The Click & Mortar Revolution: Brick and Mortars Get Serious about Going Online

Bobbin, August, 2000 by Jules Abend

As e-commerce tracking becomes more reliable, brick-and-mortar retailers are increasingly developing strategies for taking their products online, and in the process, Internet pure players are getting edged off the playing field.

While certain traditional stores have pitched online selling in the past several years, their attempts to woo shoppers electronically have been halfhearted and cautious. However, that's understandable. In the past five years, Internet-to-consumer sales have been overblown, with no real breakthroughs until 1999.

Still, online shopping has no doubt been growing, but the methods of reporting Internet sales have made it difficult to measure the true impact of consumer interest in e-commerce. What muddied the figures for online shopping -- even as late as the first three quarters of last year -- was the fact that online sales and catalog/mail order business were lumped together by the U.S. Department of Commerce (DOC).

That has since changed. The DOC began to unscramble figures for the two channels in the fourth quarter of 1999. Furthermore, the agency reports that e-commerce activity for first quarter 2000, not adjusted for seasonal, holiday and trading-day differences, was $5.26 billion, an increase of 1.2 percent over the fourth quarter of 1999.

But while the "e-numbers" are now delineated and show an upward trend, they are still small. According to the DOC, e-commerce sales as a percent of total retail sales of $747.8 billion accounted for 0.7 percent in the first quarter of 2000, an increase from 0.63 percent in the fourth quarter of 1999 on $821.4 billion in total sales.

Nevertheless, the DOC's new reporting methods give e-sellers something to hang their collective hat on. Going forward, there will be official breakdowns based on the Commerce Department's Monthly Retail Trade Survey (MRTS), which uses a stratified simple random sampling method to select more than 12,000 retail firms whose sales are then weighted and benchmarked to represent the complete universe of more than 2 million retail businesses.

Additionally, private organizations and independent research companies pinpoint the specific products that are moving and the average dollars spent online. For instance, at press time, the most recent monthly survey from the National Retail Federation (NRF) and Forrester Research Inc., in conjunction with Greenfield Online, reported that total online spending increased slightly from $3.2 billion in April to more than $3.3 billion in May, with average consumer online spending decreasing from $256 to $249.

According to the survey, known as the NRF/Forrester Online Retail Index, online apparel sales fell from $173 million to $153 million during May, and online spending on toys and video games sank from $90 million to $75 million. Offsetting losses in these categories was an increase in online sales of appliances, furniture and car rentals. Specifically, appliance spending rose from $13 million in April to $26 million in May; furniture increased from $30 million to $50 million; and car rental sales expanded from $124 million to $182 million.

The Index measures, on a monthly basis, the growth and seasonal nature of online shopping based on data collected from Internet purchasers. Figures are based on 5,000 responses received during the first 10 days of the month from an online panel developed by Greenfield. The monthly panel is weighted to Forrester's Benchmark Panel, which surveys 90,000 U.S. and Canadian members of a consumer mail panel developed by NPD Group. Data is weighted to demographically represent the North American population.

A Wake-Up Call for Stores

There's no question that the official and unofficial numbers are making e-tailing more interesting to brick and mortar stores - including clothing retailers -- which are rapidly evolving into click and mortars.

It doesn't go unnoticed that apparel, once considered not very feasible for Internet sales, is right up there among the top product performers, according to the NRF/Forrester report. Apparently, consumers are overcoming their reluctance to buy clothing without touching and feeling, at least for basic goods.

With the realization that the Internet is becoming a viable vehicle for Internet sales, merchants and even fashion stores are cranking up their e-tail activities. For example, Saks Inc., parent of McRae's, Younkers, Proffitts, Herberger's, Carson Pine Scott, and of course, Saks Fifth Avenue, recently launched a Web site, Saks-fifthavenue.com, that will feature about 10,000 SKUs by mid-2001.

And Gap Inc. is expanding its offerings via a new tool: pants@gap.com. Already a sophisticated Web participant, Gap claims to offer the world's largest assortment of jeans and khakis through Gap.com, with more than 175 sizes, 25 fits and 15 colors and washes. Customers can use the new address to view pants styles from four different perspectives including front, back, side and sketch. In addition to ordering goods online, they can use the site to locate one of Gap's 1,700 U.S. stores, or to order goods by phone.