Magazine Article | December 1, 2001

'Twas The December After Terror

Source: Innovative Retail Technologies

Retailers will need to rely on their technology implementations more than ever to get through this holiday season.

Integrated Solutions For Retailers, December 2001

Retailers are sure to feel a Scrooge-like resistance this holiday season as consumers pinch pennies in a tight economy. As a response to the events of September 11th, Americans decided the 2001 holiday season should focus on time spent with family rather than money spent on gifts. This change in consumerism spells bad news for the retail industry, which typically generates 25% of its annual sales during the holidays. Retailers have already had to overcompensate with extensive fall sales due to unbalanced demand predictions. If the holiday season plays out the same way, they fear that large amounts of merchandise will be forced into liquidation. All might not be lost, however. When it comes to capturing holiday sales, retailers who have implemented successful multichannel and Web strategies will find plenty of reasons to celebrate.

Home Is Where The Shopping Is
Many economic predictions, including those regarding holiday spending, were buried in the World Trade Center rubble. The Commerce Department announced in October that the small 0.4% gain retailers saw in August was negated by a 2.4% fall in sales in September - the biggest drop since the department started reporting retail sales nine years ago. The countrywide effect has been seen in recent spending lulls and alternative holiday shopping plans.

Vividence Corp. (San Mateo, CA), a Web analytics company with a strong focus on online behavior and attitudes, was in the midst of its Holiday Readiness research in September. Consumers surveyed both before and after September 11th responded that economic concern would be the number one reason to spend less money this holiday season, but after the attacks, safety was also on their minds. Of those surveyed, 37% planned to search for good deals online this year while sitting safely at home. This consumer mind-set offers a chance for retailers to test their latest technology initiatives designed to efficiently provide single views of customers, inventory, and package delivery.

Put Tech Investments To The Test
Much has changed since 1999 when 65% of the top e-tailers were pure-play dot-coms, 29% click-and-mortar sites, and 6% extensions of catalog operations, according to AMR Research (Boston). In 2000, the pure-plays lost some ground dropping to 49%, while click-and-mortars and catalogers increased their online market share to 38% and 13%, respectively. In a conversation with Randy Covill, senior retail analyst at AMR Research, he confirmed that 2001 will be a year for multichannel retailers to shine.

Multichannel strategies allow retailers to provide many consumer options that will pay off this holiday. Retailers who offer brick-and-mortar delivery of online purchases will be able to cost-effectively waive delivery fees and upsell once customers are in the stores. Those who offer package delivery tracking in conjunction with carriers will also have a customer service advantage. Well-honed CRM (customer relationship management) technology can help retailers better target promotions to multichannel customers, which according to Covill will be a major strategy for retailers to earn last minute holiday sales. "Research shows that Eddie Bauer customers who shop through catalogs, online, and stores spend three to eight times more than single-channel customers. Eddie Bauer, and other multichannel retailers, are well positioned for success," Covill said.

Other retailers, like West Marine, have been able to attract new boating enthusiasts to its Web site and stores through eBay online auctions. When its auction customers win a bid, their transactions are completed within the West Marine online shopping cart. Tony Gasparich, VP of Internet at West Marine, said 80% of auction customers are new to the company and 27% purchase from the site again.

Regardless of what the shopping season brings in terms of profits, the entire Integrated Solutions For Ret@ilers staff wishes all our readers and their families a Happy Holiday as visions of mouse clicks dance in their heads.

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