy.com pulled the plug on its web site in favor of selling exclusively from a New York shop.
A few years ago, it was the real-world retailers who were closing up shop to take up life on the web. But now, web-based retailers are closing web stores and taking up life in the real world. Lucy.com, a women’s sports apparel site that had loyal and rabid customers, is the latest to close its web operation, following a similar move by Gazoontite.com last fall. Lucy closed its web shop in February and will sell exclusively from its location at the Crunch Gym at 58th Street and 2nd Avenue in New York. CEO Sue Levin posted a letter on the Lucy site stating that the cost of selling on the web was too high but that it hoped to have another web site in the future.
That’s a truth that has hit many dot-com retailers in the face over the past year. Promoting a national brand is wildly more expensive than most people thought. Garden.com, for instance, spent twice its revenue just on marketing. And most analysts say Garden was not alone in that range.
The other problem was that Lucy.com never differentiated its products, says Duif Calvin, San Francisco-based senior retail analyst with iXL. She says that Lucy’s “Shop by Body Type” feature was not carried thoroughly enough through its inventory. Searches by different body types often recommended the same product for the different types. Furthermore, once a customer had done a search and found a product, Lucy did not recommend enough ensembles to promote impulse purchasing, Calvin says. Finally, prices were higher at Lucy than elsewhere, she says. “A retail brand has to have a meaning,” Calvin says. “It was never clear that Lucy’s brand was carried through to the merchandising.”
Lucy plans to open more stores this year, although the company will not provide details. The company has fired more than half of its 95 employees, with more lay offs expected after the web and catalog operations closed. The company expects to save money by operating only offline stores and is not ruling out re-introducing a web business in the future. Calvin believes that the store location in the Crunch Gym will be a good way for Lucy to gather data about what its customers want, but the location is not likely to generate traffic. “It’ll be a good way for them to find out what they need to say to people to differentiate the brand,” she says.