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E-commerce, advancing technology and consumers' changing shopping habits have brought retailing to a flash point: If retail stores are to remain profitable and relevant to consumers, they need to be better.
Retail chains dominated North American online retailing for most of e-commerce's existence, collecting roughly 40% of all online retail sales tracked by the Internet Retailer Top 500 Guide through 2009. In 2010, however, web-only retailers took the lead, accounting for 37.9% of Top 500 sales versus 36.8% for retail chains. In the years since, web-only retailers' lead has widened: in 2012 web-only retailers accounted for 42.4% of online sales among Top 500 merchants compared to 34.9% for retail chains.
Combine this data with earnings reports from retailers showing same-store sales growth is stalling or declining and consumers who have, through their smartphones, convenient web access 24/7, and the threats store-based retailers face becomes clearer. E-commerce, advancing technology and consumers' changing shopping habits have brought retailing to a flash point: If retail stores are to remain profitable and relevant to consumers, they need to be better. After all, web-only retailers almost always have the advantage on price, and consumers have many shopping alternatives easily at hand.
This month's cover story, which starts on page 18, explores how some retail chains are responding to the threats by improving their operational efficiencies to appeal to consumers across all sales channels. A lot of them are swapping out business systems so that, for example, they can make all inventory companywide available to a shopper, whether she is online or in a store. They are also testing digital technologies—in effect bringing the web into the store—to give consumers new reasons to shop in person, and not online. The success of these initiatives, and others sure to come, will determine how much of a role physical stores will play in retail in the years ahead. Every expert and executive interviewed for this story said, effectively, that there is a future for stores, but that not every store is assured a future.
I also want to alert you to another big story in this issue. Managing editor of mobile commerce Bill Siwicki, working in conjunction with RSR Research LLC, on page 40 reveals some jaw-dropping findings about how consumers interact with retail sites on mobile devices. I won't steal his thunder here, but I strongly encourage you to check it out. The research findings and Bill's analysis of them may well prompt you to reassess your mobile web strategy.
Allison Enright, Editor