|As seen in the June 2001 issue of...
a management and marketing "solutioning" firm, is the
moderator of "E-Tailer’s
Digest," an Internet retail discussion forum. georgem(at)gapent.com.
Bricks and Clicks:
The New "New Economy"
Today’s Internet world is a far
cry from what it was a couple of years ago, or even last year.
The old guard in retailing has let the dust settle, and have
now joined the “new economy” in what is dubbed “bricks and
clicks.” And they are making a success of it!
A couple of years ago, forecasters predicted Internet
companies would put retailers out of business, while shopping
centers would go the way of buggy whip factories. Why would
anybody drive to the mall or walk to a store when they could
shop online in their pajamas in the middle of the night?
- Well it looks like the inexperienced
twenty-somethings have gone away, and we’re finally going to see the
retail gurus online with their expertise in merchandising and
retailing. Giants such as Wal-Mart, Federated Department Stores and
Staples are expanding their Web offerings or combining Internet
operations with their catalog businesses. And companies like Borders
are partnering with “pure play” Amazon.com, which makes more
financial sense for both companies.
The traditional retailers are finding the Internet a much easier
place to do business than the small start-ups that first tackled
e-tailing, without business, merchandising or retailing experience.
With established brands and deep pockets, big-name traditional
retailers are expected to fare better on the Internet than their
upstart predecessors. And the smart independent can follow on their
How are bricks and clicks retailers using
Bricks and clicks retailers are using their Web site as a valuable
tool --- not necessarily for sales, but for marketing and customer
Store and product locator. Many retailers like CompUSA allow the
customer to search for a product online. You enter your zip code,
and they then list stores near you and how many each store has in
stock. It's a lot cheaper and more effective then calling and tying
up an associate's time.
Many customers don't want to shop online. Rather they want to know
if their local store carries particular merchandise. Last fall Home
Depot was ready to launch an online shop with 5,000 general items,
until they learned that their customers really wanted a view into
their local store. (author’s note: Surprisingly enough, in January
1998, when I was a keynote speaker at Gifts & Dec’s conference at
the Dallas Gift Retail Trade Show I noted that 51% of Americans who
use the Internet do so to access local information. )
Bridal Registry. Stores like Target find the bridal registry is the
most popular area of their site. Visitors can print out the couples
wish list, and go to a local Target to purchase. Since bridal
registries have always been a bear to control throughout a chain,
the Internet is a natural.
Catalog or Remote “store.” For areas with less population, some
retailers like Home Depot are offering Internet ordering, simply
because there aren't enough people in those areas to justify
building new stores. Just like catalogs did decades ago. In fact,
Federated Department Stores (Bloomingdale's, Rich's and Macy's) is
combining its Internet operations with its catalog businesses, in
part to cut costs and reduce redundancies.
Advertising. The Internet is an up-to-date, massive ad campaign
going 24 hours a day, 365 days a year. And the public is looking at
those ads. In 1998, according to market researcher IDC , only 30
percent of U.S. households had Internet access. Today, 47 percent
can log on, and by 2005 it is projected that 75 percent of all US
households will be able to access the Internet.
Why will they succeed?
“Land Grab” is over. When the Internet was a novelty and anybody
could “open a store” most had the erroneous idea that you could sell
cheaper online and they tried to gain a foothold in this new medium.
Hence there was a lot of heavy discounting and very expensive
marketing and promotions, which forced the inexperienced out of
business. Remember Super Bowl 2000 when one company spent more on
one ad than their sales for the prior (and coming year)? I consulted
at one major online store that applied a 30% markup across the board
for all their gift items. When I explained that a 30% markup
represented a 23% gross profit, and their competitors were applying
a 100% markup, they tried to justify their actions by saying the
competition had more of an overhead. This from a company who just
spent $2.5 million for a computerized inventory tracking, scanning
and billing processes and another $2 million for a warehouse
buildout. Plus, they had sixty people in customer service!
Established Brands. These brick and mortar retailers already have
well-known brands and all the marketing they need. And they will
have the merchandise in stock.
Multichannel. A customer can find and/or purchase products online
and/or purchase or return it to the store. Hallmark's vision is to
create synergies among its physical stores and online ventures such
as Hallmark Flowers. One of Hallmark's first steps will be to build
a powerful customer database that supports its retail and online
channels. It will have to consolidate separate customer databases
devoted to its 15 million loyalty card members, Keepsakes
Collectibles clubs, retailers, and Hallmark.com.
Retailers are coming to realize that there's something to lose by
divorcing online operations from retail stores. A survey by Jupiter
Communications Inc. found that 76 percent of retailers could not
track their customers across store, online, and catalog channels.
However, business practice issues prevent many retailers from a
total integration. Store managers are often given incentives to
minimize returns, and returning goods bought online will affect
those managers. Breaking down barriers between traditional stores
and online operations will require a rethinking of outdated,
Borders’ vision is a customer going online to see if her local
Borders store has a book she wants, reserve it, then drive down to
the store to pick it up and pay for it --- sitting in on a poetry
reading and buying a latte while she's there.
