(For other news from the Reuters Global Consumer and Retail
Summit, click here)
* "Buy online, pickup in store" seen as way to compete with
* Lots of room for improvement in "omni-channel shopping"
* Online sales account for only about 7 pct of U.S. retail
By Phil Wahba
NEW YORK, Sept 15 Bricks-and-mortar retailers
are trying to compete with Amazon.com Inc and each
other by offering what they hope is the best of both worlds -
online sales with the option of store pickups, delivery and
When successful, this so-called omni-channel shopping -
allowing customers the choice of buying in a physical store or
online - can provide better service, more inventory and faster
delivery options, e-commerce experts said at the Reuters Global
Consumer and Retail Summit in New York last week.
It is also one of the best ways that traditional retailers
can hope to compete with Amazon, whose physical presence is
limited to distribution centers.
"The promise is there, the potential is there, and when it
works, it's a lovely thing," said Fiona Dias, referring to
omni-channel shopping. Dias is chief strategy officer at
ShopRunner, which provides e-commerce services to major U.S.
But only a handful of retailers are doing it well, the
experts said. For starters, it is expensive. Making the change
typically requires costly software to combine online and
in-store inventory. Stores also need to be reconfigured to give
workers room to pack and prepare orders.
Staff has to be retrained so that they encourage sales both
in-store and online, even if they lose a potential commission by
selling online. And the sales strategy requires big changes in
how an organization works - merchandise buyers for e-commerce
and stores have typically operated separately.
"It's been very frustrating for us in the industry who know
it can be done," said Dias. She gives the retail sector a C-
minus grade, saying too few chains have tapped the potential of
omni-channel shopping even as big companies have made strides.
According to the U.S. Commerce Department, online retail
sales increased 18.4 percent in the second quarter. With only
about 7 percent of overall retail sales coming from online
sales, there is still lots of room left for retailers despite
Amazon's head start.
Amazon representatives declined to comment for this story.
Though top retailers initially reacted slowly to Amazon's
rise, many have redoubled their efforts, and some are taking
advantage of their numerous stores to improve online sales.
Nordstrom Inc, Macy's Inc and Wal-Mart Stores Inc
now all use stores to ship products, something that can
speed delivery and reduce the amount of merchandise that ends up
Wal-Mart now fills 10 percent of online orders that go to
shoppers' homes from its stores, Walmart U.S. Chief Executive
Bill Simon said at the summit.
In-store pickup will allow Wal-Mart to get more last-minute
online sales, right up until stores close on Christmas Eve,
since shoppers do not have to factor in as many days for
shipping as they would with an online-only retailer, Simon said.
Wal-Mart also is testing the use of storage lockers at the
front of some stores in the Washington, D.C., area where
shoppers can quickly pop in to pick up items ordered online
without needing to visit a large store. Simon said the company
is ready to roll out the program as demand dictates.
Target Corp is only now getting around to offering
"buy online, pickup in store." CEO Gregg Steinhafel said last
month he expects to roll out the option to all stores by the
holiday season. Kohl's Corp will start offering in-store
order pickup next year.
Many teen chains including Aeropostale Inc, and
specialty stores, as well as smaller chains, are not as far
along in merging e-commerce and brick-and-mortar because of the
small size of their stores, the panelists said.
Abercrombie declined to comment, and Aeropostale did not
immediately return a request for comment.
Some retailers are already looking at the next phase of
Gap Inc is letting shoppers at 40 Gap and Banana
Republic stores in Chicago and San Francisco reserve items
online, and holding them for 24 hours. Gap hopes this will give
shoppers more reason to come in and shop some more.
"(With) a person who reserves, purchase intent is super
high," Gap Chief Executive Glenn Murphy told investors at a
conference on Monday. He said the program would be rolled out
more broadly next month since results have been good so far.
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(Additional reporting by Jessica Wohl; Editing by Matthew