IT WON’T TURN REAL-WORLD RETAIL UPSIDE DOWN. BUT THE NET’S POWER TO MASS-CUSTOMIZE AND REFOCUS THE SHOPPING EXPERIENCE COULD TURN RETAILING INSIDE OUT.
Byline: David Moin
As the cyber-hype finally simmers down, a clearer picture of where the Internet fits into the material world is emerging, and it’s not the market share monster many predicted it would be. Still, Internet commerce did grab some $25 billion in sales last year, by Ernst & Young’s estimates. And perhaps more importantly, it’s crept into the homes and hearts of a significant portion of Americans, especially as a primary purchasing tool for the poorly served at retail — big and tall men, large women, the disabled, those living in remote areas, the time-pressed. And that doesn’t count the computer geeks, couch potatoes and those who just hate the store scene.
At bat, the Internet is hardly a slugger. There’s been more strikeouts than hits. But percentages aside, cyber experts and marketers say the Net is reshaping attitudes about shopping, altering when and how people shop and changing how people perceive the products they buy — and the change will continue in unforeseen ways.
For one, it’s coaxing down the exasperation level inherent in America’s favorite pastime. For those who lose it waiting at the checkout line or inching out of the parking lot, the Internet is a savior.
The avid onliner who still occasionally visits a store may find that visit more exasperating than ever. “If you get frustrated online, all you have to do is just click it off,” said Stephanie Shern, Ernst & Young’s global director of retail and consumer products. “When you get frustrated in a store, you are really beside yourself. Online people really like the convenience and ease of getting information, and that is putting a burden on the on-land experience.”
Martha Stewart certainly wouldn’t discourage anyone from shopping stores, since her products are in just about every mall, as well as on her own Web site. But for her, shopping is pure anguish. “I actually hate shopping,” she whined. “I don’t mind looking in stores, but I don’t like fighting the crowds. I don’t like waiting to pay. I don’t like standing on line. It’s interminable.”
“There is no question that shopping on the Internet is a different physical and psychological experience,” said Ken Seiff, chief executive officer, Bluefly.com, an offprice site. “Compared to stores, some aspects are better. Customer service is more uniform. Centralized inventory is easier to monitor so it is more likely an e-tailer has a better in-stock position. And, there are no register lines.”
Frustrations washed away? Not completely. As Seiff said, “Of course, you can’t try on clothing, and it’s harder to shop with friends.” But the bottom line, he stressed: “The Internet shopping is yet another option from which consumers can choose. For this reason alone, it probably increases the number of people shopping and may impact the total consumption of clothing and other items.”
Don’t Sell Me, Serve Me
The Internet is changing how people perceive products, mostly because Web sites can provide enormous product knowledge, turning blind shoppers into educated consumers who end up more comfortable making purchases.
“It’s solving some problems at retail,” said Paco Underhill, founder and managing director of Envirosell, a testing agency for stores, banks and merchandise. “The Net works for a series of things that, in effect, we’re not getting perfectly in bricks and mortar. One is the ability to pre-shop. Amazon provides access to lots of information that makes us educated and happy.”
But again, this is not entirely shopper nirvana. Bear in mind, as Underhill pointed out, “Stores are a social experience. I don’t care how many chat rooms there are on a site, they will never provide what the experience of brick-and-mortar shopping provides for all five senses, if not six or seven.”
“It’s the difference between staying home to watch a video and going to the theater to see it on the big screen,” said Allen Questrom, chairman and chief executive of Barneys New York. “It’s not the same experience at all.”
Some opponents of online society brand the experience as borderline anti-social. But experts counter that if online shopping is fast and easy, it becomes something people like to discuss, even brag about, feeding conversation and feelings of achievement. You’ve navigated the site, made the purchase and conquered cyberspace.
“The Internet has created different ways of thinking about goods,” observed Genevieve Bell, a cultural anthropologist for Intel Corp. who has studied how people utilize the Internet and how it has changed their lives. For example, “It’s made buying books into something to talk about.”
Bell suggested that the Internet has changed how some people “think about the whole notion of shopping — from recreational and social to being really focused.” She sees the commercial Internet at a crossroads. “Right now, people are learning how to shop in e-commerce space, learning about what it does really well, what desires it can fulfill really quickly. There are definitely some who take to it like ducks to water and some who have problems.”
Similarly, Web sites are at a crossroads regarding design and functionality. Bell predicted the big push going forward will be higher degrees of personalization, more customer service and a higher-touch experience. The game is at the point where marketers must treat consumers as individuals.
Bluefly’s Sieff said his company is doing just that. “We let the Internet and database technology do the searching and sorting for our customers so that they will only view those brands and products which match their preferences and which are available in their sizes.”
“The place where the Internet will have a major impact is in convenience shopping,” said Sramana Mitra, ceo of Uuma, an upscale fashion site being developed for fall selling. “Our target audience is busy professional women. A large portion of their budget goes for things they have to have, or gifts they have to give.
“Convenience: That’s where the Internet is going to pick up revenues. The place where the Internet will never make any impact is where you have a lot of time to plan, such as going to a really fancy evening event requiring a formal gown,” Mitra said.
“Psychographically, shopping with a friend on the Internet is not as much fun as going out shopping, having a cup of coffee, chitchatting, looking at people. It’s more the psychographic of catalog shopping and being able to reach a lot of merchandise quickly. The place where the Internet will win over stores is at the personalization level. Meaning the site becomes ‘my store.’ It carries my merchandise. It can be a complete one-to-one marketing experience, merchandising to my taste, my color, my styling.
