Summary
1)Jupiter Research, a market research firm specializing in e-commerce feels that the growth rate for online sales has peaked(LY close to 26% overall in all channels combined) and projects overall growth rate at 9% by 2010. 2)Pressure from smaller or niche retailers has increased dramatically over the past several years. Online e-tailers such as Blue Nile, Williams-Sonoma, Zappos, Redcats USA and scores of others who have "category killed" as well as targeted specific demographics like income, education and event planning have fared better, percentage-wise than traditional multi-channel or established e-tailer competitors. 3)Brick and mortar retailers like Best Buy, Sears, Borders, Circuit City and others have leveraged website usage and loyalty by offering in-store pick up and returns as differentiators of convenience and choice as well as to offset the negative aspects of spiraling delivery costs of products purchased online.
Analysis
In analyzing the content of the original source article, it becomes readily apparent that the cliched' word, "differentiation", though certainly overused and under explained, has truly become the mantra to sustained growth in the multi-channel segment. It is no longer about how many stores a retailer can open in a given year, but moreso, about the product and service offerings established that make a particular retailer truly unique in terms of brand, selection, product availability in both channels as well as ease of maneuverability between each channel to make the customer experience as seamless as possible. As an example, Best Buy, the largest CE retailer on the planet, ranks #11 in the top 500 internet retailers; on the flip side, Office Supply retailers Staples, Office Depot and OfficeMax rank 2, 3, and 6 in total internet sales volume. However, Best Buy is the only CE selling player of the four that allows the customer the choice of purchasing online and picking up in-store, thereby, creating a differentiator for customers who would rather not wait for delivery or pay escalating shipping charges for web-ordered product.
Given the fact that two of the three players in the Office Supply sector, ODP and OMX have had somewhat less than desired Q1 2007 earnings, could web development, in-store pick up, niche marketing through the web sites be a potential turnaround strategy for weak retail store comps? Both companies have agressive plans TY for new store openings as well as remodels. ODP plans on opening 150 or more stores and remodeling all remaining non Millenium2(new prototype) existing stores to the M2 format by mid-year 2007. OMX plans on opening 70 stores while remodeling up to 200 more of its existing stores to its new format, Advantage. If either or both of these sector players looked at in-store pick up as both a web site/retail store synergy as well as a differentiator from top rival, Staples, perhaps the last two fiscal quarters would provide a much brighter outlook on FY 2007 than the first 3 months of the year have. If I were Steve Odland at ODP or Sam Duncan at OMX, I would not spend a great deal of time thinking about how to leverage the websites.....because.....while you are thinking, Ron Sargent at Staples just might be rolling out the initiatives and taking an even larger share of the e-commerce business than they already have!
