Rachel Sheldon Issues in FCS Bricks-and-Mortars vs.

Online Shopping I propose that we as FCS professionals act to inform and educate the workers of businesses on how to keep strong and stay standing in this battle of online shopping versus bricks-and-mortars. At the turn of the millennium is when we first began to see businesses look to the internet as a new medium to sell products to their customers. Companies saw this as a great way to increase the number of their clientele and cut down on the cost of selling through bricks-andmortars. Customers liked the idea of buying products online for oftentimes less, and being able to do so without leaving home. While this may seem like a win-win situation, it has a large effect on bricks-and-mortars that most people do not think about. Bricks-and-mortars are losing profit and struggling to pay for the cost of business when customers decide to buy online instead of at their locations. As technology continues to develop and online sales continuously grow, it is important that bricks-and-mortars learn new ways of adapting to this new age of technology in order to compete and stay in business. I propose that we as FCS professionals act to inform and educate the workers of businesses on how to keep strong and stay standing in this battle of online shopping versus bricks and mortars. We also need to educate the public on the importance of shopping in bricks and mortars store locations instead of online when possible. Most consumers do not realize the effects that shopping online has on actual store locations. If we as consumers continue to neglect bricks and mortars, we will see the locations dwindling down and the way we shop will change forever. Utilizing bricks and mortars when we can and changing the types of merchandise

assortment in stores will help ensure that bricks-and-mortars stay in business and do not fall victim to the new and growing trend of ecommerce. We can foresee a problem when we recognize that as the way consumers do their shopping is changing, bricks-and-mortars for the most part have stayed the same. When one changes, the other should follow. Bricks-and-mortars need to change the way they do business if they want to survive. The problem is, they dont know what to change. Should they change the way they interact with customers? Should they offer more coupons? Should they rearrange their merchandise? Should they advertise more? When bricks-and-mortars are faced with hundreds of these possibilities, it can be too overwhelming and too expensive to try them all and see what works. As FCS professionals, we have the ability to research into this problem and come up with the best possible solutions to this scenario. Through the use of critical thinking, we can help bricks-and-mortars change for the better. As a result, we will help shape the future of retailing and keep the bricks-and-mortars we grew up with around for future generations. We need to educate the public on the fact that bricks-and-mortars are struggling more now than in the past because of internet retailers. Some people think that big-name stores have such deep pockets that there is no way online sales could hurt them. The reality is, while these chains may be very successful, if a store location is not making a profit, they will close. When purchasing items from www.target.com, the company is making money, but no store location will be seeing any of that profit. Ma and pop stores and other small independent businesses are in even greater danger. Now, instead of having to compete just against big-name retailers, their customers now have the option of

shopping online as well. As these stores continue to have their profit relocated to online businesses, they will continue to struggle financially and begin to disappear. Shopping online is still a fairly new phenomenon, but it is one that will continue to grow and prevail in the future. Sheri Worthy of Mississippi State University and Karen Hyllegard of Colorado State University pointed out that younger generations are learning about and using the internet in school and are adapting quickly to technology. This type of learning gives us an idea of how the future is going to unfold. Technology is expanding every day and the younger generations are being taught about it so it becomes natural to them. This combination is undoubtedly going to have an effect on the way consumers are going to shop in the future (Worth, Hyllegard, 2004). The NRF, a trade association, released its annual sales forecast for online sales and retail sales in 2013. They are predicting a 3.4% increase in retail sales for 2013 from 2012. That is less than the 4.2% growth that the NRF saw from 2011 to 2012. On the contrary, the forecast for online sales is as much as a 12% increase to make up a total of 18% of all retail sales this year (Malcolm, 2013). While online sales have not yet accounted for the majority of purchases, they have grown at a faster pace than bricks-and-mortar sales for the past several years and are expected to stay strong as bricks-and-mortars sales percentages continue to decrease. To better understand why the process of online shopping is such a threat to bricks-andmortars, we need to look at the reasons why consumers are utilizing it. In a study done by Seppo Pahnila and Juhani Warsta, the key reasons why shoppers are attracted to online shopping over in-store shopping are discovered. They state that the online shop has to both amuse and benefit the customer to first grab their attention and consider buying online. Once this is accomplished,