“This is going to be the year of apparel, with [personalization] technology that breaks it open,” Mitra predicted. “It’s been the biggest bottleneck.”
Shopping List: A Thing of the Past
On the Internet, there’s really no comparison to the weekly trek to the suburban mall. Instead, people shop sporadically, through the day, as wants and needs occur to them.
“They’re visiting the Internet more than they would any single store. With the advent of broadband, there will be fewer barriers to being even more spontaneous in shopping,” Intel’s Bell said.
“There is a lot of impulse-shopping going on,” noted Shern. “We believe from the studies we did that there was a lot of impulse-buying, a pretty large percentage. The dollar volume is still not great, but I do believe they are buying on impulse. It’s about convenience.”
“It’s a godsend to many, many people who are busy, who like to stay at home, or have to stay at home,” added Stewart. “One day, you will be able to shop from wherever; you, with a wireless hand-held device, can be with your kids at the baseball game or sitting on the beach and order pots and pans.”
Cyber Winners and Losers
The particular shopping experience offered by the Web won’t benefit all sellers equally, however.
“In children’s apparel, I think there is a huge opportunity to increase the amount of sales online because most parents don’t go into stores and try things on their kids, anyway,” Shern said.
“With women’s apparel, it depends. If you are a fashion-forward person in women’s, you want to see the stuff, from high-end to low-end. If you are not a fashion-forward shopper, more of a Gap-basic kind of customer, you could conceivably buy more online. J. Crew, Lands’ End — they’ve had good experience online, partly because of [prior] consumer acceptance and recognition of the brand. Designers like Ferragamo and some of the other luxury women’s designers should be selling online. They have [loyal] customers who love the products and can’t always get to the stores.”
“What companies need to look at is what customers want to get out of shopping,” said Lory Pilchik, director of consumer brand management, Dell Corp. “There are companies like Dell which are trying to address different kinds of customers. For consumers who want to touch and feel, we have virtual tours online, providing in-depth looks at our products. From Dell’s perspective, phones, the online channel, the retail channel all need to work together and complement each other.”
“Think of large and tall women,” Underhill said. “The Web could serve as a wonderful search engine for a segment of society ill-served by bricks and mortar today.”
Underhill puts apparel purchasers into two quadrants: uniforms and costumes. “Uniforms are everyday repertoire. Costumes are bought with a specific occasion in mind, like a wedding. If you want to look fabulous, no, you are not going to shop in cyberspace. If you are going to Club Med and you need shorts, a beach coverup, a series of things I call the uniform, it’s fine. But if I want a bathing suit, I better damn well try it on first. Costumes do not fit into the Web, uniforms do.”
Transforming the Tech-Averse
“Because of the Internet, consumer acceptance of new technologies is at an all-time high,” said James Mansour, principal of Mansour Design retail branding consulting.
“Customers in retail stores are accepting having to interface with devices to help them get deeper product knowledge, or learn about upcoming sales events. People would be a little standoffish, but they can deal with this now, with the touchscreens and the kiosks. “The key is to create emotional, visceral responses. When it is used to take you someplace else, it is very interesting and makes shopping fun. What retailers really need to be working on is to create an experience with the site, not just a place where you go to buy.”
Where the Web is falling short now is delivering that visceral fun for many visitors, and the pioneers are taking the hit. “The spectacular failure of the Internet is, there is not this experiential tie-in with brands,” Mansour stated. “Boo.com came out there too early. The guys who are out there now, trying to create unique brands, they’re ahead of the curve a little bit, but computers are too slow. The bandwidth is not there yet to do the most exciting things over the Internet. It’s more than a year away. What is lagging [on the Internet] is what the stores have — what they call visual merchandising.”
The visual pop for net merchandising will come from widespread use of streaming video, in which a static image or icon, when clicked, comes to life as a video clip. “Right now, you have to download and it takes time and creates a disconnect with the customer,” Mansour said. “They get bored. That will change as bandwidth increases, and with streaming video coming online.
“It’s a convergence issue. Technologies are going somewhere, brand marketing is going somewhere. Eventually, the two will converge and create a great experience online.”
Ad Overdose, Branding Bust
Meanwhile, the convergence of Internet-based advertisers into the advertising hopper is producing a big blur. “It’s very difficult to establish a brand image online,” said Barneys’ Questrom.
That’s a fundamental flaw. “People are spending tons of money trying to establish a presence. So many brands are being advertised. There is such a plethora, one can’t remember any of them.”
“It was very interesting last Christmas to watch all of these 21st-century companies rely on 20th-century marketing and branding and spend like drunken sailors and ultimately get so little from it,” Underhill said. “If all these 21st-century businesses are using 20th-century marketing techniques, isn’t 19th-century accountability around the corner?
“Can you brand a Web site? You can, but you have to be very, very clever. Imagine ‘studioapartment.com,’ a hypothetical site where everything for the home is in miniature. That would be a great concept, for somebody living in a limited amount of space. The site would understand a serious lifestyle issue. I would love to see the smallest washing machine in creation, or the world’s most efficient dishwasher, and you could hang a complete site image around it. The Web does have this potential,” Underhill said.
Uuma’s Mitra agrees that the Net’s core merchandising power is proving elusive. “Macy’s, Bloomingdale’s, Neiman Marcus — none have captured the promise of experiential shopping online, where you can really romance the whole experience. For better, bridge, designer price points, a level of romance, a cleanliness of design and imagination, is essential.”