BACK TO FUTURE
Retailers battle for profits
After a horrible first half of the year, retailers are going high-tech to rescue the back-to-school season.
Traditional department and discount store chains are trying to win over shoppers — and compete with online titan Amazon — by converting their brands into omnichannel retailers that make it easy for shoppers to buy online, in-store or from a mobile device — and move seamlessly among all three options.
“Growth … looks different today,” said Brett Biggs, chief financial officer of Walmart, at an analyst presentation in June. “It’s still about comp sales and … building stores. But now it’s about mobile e-commerce … fulfillment capabilities … and developing new services.”
The back-to-school season generates an estimated 18 percent of annual sales for apparel retailers, second only to the holidays’ 19 percent, according to Cowen & Co.
While the National Retail Federation expects back-to-school and -college sales will jump substantially, to $75.8 billion this year, every dollar will be hard won. Stores are under pressure not only to generate strong sales, but to turn a profit while offering the speed and convenience customers expect.
However, most retailers will face the challenge of implementing a tech upgrade for millions of customers without a hitch.
Cutting shipping time from two days to one, for example, can add 30 percent to a retailers’ cost, said KumarVenkataraman, a partner in consultant A.T. Kearney’s retail practice.
The majority of back-to-school shoppers plan to visit traditional stores; however, the crowded aisles are losing luster. Nearly a third of shoppers surveyed by Deloitte said they’ll buy online and pick up in-store instead.
Millennials in particular prefer shopping online because of free shipping, as well as not having to “deal with people” — or even wear pants — according to a survey by mobile commerce platform BrandingBrand survey.
Here, a look at new omnichannel efforts by major chains.
Improved apps: Walmart, JCPenney, Macy’s and Target have all redesigned their apps. Macy’s main app now has an image-search function, allowing customers to photograph an item and locate a similar one in-store. Walmart rolled out a proprietary payment system to all of its 100 stores in New York state, as well as nationwide, at the end of June. This summer, Target made its Web site the same for mobile devices or desktops, and is testing direct-manufacturer coupons.
Fast shipping, free or cheap: Taking a page from Amazon Prime’s $99 annual fee for unlimited two-day shipping, Walmart has launched an unlimited twoday shipping program for $49 a year, dangling a 30-day free offer last month to boost membership. In June, Staples launched $9.99 same-day delivery in Manhattan for online orders. Sears offers free shipping for items ordered on its app while shoppers are in-store.
Blended online and in-store shopping: JCPenney’s “buy online, pickup in store” program includes more than 150,000 items for backto-school, while Target has more than tripled its assortment in the last three years to 120,000 items for order pickup. Kmart has a nomoney-down layaway program offered in stores, or for 1 cent online or on its app, while Sears customers can shop online or via app and have the item delivered to their car outside a Sears store.