INTERNET FORUM SEES A FUTURE FOR STORES
Byline: Valerie Seckler
NEW YORK — The Internet is expected to radically alter the way we do most everything, much as the light bulb did 100 years ago, but that doesn’t mean traditional retailers will be left in the dark.
That was the message from Mary Modahl, vice president of research at Forrester Research Inc., an Internet consultancy, based in Cambridge, Mass., that opened its two-day forum called “Selling to Digital Consumers” Wednesday at the Grand Hyatt New York.
“Traditional companies can still beat out dot-coms,” Modahl told an audience of several hundred retailers, suppliers, investors, securities analysts and media representatives.
Modahl advised brick-and-mortar players to begin by figuring out how their customer base is divided among “early adopters” of e-commerce, “mainstream” consumers, and “laggards” in shopping online — and then aiming at the mainstream, those who began shopping online during holiday 1998.
These are part of a new set of criteria, called “technographics,” that Forrester has created to describe how the emerging online shopper responds to new technology.
“The early adopters are those with high incomes who like new technologies, but there are also people in the high-income group who are slow to start using new technologies, and low-income consumers who are eager to adopt,” Modahl said of the mainstream online consumer.
“These are the three major consumer opportunities online,” she noted in the forum’s opening session, entitled “The New Retail Battlefield.”
While the pure Internet merchants have gained some early tactical advantages over brick-and-mortar stores, Modahl projected the battlefield will begin to level out as more mainstream consumers start shopping online. This group, as defined by Forrester, includes both low-income consumers who like new technologies such as the Internet, and high-income consumers who are slow to adopt them.
And as more of those consumers get online, Modahl forecast, traditional merchants that have launched web sites will benefit more fully from one of their biggest assets: brand equity.
“Even powerful Internet megabrands, such as Yahoo! and AOL, have nowhere near the brand equity of a Wal-Mart,” Modahl contended.
The brick-and-mortar crowd also will be able to leverage other aspects of their operations as Internet retail goes mainstream, she added, including their existing customer base and physical presence with stores. Much of the heavy losses suffered by early dot-com players have resulted from the high price of attracting customers to their sites, let alone getting them to buy something from it.
“The presence of stores on Main Street or in malls will be a key to doing more business online with mainstream consumers,” Modahl forecast. “The high- income consumer who is slow to adopt a new technology needs to become [more] familiar with that technology before they start using it regularly.
“Stores help to create a top-of-mind link between something the ‘laggards’ are familiar with, and shopping online,” she continued. “High-income consumers who are pessimistic about new technology still need to get more comfortable with shopping online.”
In contrast, she said, the primary demand of the early Internet shoppers has been on a site’s “responsiveness,” or the effectiveness of its interactive features.
According to Forrester research, released Wednesday, there are currently 60 million early adopters of the Internet in the U.S., with a median household income of $65,000 a year, and total personal disposable income of $3 trillion.
By comparison, Forrester estimated, there are 88 million mainstream Internet users, with a median household income of $35,000 a year, and total personal disposable income of $2.8 trillion.
“The battle for the mainstream consumer on the Internet is far from over,” Modahl maintained. “It is not too late for the traditional retailer to get online, and take on the dot.coms.
“Even the battle for the early adopter isn’t over,” she concluded. “About 25 percent of this group had purchased something online as of January, and the indication is that between 40 and 50 percent of this group will have done so by Dec. 31.