Retailers must understand that the consumer is in search of
convenience. The Gap, for example, offers its customers the
opportunity to purchase a garment online, and then return it at a
physical store if they choose to do so. To succeed, retailers need
to be customer-centric and to provide adequate services across all
Integrated Information Technology. Retailers have the IT systems to
run their businesses offline, and by combining that expertise with
Web development they can improve customer service and consistency in
business processes. One challenge they will face is that businesses
frequently run some core operations on older computer systems, while
online properties were generally built on newer technologies. Many
software products can help facilitate data integration, but the
effort still involves time-consuming and costly programming and data
Management at bookseller Borders can't tell whether customers who
buy books in the company's retail stores are the same who buy from
its website. But, they are building a data warehouse, at a cost of
$1 million, which will pull information from multiple databases and
provide a consolidated view of customers of Borders Books and
Borders Music superstores, Borders-owned Waldenbooks stores, and
Kmart has a database on 90 million households, and its Bluelight.com
Internet operation has a database of 4 million customers. Yet they
are completely separate.
Others like CVS and Gymboree recognize the need for a data
warehouse, but they have other priorities for the next year or two.
It is a big investment.
Keeping it separate.
Clicks and bricks integration isn't the goal for everyone. Some
companies continue to run their divisions separately. Nordstrom has
a separate company Nordstrom.com with a separate buying group and
different product mix. Earlier this year, bookseller Barnes & Noble
Inc. spun off its online operation in a public offering,
Barnesandnoble.com Inc. And although the parent retains a minority
stake, their IT systems are not and were never linked.
Obviously separate databases negatively affects customer rewards
programs. And, over time these companies will learn that integration
of all operations is the key to success.
Still, businesses that maintain both online and offline stores, are
not showing a real sense of urgency in establishing cooperative
efforts. For example, recently barnesandnoble.com had a top-selling
book for 50 percent off retail, while in the brick-and-mortar
counterpart, the same book was only 20 percent off. And you can find
a book at barnesandnoble.com which will not be available in the
Furthermore, some companies have not yet recognized the necessity of
offering easy returns for consumers. CompUSA, the national computer
retail outfit, will not accept returns of merchandise that was
purchased at CompUSA.com.
What will the retailer gain with bricks and
One of the major benefits of a Web site for retailers is cost
savings, especially with calls to the stores for product
information, store directions and even customer service. Customers
can learn more about a company and it’s products and services and
receive consistent answers each time.
More importantly, the Web site is an opportunity for the retailer to
keep it’s name in front of the public in a consistent, timely and
cost-effective manner. And it is a great way to drive more traffic
to the stores.
How can the independent retailer take
advantage of bricks and clicks?
One method that is not being capitalized on enough is gift
registries, which worth the same as bridal registries, except there
are more gift-giving occasions. Independent retailers could have a
registration form where their customers can enter information about
family members, i.e., birthdays, anniversaries, special occasions.
Then the store could send an e-mailing to family members reminding
them of the upcoming event. And, if the persons likes and dislikes
are also recorded, the mailing could provide some suggestions.
Better yet, allow the person to develop a wish list. Amazon.com has
a wish list on their site.
Some simple methods:
- Become customer-centric. Ask what
your customer want? What will help you service them better? The
customer only sees one of you, not an online and brick and mortar
- Make sure you have all your
branded products listed in your keywords Meta tags when you submit
your site to search engines. If you carry Hummel, Keepsakes
Collectibles, Beanie Babies and Hot Wheels be sure you include
them. Arrange your keywords in order of importance as some search
engines have a limit. If I search for Keepsakes Collectibles in
your town, your store should appear.
- Get listed as a retailer with your
suppliers at their sites. If somebody goes to Hallmark, they
should find your store in their town.
- Update your site with new
information regularly. If you are having a sale, announce it. If
you received new merchandise, advertise it.
- Even if you don't display all
products on your site, list the main product lines and brands. And
if you do display products, provide as much detail about the
product as possible dimensions, weight, needs batteries, colors,
- Give directions, or link to the
online map services like Mapquest to enable visitors to find you.
- Provide store hours. One retailer
I knew got an unexpected sale because his competitor up the street
had a sale, but was closed on a Thursday night when most customers
Hopefully you can be one of these successful bricks and clicks
George Matyjewicz of GAP Enterprises
Ltd., a management and marketing “solutioning” firm, can be e-mailed
at georgem(at)gapent.com. E-Tailer’s Digest is a moderated Internet
retail discussion forum, located at
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is Chief Global Strategist and a Partner at
Enterprises, Ltd. a management and marketing
Solutioning ™ firm that assists retailers. He is a
veteran of the Internet and the computer field, as well as a
former retailer and the moderator of E-Tailer's Digest.
Matyjewicz can be reached at (770) 752-7022 or e-mail to
write to him c/o G&DA, 345 Hudson Street, New York, NY 10014