Online sales grew by more than 30% in the fourth quarter, but store sales slid by 6.1% year over year.
More merchants are relying on web sites and catalogs--or a combination of the two with clickable catalogs--to expand their product offerings. But along with the benefits are risks, retail analyst Jim Okamura says.
More merchants are relying on web sites and catalogs--or a combination of the two with clickable catalogs--to expand their product offerings. But along with the benefits are risks, says Jim Okamura, senior partner specializing in multi-channel retailing at retail consultants J.C. Williams Group.
Okamura notes that retailers like Williams-Sonoma and Sears, Roebuck and Co. have expanded their product lines by offering additional items in their catalogs and on the web that are not available in their stores. Williams-Sonoma has expanded its number of food items for sale, offering several items only through its web site and catalog like an eggnog torte dessert for $34 and a selection of assorted French pastries for $59. Sears has broken out into expanded toy and gift offerings with its respective partnerships with KBToys.com and HarryandDavid.com, also offering many items only online or through its catalogs. “These are great examples of retailers looking for opportunities to get into new products or expanding existing business,” Okamura says.
Although such arrangements can bring a retailer incremental sales and a broader base of customers, they can also present challenges and risks, he adds. “A lot depends on a retailer’s core brand, and how that brand has characteristics that can extend to other product categories,” Okamura says. “Retailers need to drill down to where their brand can effectively stretch into extra product categories.”
In some cases, however, retailers taking this approach rely heavily on suppliers and merchandise partners to handle matters such as fulfillment and deliveries, including drop shipments from manufacturers. “It’s a risky thing, because you no longer have as much control over serving customers,” Okamura says. “You’re putting your brand on the line, so it depends on your confidence with your partners.”
On the other hand, partnerships can also provide a low-risk means of testing a new selling channel, Okamura adds. He cites as an example Yahoo’s boutique within a Marshall Field’s store in Chicago, where the web portal displays its online services as well as merchandise like digital cameras and computer keyboards carrying the Yahoo logo.
In another cross-channel trend, more retailers are seeing the benefits of letting their web site shoppers page through electronic or clickable versions of their paper catalogs. “This is right up there with gift card programs as a popular new initiative,” Okamura says. Among retailers offering new online clickable catalogs: Kenneth Cole, Williams-Sonoma and The Bombay Co.
Okamura attributes the spread of clickable catalogs--which present the identical page-by-page appearance of their printed versions--to the comfort level they appear to offer shoppers. “There’s something about the familiarity of the catalog experience for consumers,” he says. “The retailer edits the product assortments and helps shoppers select products. It’s a comfortable mode of shopping.”