Though a majority of American spending is still done in brick and mortar stores, e-commerce continues to grow and affect the sales of major brick and mortar retailers. The two main effects of the rise of e-commerce on brick and mortar stores are widespread store closures and shifts in the traditional brick and mortar business model. Based on consumer responses, brick and mortar stores will likely continue to thrive due to consumers’ preference for instant gratification over convenience.
THE EFFECTS OF E-COMMERCE
(Source 6)
The findings of online shopping versus in-store shopping showed that brick and mortar stores are seemingly surviving the rise of e-commerce. But when looking at stores closures, it is clear that e-commerce did have an
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Retailers have started to try to increase their online presence to lure in customers while simultaneously closing stores. (Source 11) The total number of store closures equal about $70 billion in retail leases. (Source 15) Fortune reported that a total of 6,700 stores in the US were closing in 2017, which beats the all-time high in 2008 when 6,163 US stores closed. (Source 16) Despite the store closures, US retail sales in-store are 10 times bigger than online retail …show more content…
According to Forbes, 90 percent of consumer spending is done at brick and mortar stores. When comparing sales, in 2016, online sales only accounted for 7.8 percent of total US retail sales. (Source 16) Some brick-and-mortar retailers are reporting large sales numbers per sq. foot, representing major profits despite real estate costs. For instance, Apple reports $5,546 in sales per square foot while Generation Next Franchise reports $3,970 in sales per square foot.
Consumer preference continues to push the growth of e-commerce. In December of 2017, the Entrepreneur reported that 51 percent of Americans prefer to shop online while 49 percent preferred to shop in-store. Those who like to shop online enjoy the convenience. However, the survey shows that (Source 5) consumers still prefer to visit retailer in-person for the experience such as trying on clothes, testing products, and the social aspect. However, many do prefer to research companies online before visiting
The idea that department stores might be losing out to retailers like Amazon is not a new one. However, the extent to which one affects the other is not entirely clear. More specialized, non-department stores may also play a role in pulling department store sales downward. Clothing store sales, for example, grew slightly, by 1.2 percent, from January 2013 to January 2014 while department store sales declined. (Census Bureau, 2014)
Being a multi-billion dollar retailer comes with its perks. JCPenney’s dominance over catalog merchandising has now extended into the cyber world at www.jcpenney.com. This website is multi-functional and easy to navigate, but how would JCPenney’s new e-commerce site stack up against its toughest competitor, Kohl’s, on the web? The answer may surprise you. This is an intriguing look at how varied retail comparisons can be. While JCPenney is struggling with sales on the retail floor, Kohl’s continues to exceed expectations in their stores. Online though, it is a completely different story.
Industry Overview Some 400,000 specialty retail stores operate in the US with combined annual sales of $350 billion. CAGR 2002-06: 5%. Market is dominated by large players like Best Buy, Toys “R” Us, Gap, Sports Authority, etc. The market size of some major product categories.
Taking the e-commerce market by storm, Amazon.com was founded in 1994 (Amazon.com). Bringing the company to life was Princeton engineering graduate Jeff Bezos. He first thought of the idea to create Amazon.com when he was simply searcing the internet. He first worked as an investment banker D.E. Shaw & Co. where he was looking for investment opportunities for the company. surprisingly, he found that the internet was growing over 2,000 percent per month (“Jeff Bezos the King of E-Commerce”). He saw this as a massive opportunity and decided to start Amazon.com to first sell books. Amazingly, Amazon.com now has over 232 million products for sale for United States residents including electronics, clothing, and their own movie streaming
The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India. ·
In addition to the change in behavior of consumer, many companies or retailers change the sales channel combinations. The greatest impact of the Web-bases electronic revolution has occurred in companies adopting the click-and-mortar approach. Click- and-mortar is one the strategy used by the companies or retailers that they continue to conduct their business in the physical locations and have added the electronic commerce component to their business activities. According to one study, 37% of United States retailers are selling through a combination of the internet, in stores and catalogs. This represents a growing demand for the business-to-customer package delivery service.
The retail industry is as old as human civilizations, and it’s worth noting the retail sector is much better geared to change than most sectors. Over the past couple of decades there has been a wide range of changes in the retailing business. The retail sector dates back to the early 1800’s when the first local corner store sold common household items and basic groceries. As its name states, the corner store was just that, stores strategically placed on corners on high foot traffic areas for easy access. As society started to grow so did the need for new consumer goods and how a consumer would reach those goods. Department stores became popular simply because they were able to offer an assortment of categories and a variety of items within those categories all under one roof. The first two cities to start developing large scale department stores were New York City, and Chicago. In New York in 1846, the first building was built offering a variety of goods at fixed prices that were shipped from Europe. Department stores moved away from the idea of bartering and all items sold were considered fixed. However, department stores did offer discounts and coupons as a way to get customers in the door. In 1862, the largest department store was built during this time in New York City. The department store was on a full city block with eight floors and nineteen departments of dress goods, furnishing materials, carpets, fine china, toys and sports equipment. All these items were arranged around a central glass-covered court. The glass windows quickly became a staple in the department stores design. The act of window shopping was introduced and quickly all department stores had floor to ceiling windows advertising the newes...
In the article “Amazon.com is a 21st Century Deal with the Devil”, Amy Koss of the LA Times depicts the website giant Amazon.com as the devil. Koss describes a mall that is like a ghost town with its empty stores and chained doors. (Koss 1) Koss talks about the ease of internet shopping; one can click a button and order almost anything and have it delivered right to their doorstep. (Koss 1) This article points out how internet shopping has decreased human interaction. (Koss 1) It also discusses the struggling of big box stores which often result in the loss of retail jobs. (Koss 2) In conclusion, Koss’s belief is that the “evil” internet has not only changed how humans purchase goods, but also changed the human way of life.
With Toys “R” Us having domestic and international stores, they have done a great job over the last few years. The total operation of stores have increased to 1,691 from 1,540 in February 2013 ("Financial Document Detail",
For the purpose of this study, the researchers have opted to take the point of view of Carrie Galeotafiore, an analyst from Value Line Publishing (VLP), who specializes in the retail building-supply (RBS) industry. This perspective allows us to be knowledgeable about economic, industry, and entity specific factors relevant to this study. Moreover, it justifies our professional judgment for the resulting estimated figures used.
This view stems from the overlooked fact that new shops will emerge in their place. As discussed previously, major companies do drive other shops out of business. On the other hand, this leads to the creation of new stores and retailers. These new shops can offer different services or offerings to its target consumer in place of the stores that have been driven out of business. Meaning that local communities would not truly lose anything in place of a mom-and-pop shop that has failed due to a big box retailer.
stores are smaller because the products are mainly grocery items. They have wide aisles and
15 years ago, the only way to purchase items was by going to retail outlets and walking up and down isles and waiting in line to check out. Fast forward to today, and men, women even children are purchasing items on the other side of the world from the comfort of their own home and receiving them on their doorstep in a week or
mall in America has 425 retail shops, 4.2 million square feet of space, over 13
Online and in-store shopping differentiates in various ways. However, they both are convenient ways to shop. Recently, online shopping has been most convenient for me, but I enjoy both ways of shopping. I believe that shopping preferences change depending on a person’s situation. I noticed that many people are starting to prefer online shopping more than in-store shopping.