MAKING MASS WORK ON THE NET

Byline: Melonee McKinney

NASHVILLE — Benjamin Netanyahu, former prime minister of Israel, believes what Bob Dylan said in the Sixties is relevant today for retailers grappling with Internet strategies. “‘The times, they are a-changin’,”‘ Netanyahu said during his keynote speech at the International Mass Retail Association’s annual conference here last week. “In order to be a leader, you have to adapt your vision to the changing times. Your vision has to accord with reality, and you have to seize the future.”
Netanyahu’s words set the tone for the four-day meeting, which largely revolved around the rapidly changing Internet and its business ramifications. The conference hosted about 260 retailers from 60 companies and more than 1,000 suppliers and manufacturers.
Others expounding on the theme were Don Soderquist, senior vice chairman of Wal-Mart Inc., who said retailers must change their thought processes to cope with the changing environment and new technologies. For example, rather than keeping its Web arm near its Bentonville, Ark., headquarters, the retailer opted to install Wal-Mart.com in Palo Alto, Calif., to absorb ideas coming out of Silicon Valley and attract top-level Web executives.
“What’s happening today in the world of e-retailing happens in hours and days, not years,” he said. “Part of moving Wal-Mart.com was to attract that technological competence, but it was more to get into that Internet way of thinking. We want to be able to stretch our minds beyond the horizons of today and think of the impossibilities, not the possibilities. We have no idea what new technologies will do to what we know about shopping habits. We don’t know how the Internet is going to impact our thought process.”
David Glass, past president and chief executive officer of Wal-Mart, said he doesn’t think the Internet as we know it will exist 10 years from now.
“In my opinion, 10 years from now, you will recognize little of what you see today on the Internet,” he said. “There will be dramatic consolidation in this evolution, and the ability to change is critical.”
But the excitement at the conference was tempered with skepticism.
In his address, IMRA chairman Joe Ettore, ceo of Ames Department Stores, said: “Some people believe brick-and-mortar retailing will go the way of the dinosaurs and e-tailers will prevail. It is frustrating, because it has seemed that online companies don’t seem to follow the same business rules, namely, to make a profit. But it won’t last. Eventually these online retailers will have to show a profit like the rest of us.”
And there’s still a large part of the population that is indifferent to the Internet. According to research presented by Raymond Burke, professor of business administration at the E.W. Kelley School of Business at Indiana University, 27.7 million adults say they have tried the Internet and found they have no use for it.
Ken Seiff, ceo of Bluefly.com, said financial ramifications lately have changed how people regard online companies.
“I am not sure everyone needs to be online,” Seiff said. “There used to be a financial reason to do it, but that has changed. For the same reason not everyone needs to be in the catalog business, not every retailer needs to be online. It’s not about slapping a URL on your shopping bag. You need to create a reason for people to shop. Just like Old Navy made you want to go buy cargo shorts.”
Thom Blischok, chairman and ceo of Mind Meld Inc., said over the next five years there will be a shift away from the Internet being used for convenience and research toward replenishment of existing merchandise. To be successful online, he noted, retailers and manufacturers have to blend the power of brick-and-mortar with the power of brands and sell highly differentiated merchandise.
“The Internet has begun to change consumer behavior,” Blischok said. “It forces retailers to look at who they are selling to. One size doesn’t fit all anymore. The biggest mistake in building an Internet strategy is to try to be all things to all people. You need to build specific Web sites targeting one customer segment.”
One example he cited was the partnership set up last year between Nike and Fogdog.com. “By offering Fogdog.com the exclusive rights to carry Nike apparel and footwear, Nike is able to align itself with an online retailer that shares its love of sports, performance products and customer service,” he said.