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Bricks & Clicks
by Judi Biederman

At its inception and as it gained public acceptance, e-commerce was widely regarded as the eventual death knell for traditional retailers. Its sheer convenience, time-saving attributes and cut-to-the-bone prices created a powerful retailing venue that has taken its share of customers away from the traditional shopping scene. And there is no doubt about either the growth or the potential of e-commerce. Industry analysts agree that “shopping on the net” really took off during the 1998 holiday season and that online sales for the year were approximately $8 billion. Estimates for 1999 put annual e-commerce sales figures at $20.2 billion, with up to $9 billion expected in sales during this holiday season.

As the ESP staff conducts ongoing interviews with retailers, we are hearing more and more that e-commerce is not a foe to be fought— it can and should be embraced as a component of a successful retail strategy mix. The lesson to be learned is not how stores can compete with e-commerce, but rather how their operators can make the best use of the opportunities it offers.

Certain types of traditional retailers have been hard hit, with the demise of the independent bookseller in the face of amazon.com serving as a good example of what e-commerce can do to a market. But that doesn’t mean that amazon.com is the only game in town. Traditional retailer Barnes & Noble is more than holding its own in the book market because it is responding to consumer demands by offering the best of both traditional stores and cyber shopping.

In fact, the giant bookseller’s Web site, barnesandnoble.com, ranked eighth in a recent survey of the top 100 Internet retailers published in the October 1999 issue of Stores magazine, the official publication of the National Retail Federation. In the ranking, B&N was topped by e-tail giants that do their business exclusively over the Web, with first place going to eBay.com., second to Amazon.com, third to Buy.com, fifth to OnSale.com, and seventh to Egghead.com (note: Egghead no longer maintains stores). Third and sixth places went to Dell.com and Gateway.com, both manufacturers.

Barnes & Noble is just one example of numerous savvy retailers that are adapting to the rules of a new game. Many store-based retailers, as well as numerous catalogers, are making significant investments into the future by establishing Web sites and e-commerce operations in addition to their regular operations. In fact, 21 of the top 100 Internet retailers in the Stores survey were traditional retailers and 25 were catalog or direct mail operators. In a summary of the survey, the National Retail Federation says, “Apparel and broad selection-type retailers are showing that they can successfully make the transition to the Internet channel. The research clearly shows that on-line shoppers gravitate to recognizable and trusted brand names and that traditional stores with established brands, such as Macy’s and Nordstrom, have a key advantage when they go on-line.”

Contrary to “doom-and-gloomers” who say that traditional retailing is on its way out and will be replaced by e-commerce, ESP believes that it is actually in a transition mode and is on the way up. Retailing in the future is likely to be different, but it will probably be a combination of the best of the old and the new.

In support of ESP’s theory, this article debuts a new monthly feature, “Bricks & Clicks,” devoted to the future of retail real estate— a future in which traditional retailers will most likely have both storefront and Internet presences. We intend to cover the issues that are emerging due to e-commerce and we invite our readers to share their views. An important part of our coverage will be to research and report on retailer Web addresses and their impact on storefront sales.

Click picks for this month are the rest of the store-based and catalog retailers that made the Stores top 100 Internet Retailers list, along with their ranking in the survey.