Hol­i­day shop­ping sea­son is look­ing strong — for e-com­merce

Houston Chronicle Sunday - - BUSINESS - CHRIS TOM­LIN­SON

The hol­i­day shop­ping sea­son looks promis­ing for re­tail­ers this year, with Amer­i­cans ex­pected to spend a record $720 bil­lion by the new year.

This comes thanks to low un­em­ploy­ment num­bers, tax cuts and even a lit­tle bit of a raise. The U.S. has added 2.3 mil­lion jobs and $410 bil­lion of ad­di­tional dis­pos­able in­come since last year, said James Bohnaker, as­so­ciate di­rec­tor of IHS Markit, an eco­nomic anal­y­sis firm.

Amer­i­cans feel con­fi­dent enough to spend 4.1 per­cent more than last year, ac­cord­ing to the Na­tional Re­tail Fed­er­a­tion. The bad news for brick-and­mor­tar stores is that web­sites will take up an even larger por­tion of the shop­ping bud­get, roughly $124 bil­lion ac­cord­ing to Adobe An­a­lyt­ics. And the hol­i­day shop­ping has al­ready be­gun, with cus­tomers us­ing their phones more than ever.

“The tra­di­tional de­lin­eation be­tween shop­ping sea­sons has blurred due to the emer­gence of year-round on­line shop­ping pro­mo­tions,” Bohnaker said. “In-store pro­mo­tions are also be­ing ad­ver­tised ear­lier each year as re­tail­ers hope to com­pete with on­line mer­chan­dis­ers.”

E-com­merce has con­sis­tently taken about 1 per­cent of mar­ket share a year from brick-and­mor­tar stores. This year that por­tion will grow to 18.9 per­cent from 17.8 per­cent last year, Bohnaker said.

The Sears bank­ruptcy is a vivid re­minder of how even the most pow­er­ful mer­chan­diser can ig­no­min­iously col­lapse if it fails to adapt. Many large re­tail­ers this year will test new tac­tics.

BOPIS, or buy on­line and pick up in store, is the sea­son’s buzz­word. Tar­get, for an ex­am­ple, is of­fer­ing same-day de­liv­ery in 46 states, a drive-up op­tion at 1,000 stores and free two-day ship­ping ev­ery­where.

“I’m con­fi­dent Tar­get will be Amer­ica’s eas­i­est and most en­joy­able place to shop for the

hol­i­days and be­yond,” Tar­get CEO Brian Cor­nell said in a state­ment.

This new ap­proach will not keep Cor­nell from the rep­re­hen­si­ble prac­tice of mak­ing his em­ploy­ees work on Thanks­giv­ing Day. He ap­par­ently does not be­lieve the ev­i­dence that he’s only can­ni­bal­iz­ing sales while mis­treat­ing em­ploy­ees.

Cor­nell does make a good point, though, about mak­ing the shop­ping ex­pe­ri­ence en­joy­able. On­line shop­ping of­fers con­ve­nience, so brick-and-mor­tar stores must cre­ate a pleas­ant or in­trigu­ing ex­pe­ri­ence that is worth the cus­tomer’s time.

Cook­ing les­sons, elab­o­rate dis­plays, pop-up restau­rants and craft cock­tails are just a few in­cen­tives smart re­tail­ers are of­fer­ing cus­tomers. Brick-and­mor­tar stores need more than ex­clu­sive prod­ucts; at their best, they pro­vide a vis­ual ex­pe­ri­ence the cus­tomer will proudly post to In­sta­gram or Face­book.

To meet cus­tomer ex­pec­ta­tions, re­tail­ers are staffing up. Tar­get alone an­nounced it would hire 120,000 sea­sonal work­ers, the most of any re­tailer.

Al­to­gether, stores are ex­pected to hire a record 704,000 sea­sonal work­ers, ac­cord­ing to Chal­lenger, Gray & Christ­mas Inc., a global out­place­ment firm. Wages for Santa’s elves will also go up.

“The com­pe­ti­tion for sea­sonal work­ers is in­tense, es­pe­cially as com­pa­nies ex­pand their com­pen­sa­tion and ben­e­fits of­fer­ings,” An­drew Chal­lenger, the firm’s vice pres­i­dent, said. “Re­tail­ers, lo­gis­tics firms, trans­port and ware­hous­ing are com­pet­ing for tal­ent and up­ping their em­ployee of­fer­ings this hol­i­day sea­son to at­tract po­ten­tial work­ers.”

A higher por­tion of these jobs, though, will be in ful­fill­ment cen­ters, not shop­ping malls. Ama­zon said it would hire 100,000 sea­sonal work­ers — down from 120,000 last year — and pay a $15-an-hour start­ing wage, driv­ing up pay in many parts of the coun­try.

Rec­og­niz­ing how tra­di­tional re­tail­ers are ex­pand­ing on­line, Ama­zon CEO Jeff Be­zos is fol­low­ing Chi­nese e-com­merce com­pa­nies into open­ing brickand-mor­tar lo­ca­tions.

Ama­zon al­ready has kiosks in high-end shop­ping malls across the coun­try, but the more sig­nif­i­cant move is a high-tech store called Ama­zon Go. Your phone in­ter­acts with a com­plex sys­tem of cam­eras and ar­ti­fi­cial in­tel­li­gence al­go­rithms, and Ama­zon bills you as you walk out the door.

Be­zos opened his third cashier­less store in Seat­tle and has plans to open 3,000 more by 2021. Chris Wal­ton at Forbes de­scribed Ama­zon Go as “like 7-Eleven had a 1960s love child with Whole Foods.” Since Ama­zon owns Whole Foods, ex­pect to see the tech­nol­ogy there, too.

The for­mula for re­tail suc­cess is sim­ple: pro­vide the prod­ucts peo­ple want in the most af­ford­able, con­ve­nient and ex­cit­ing man­ner. Sears set the bar for decades with a hy­brid model of brick-and-mor­tar stores and ex­haus­tive cat­a­logs. The new model re­quires re­tail­ers to el­e­vate the store ex­pe­ri­ence and sub­sti­tute ex­pan­sive in­ter­net of­fer­ings for the cat­a­log, but the ba­sics re­main the same.

The Amer­i­can con­sumer is ready to spend; a re­tailer’s job is to make it as en­joy­able as pos­si­ble.

Fred­eric J. Brown / AFP / Getty Im­ages

Re­tail­ers are in­creas­ing staffing to meet cus­tomer ex­pec­ta­tions. Ac­cord­ing to Chal­lenger, Gray & Christ­mas Inc., stores are ex­pected to hire a record 704,000 sea­sonal work­ers.

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