Traditional retail stores this holiday season have fully embraced the Internet and continue to close the gap with major online retailers such as Amazon, according to an Indiana University Kelley School of Business expert.

“Three years ago, brick-and-mortar retailers sometimes perceived their own websites as competition,” said John Talbott, associate director of the Center for Education and Research in Retailing. “Today’s best retailers are omni-channel – meaning they allow the consumer to choose how to engage, whether in stores, through the Web or even with mobile applications. These omni-channel retailers increasingly use ‘show-rooming’ techniques to display goods to consumers in the physical store and are indifferent about whether consumers make their purchases online or off.

“While Amazon rapidly builds warehouses around the country, many traditional retailers have realized that they can actively use their stores in the same way and efficiently get purchased goods to consumers quickly,” Talbott added. “This allows for more efficient use of inventory and ensures consumers get what they want when they want it.”

Another way that traditional retailers are encouraging use of the web is by offering special deals and coupons that are available only through their websites.

“It makes sense in a lot of ways. One, it is less expensive to deploy those coupons, because they just exist as ones and zeros,” Talbott said. “But the reality also is that when people are doing their research for shopping, they’re doing it online. So why make them go to the trouble of having to tear something out of a flier when you can embed the ability to get value while they are in the process of looking for their gifts?”

Traditional, omni-channel and pure play retailers also gather data about what kinds of items people are looking at and make special offers based on that information.

Last year, many stores made the controversial move of being open on Thanksgiving. This year, many stores are invoking the phrase “Black Friday” days and even a full week before the actual day arrives, suggesting that such sales already are happening.

Any benefit to ‘early Black Friday’?

Talbott questions the real value of stores’ “early Black Friday” promotions to consumers.

“It depends on what you mean by discounting,” he said. “These are planned promotions. Retailers own those products well, and they’ve actively gone out and sought value for their customers, been able to acquire them, and then they transferred that value to the consumer.

“In the sense of discounting it – meaning that there is an established value for something and suddenly you can get it for a much lower price – I think that is a limited phenomenon.”

What so-called early Black Friday sales do is redistribute the limited amount of holiday shopping over a wider period of time, which may be smart from the standpoint that bad weather in December can dampen fourth-quarter sales activity. But they won’t encourage shoppers to spend more this Christmas.

“There’s all kinds of evidence to suggest that the economic capability is economic capability, and no amount of the work on the part of the retailer takes a season that was going to be at 2 or 3 percent and builds it into something at 10 percent – that just doesn’t happen,” he said.

“But you can transfer value between days within the overall shopping season, and there’s competitive transfers between retailers. Stores want to make sure that they get their share of consumer sales. Everyone has a fixed amount that they’re really going to spend. If one store gets it before another, it’s lost.”

Source: IU Kelley School of Business

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