Online retail wise to partner with stores

Most observers blame e-commerce giants for the demise of shopping malls. But those same companies hold the key to the mall’s future.

A poster at The Galleria touts the environmental virtues of shopping in a mall, which include less packaging and lower truck emissions than when people buy goods off the internet.

Later, when I saw an Amazon kiosk outside the entrance to Macy’s, I had to wonder who was trolling whom.

Retail stores employ more Americans than any other sector of the economy, which is why everyone should worry when Macy’s stock plummets 16 percent as it did on Wednesday. Despite posting good financial results, stock analysts simply don’t have faith in the future of brick-and-mortar stores.

Most observers blame e-commerce giants like Amazon for the demise of hundreds of shopping malls and the tens of thousands of jobs contained in each one. But those same e-commerce companies hold the key to the mall’s future, if they choose to use it.

The average Macy’s looks pretty much the same as it did 10 or 20 years ago. The floor is jampacked with thousands of products in dozens of sizes. Sales racks fill the walkways offering 70 percent discounts, and the customers’ disregard for the clothing keeps salespeople scrambling to clear the floor of trip hazards.

Macy’s Chief Executive Jeff Gennette has promised investors he will overhaul the stores and offer better experiences while increasing online sales.

Gennette managed to break a nearly three-year losing streak in comparable sales and even raised his earnings forecast on Wednesday.

Analysts, though, believe traditional department stores are doomed. They sell other companies’ products in a stale, old-fashioned environment.

Houston’s Galleria touts a rehabilitated Saks Fifth Avenue, yet I found only cosmetic differences. There was more open space between racks and a cock-

tail bar near the men’s section. But Gucci, Louis Vuitton and other luxury brands operate their own stores just a hundred yards away.

Younger shoppers want stores filled with natural light where the owner offers a unique product, point-of-view or experience. When it comes to commodity goods, they choose maximum convenience, which is why delivery driver is one of the fastestgrowing jobs in America.

Many retailers are trying to find a profitable middle ground.

Macy’s and other stores offer substantial discounts for buying online and picking up in the store. U.S. e-commerce companies have opened small brickand-mortar stores to speed delivery and build brand recognition. But you rarely see online and brick-and-mortar retailers working together.

That innovation is taking place in China.

Alibaba, TenCent and JD.com are three of the world’s largest online retailers, but each is developing technology that automates and improves brick-andmortar shops ranging from department stores to gas stations. Alibaba says it has partnered with 1 million stores to deploy what it calls New Retail technology.

The company supplies momand-pop corner shops with mobile phone apps, sensors and analytical software that helps them identify their most popular products, order them from the cheapest distributor and speed up checkout. Remodeled stores, QR codes and mobile payments have boosted revenues at these partner stores by 30 percent, Alibaba said.

When it comes to department stores, Alibaba is developing interactive changing rooms that allow you to see your reflection wearing a product. In a current experiment with fashion label Guess, once you find something that looks good, a tap on the mirror activates a robot that delivers the shirt, skirt or other item to your changing room.

If you like the item, an artificial intelligence tool shows other products that pair well with your choice. If you have the T-Mall app on your phone, your account is billed when you walk out of the store.

JD.com has similar digital packages for stores that it calls “retail as a service.” Shopkeepers who partner with an e-commerce company agree to an annual fee and promise to buy a set value of products monthly. The store essentially becomes a new distribution center.

Amazon’s purchase of Whole Foods comes the closest to mimicking these experiments, but it is primitive by comparison.

While such new technology will make shopping in stores fun and convenient again, it will also eliminate jobs and reduce retailers’ overhead costs. Most of these stores eliminate cashiers by automating transactions, and robotic stocking and delivery can create stores where customers never encounter a salesperson unless they request one.

Thriving shopping malls offer goods that people want to inspect before they buy, and as long as that’s true, there will be a future for brick-and-mortar retail. Chinese companies are proving that e-commerce giants can partner with stores to deliver the benefits of online and in-person shopping to customers.

A little less competition and a little more cooperation may be in order.