Online Sales Key to Season
The Columbus Dispatch
January 19, 2014
By Tim Feran
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The results are in, and the winners of the holiday shopping season are the retailers whose sales fell the least compared with last year.
And that group had one important thing in common: They sold goods online.
One telling number came from local retailer Abercrombie & Fitch, which reported recently that its direct-to-consumer business, which is mainly online, represented a record 25 percent of total sales in December.
That contrasts with the industry assessment that sales overall rose about 3.8 percent during the holiday shopping season.
Observers say discounting had a lot to do with the big surge in e-commerce.
Abercrombie, for example, emailed alerts about deep discounts to customers several times a week during the holiday season, alerts that have continued into the new year.
Only a few days ago, the retailer sent an email touting its winter sales featuring “up to 70 percent off,” and including free shipping on orders of more than $50.
The short-term boost from such discounting is troubling for the long-term health of retailers, said Jack Kleinhenz, the National Retail Federation’s chief economist.
“Undoubtedly, some of the increase came at the expense of (profit) margin,” Kleinhenz said.
“Retailers are still stressed, and a long-term promotional environment may actually hurt the bottom line.
“As consumer confidence grows, there will be less need for retailers to heavily promote and discount their offerings.”
Blame gameThe surge in online shopping may have boosted retailers’ sales, but they added to the holiday headache quotient as many of those purchases arrived later than promised.
A new study has found that retailers, not delivery services such as UPS and FedEx, were responsible for a majority of the delays.
Of more than 175 orders placed on the last day that retailers guaranteed delivery by Christmas, 15 percent of orders did not reach their destination in time — and retailers were responsible for 56 percent of those delays.
While carriers had to deal with extremely high volume and some severe weather, retailers fell flat largely because of internal processing errors or a failure to upgrade shipping, according to the study, conducted by management consultancy Kurt Salmon.
“We saw companies get a lot more e-commerce volume than they were expecting,” said Steve Osburn, a director at Kurt Salmon. “When you combine that with a short shipping season, the result was retailers were really pushing the envelope.”
One of the retailers in the study that avoided those problems was Sears.
“One of the things that made Sears successful is they do a lot of ship-from-store,” Osburn said. So, if a shopper in California ordered something at the last minute, Sears would look through its inventory — both in distribution centers and stores — quickly determine which place was closest to the customer and ship from that place.
The top performer among retailers was Zappos, pulling off deliveries on orders made Dec. 23 in all cases. How did the company do it? By shipping everything ordered Dec. 21 through 23 via overnight air, but not charging customers for the upgrade.
“Zappos is a good example of being a customer service-driven company,” Osburn said. “They chose to upgrade their shipping and not charge customers extra. They ate into their profit margin for that, but they kept their customers happy.”
Sharing space
Outdoors outfitter REI will move into part of an existing h.h. gregg store when it opens its new store in Sun Center on Sawmill Road in the fall. To make room for the Seattle-based retailer, the electronics and appliance store will shrink from its current 60,000 square feet to 37,000 square feet, said Sarah Benson Hatcher of Casto, the building’s owner. During the redevelopment, h.h. gregg will remain open, she said.
The Sawmill Road store will be REI’s second location in the Columbus area. Its first one will open soon in Easton Gateway, the 54-acre addition to Easton Town Center and Easton Market.
Online Insight
Retailers don’t just profit from the Web through online shopping, they gain valuable insights as they are designing merchandise, as the folks at the Limited can attest.
The fashion retailer recently announced it is using online analytics provider First Insight to determine which products are most attractive to its customers.
First Insight uses social media to learn about shoppers’ preferences and relays those insights to the central Ohio company. The process helps reduce risks and allows for faster design and manufacturing.
Arts and crafts
The Columbus February Avant-Garde Art & Craft Show will take place from 10 a.m. to 4 p.m. Feb. 8 at St. Agatha Parish Hall, 1860 Northam Rd. It will feature items made locally including paintings, home decor, glass lawn art, jewelry, sports memorabilia and other items.
Admission to the event is $3, or free to children younger than 12. For more information, go to www.avantgardeshows.com http://www.avantgardeshows.com.