the consumer has to find the value of ecommerce to make the initial switchover. For a person new to ecommerce, it can be tricky to urge them into transferring their money over the internet for the first time. The top aspects that urge consumers to make online purchases boils down to convenience and price (Warsta, 2010). Oftentimes, companies can offer the same products to consumers for less money online because they dont have to pay transportation costs to deliver the products to stores. If this wasnt enough to lure in price-conscious shoppers, they also have the convenience of having the product delivered right to their door and avoiding the cost of gas to drive to the stores themselves. This is usually enough value to a consumer to allow them to decide to purchase online. The fear that people used to have about transferring money online is now becoming obsolete as technology improves and people learn to accept the idea. Once the first online purchase is made, consumers begin to trust ecommerce and tend to make additional online purchases later on. Online businesses offer incentives to their shoppers to keep them coming back. Online coupons, free shipping offers, and past customer deals are all used to keep the consumer interested in online business. With the ability to purchase basically anything over the internet today, businesses need to learn what products consumers are buying online versus in store. In a study performed by Browne, Durrett, and Wetherbe, 605 participants in Generation Y were asked if they had purchased something online in the past year, and if they had, what they had bought. The results help break down the types of products that consumers find more convenient to purchase online, and what they would rather buy personally in store.

The results indicate that there is a pattern to the types of items purchased over the internet. The top 5 categories that this study found to be bought online were clothing, travel, computers/computer equipment, compact disks, and books. The 5 least common categories purchased online were toys, appliances, groceries, telephone/fax, and automobiles. This information can be valuable to businesses when deciding what type of merchandise they should attempt to sell or discontinue selling in their stores.

(Browne, Durrett, Wetherbe, 2004) Browne, Durrett, and Wetherbe also examined the behavior consumers have when it comes to learning about the product online or in-store and making their actual purchase online or in-store. The study indicated that the majority of consumers, 39.3%, learn online, and buy at store, 34.5% learn at store and buy at store, 12.6% learn at store and buy online, and 9.3% learn

online and buy online (Browne, Durrett, Wetherbe, 2004). This shows us that the majority of consumers learn about products and buy products in store, but there are still shoppers that come into a store with no intention of purchasing there, and some that never consider buying in store. If we as consumers continue to neglect bricks-and-mortars, we will see the locations dwindling down and the way we shop will change forever. As our shopping behaviors continue in this direction, there are several consequences that the public needs to become aware of. First and foremost, bricks-and-mortars profits will continue to suffer as online outlets receive funds. As a result, we will start to see more job cuts and store closings. It will be more difficult for bricks-and-mortars to be able to afford to do business. As these stores continue to close, consumers will feel the consequences of it as well. Consumers will have to drive further to stores that are still in business and wont have as many options as they do now. The way consumers shop will change because of this, relying more heavily on online shopping than now, which will only continue to hurt and end the existence bricks-and-mortars. Obviously, it is impossible to know exactly what the future holds for bricks-and-mortars, but we do know the direction it is heading. Futurist Graham Molitor predicted that retail stores and wholesalers may largely disappear as the convenience and time savings of electronic shopping and home delivery alter consumer behaviors (Greer, Kenner, 1999). Others believe that online shopping wont have such a large effect and will only replace other shopping methods such as catalog shopping. Terry Lundgren, the head of Macys, argues that bricks-and-mortars are not going to be replaced with online shopping. He believes that the more channels of consumers to purchase from, he better. Kevin Ryan, chief executive of Gilt Groupe, an online

retailer, believes that bricks-and-mortars are in great danger by Amazon and other online-only retailers. He also says that the double-digit growth of online sellers is coming at the expense of physical stores (The Economist Online, 2012). Regardless of how severe the impact ecommerce will continue to have on bricks-and-mortars, it will at least force retailer to respond with new strategies in an effort to keep shoppers coming in.

Utilizing bricks and mortars when we can and changing the types of merchandise assortment in stores will help ensure that bricks-and-mortars stay in business and do not fall victim to the new and growing trend of ecommerce. If we take a look at the root of this whole problem, it is that consumers are choosing to purchase some items online rather than in store. In order for stores to keep their sales up they need to look at their merchandise assortment and compare it to what is now being dominated by online sales. For example, books were one of the top 5 items being purchased online, as I mentioned earlier. This information should not be taken lightly by book stores. Borders was once a popular bookstore but in 2011, the company filed for bankruptcy and all remaining locations were closed (Plafke, 2011). Sales were not sufficient enough to keep the business operating. Part of this reason is because consumers were buying books online. Oftentimes customers will go into the store, look through the books, and then either not purchase the books at all or go online and buy the book for a discounted price. When looking at a flourishing bookstore such as Barnes and Nobles, it might be confusing to understand why this store survived and Borders didnt. Barnes and Nobles did a great job at responding to the loss of sales to online retailers. They knew they needed to step up their game in order to keep customers coming and buying their merchandise.

