The internet has changed our buying habits and there is no way to stop it. In fact, as the tech-savvy children of today increase buying power ability with age there will be no escaping internet buying at any level. Currently, many of the older generations are still using their childhood habits and shop in stores and do not ‘trust’ the internet. But they are not loyal and they are also searching the web and realizing the fact that it is not that hard to learn something new.
If we are going to purchase everything online, what will become of our retail sales stores? They are not going to last and we are already seeing the affect. Certain industries that carry “Need it Now” products will survive. Other industries where people take time and shop for products and need sales help and/or to touch and feel the quality are struggling. You may think they shouldn’t be but they are for the following reasons.
1. Consumers are pretty wise. They shop locally and get the expertise, touch/feel it and then buy it cheaper online once they know what they want.
2. Internet shipping is very inexpensive and many times it’s free.
These two things lead to lost sales for the retail stores. Loyalty is losing over bottom-line savings. The result is that businesses are closing, people are losing jobs, which means they have to make sure to buy at the cheapest prices and the cycle continues. Retail stores employ the majority of population believe it or not. In our efforts to save 5-10% we are robbing ourselves out of our future, as the economy continues to crash.
These industries can be saved and business can thrive again. However, we need the help of the manufacturers. All they need to do is to hold the internet companies to a higher pricing standard. Manufacturers do tend to have Minimum Advertised Pricing Policies. The problem is that the policy applies to the internet and the retail store equally. In this case, the internet store continues to keep the competitive edge because they don’t have to pay the rent of the store or instalment on the loan amount incurred for the purchase of a retail store property. To change this, there should be two separate Pricing Policies. For example, an internet store can offer 10% off the list price, but the retail store can offer 20% off list prices. Now it makes sense for a consumer to go back to the store and get the expertise they need. I think CompUsa(a retailer and reseller of consumer electronics, technology products and computer services)is a good example of this. You can usually get better prices if you go into the store. Therefore, me and my family prefer retail store shopping. The electronics industry really requires the local expertise and they have pretty much protected prices so they can thrive long term.
There are a few other things that manufacturers should do to protect their future. First, they really need to make all internet sites put their corporate name and address on the site. No different than a retail store. If they are a legitimate company, then what’s the problem. Too often you just don’t know who you are doing business with when you purchase online and you should. Second, they need to avoid opening accounts with people who run their business out of their bedrooms and don’t offer very good phone support. Mandate that they have normal phone hours posted, so customers can get help when they need it. This is no different than a retail store. Third, do not let wholesalers sell directly to the customers. If you cut out the retail stores, then their time in business is limited especially if the product is not a commodity. This type of devaluation of products is a short-term solution to increase sales. It will come back to bite them in the end, whether 5 years or 10 years down the road.
The internet store is not the bad guy here. It’s the few internet stores who are happy with a 10% margin and cuts prices and ruins the industry for everyone else. It adversely affects this country. Retail stores have more overhead and can never operate with a 10% margin. It takes more than that to stay in business.
It scares me to see the direction all this is going. The manufacturers have to be strong and lead the way for the rest us. Support your local businesses and be loyal to the people who help you whether an internet or retail store. Please don’t always make it about price.