Reality check

Major retail chains are waking up—finally—to today’s retailing realities.

Allison Enright

Chain retailers are, slowly but steadily, removing their blinders and realizing that the web has indisputably changed what consumers want and how they want to shop. And one by one, they're changing their retailing strategies to remain viable.

As this issue goes to press, Toys 'R' Us—long a champion for the dominance of stores—announced it would price-match in its stores 11 competing e-commerce sites, including Amazon.com, and the prices listed on its own e-commerce sites. Best Buy Co. Inc. implemented a similar price-match guarantee in January and in late August emphasized the web as the focal point for the "Renew Blue" turnaround program it introduced last fall. By next year, the consumer electronics chain will have shrunk the total amount of retail square footage it has in the United States by 3.4% from 2011, while, at the same time, increasing its store count by 14.6% as it operates fewer large-format stores and more small-format stores. It is also using many of its stores as fulfillment centers for orders placed on BestBuy.com.

Staples Inc., which operates 1,531 U.S. stores and is the second-largest North American e-retailer by online sales, is being even more aggressive. Staples CEO Ron Sargent has said he wants to reduce the chain's store footprint by 15% over the next three years, and the retailer is rolling out a host of changes—virtually all focused on beefing up web sales or incorporating the web into stores—to stop a sales slide. Internet Retailer managing editor Zak Stambor spent a day with the brain trust charged with reengineering Staples' retailing strategy into one designed for today's—and tomorrow's—retailing realities. His story takes a frank look at the challenges the retailer faces and explores Staples' transformation as it seeks to find the strategy that'll work for both shoppers and Staples.

Elsewhere in this issue, technology editor Paul Demery provides an update on the online sales tax issue and what it is likely to cost merchants to collect. That's a reality check of another kind, and one all merchants must be ready for.

Allison Enright, Editor