Starbucks coffee shops were added to the stores to make customers feel more welcome and allow them to experience something they couldnt experience online. Also, probably the most important differences, is that Barnes and Nobles offered a variety of merchandise, not just books. This way, if book sales were suffering, they would still be okay. It is important for all stores to look at their own merchandise assortment and decide what items are top-sellers and what items are being lost to internet sales. After finding out, they need to take those items off of the shelf and make more room for the items that customers are coming into the store to buy. Some items may come as a shock to being bought more happily online than in stores. Even items such as Pampers diapers are being sold in large quantities from Amazon.com (Clicks and Bricks, 2012). Bricks-and-mortars should continue to carry these items for those customers that do buy in-store, but the quantity should be lowered and swapped out for better-selling merchandise. Stores need to focus on things such as expensive clothing or highpriced gadgets that consumers feel a strong need to see in person and try out the product before making the decision to buy. Buyers for stores need to be aware of this information before they make a big purchase on items for the store. Just because they can get a good deal on a bundle of merchandise doesnt mean it is going to sell. The money would be better spent on merchandise that they know customers are coming into the store to buy. Another important way stores can adapt to this change is by increasing their employees product knowledge. Customers can become easily aggravated when they come into a store to make a purchase and cant get the information they need about the product from the store or employees. When this happens, they turn to the internet, read reviews and product information, and can end up purchasing online, especially if they feel like the unknowledgeable staff are not worth visiting again.

Stores also need to focus more on superior customer service. Besides knowledgeable employees, stores can improve the way they interact with customers, offer better return policies, and think of more ways they can help the customer. Making the customer happy and glad to be in the store should be one of employees main goals. Apple shops are beautifully designed, staffed with knowledgeable employees, and make the customer want to visit the store. Disney stores pay close attention to shoppers children to make sure it is the best 30 minutes of their day (Clicks and Bricks, 2012). These types of changes will help make customers want to make the trip to the store instead of to their computers. Some stores are focused too much on making a quick sale and are targets for becoming showroomers. This is when customers only come into a store to look at merchandise and experience it in person, then leave and purchase the same item online for a cheaper price. There will always be showroomers at any store, but with some small changes retailers could encourage them to buy the item when it is in their hands already in the store. Increased customer service, employee/customer engagement, and promotion deals may make the consumer feel more apt to buy the item there instead. If you look at retail stores, they havent changed much in 50 years. The internet is helping to force changes that were too long in coming (Macht, 1999). Technology has drastically changed in the last 50 years, so why have bricks-and-mortars stayed near the same? When times change, the way people do business needs to change along with it in order to survive. Some retailers are starting to think of ways to offer their customers the same rich and vibrant interactions that they can experience online. Unfortunately, most of these ways come with a large price tag.

Technology is slowly starting to integrate with retail in ways that companies can take advantage of. Businesses can team with Iphone to offer a variety of apps to help the customer when shopping in store. Some of these include barcode scanning to read more about the product and display price, item location to easily locate products in the store, and coupons all with the help of mobile apps that consumers already love. This can make shopping in store more convenient and make the tech-savvy customer feel more comfortable buying in-store. Lets quickly summarize the different ways discussed to help keep bricks-and-mortars competing with online sales: Inform the public that there is a problem Analyze merchandise assortment Utilize bricks-and-mortars when possible Superior customer service and customer engagement Integrate technology

Though we may see a decrease in bricks-and-mortar stores, I dont think there will ever be a time when they have all but disappeared. There is always going to be a need for the human interaction that these stores offer that customers cant get online. Besides the purchasing aspect, shopping has become a popular pastime for a lot of people. Malls are the place to go for people when they need a day of fun. The thing we need to focus on is doing our part to help keep the stores we love in business so the number of store closings isnt as drastic as its panning out to be. Alongside the changes that bricks-and-mortars can make themselves (merchandise assortment, customer service, integration of technology), it is important for FCS professionals to urge consumers to buy from bricks-and-mortars when possible. Shopping online is not a bad

thing, it can be necessary at times, but shoppers need to understand that it is our responsibility to help keep our favorite bricks-and-mortars in business. So, instead of loading up your online cart on an impulse buy, wait until you go to the actual store if it is equally convenient. It is our responsibility to change our own shopping habits as well as educate others about the effects their actions may cause. It is better to help prevent this problem and keep a variety of bricks-andmortars open than to be unhappy traveling longer distances to those stores that have survived.

Sources:
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