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The Increase in Online Sales

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Big-box retailers such as Target & Walmart have already recognized the growing influence of e & m-commerce, and are offering online store formats. Costco, whose advantage lies in bulk-sales, also announced greater focus and online with plans for mobile applications and improvement to Costco.com.

It is becoming increasingly clear that the firms that continue to invest in the growing online sales channel are likely to emerge as future leaders. Brick n Mortar retailers such as Target and Walmart are investing in creating an omni-channel environment. The model embraces IT while leveraging advantages of physical locations. Companies that are not investing as much as the leaders in online channels (for example, Kmart) are likely to lose out in the long run.

Operational efficiencies

Retail industry is centered on commoditized goods and is hence extremely dependent on price/cost advantages. Investments in IT technologies that enable efficient inventory management. Retail industry is one of the largest users of big data. Big data is being used to analyze process improvements, study logistics, optimize inventory, improve merchandising, and most importantly, study in-store and online consumer behavior to forecast future needs.

IT technologies enabling supply-chain efficiencies is going to play a greater role in achieving cost leadership. Companies such as Walmart, which are able to use IT to track and manage the purchase, storage and distribution of merchandise can offer lower prices which is a key success factor in the industry. Amazon and Walmart, who continually invest in technology are likely to remain competitive on price, and will be able to offer services which make goods available to consumers in efficient ways, are likely to e...

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...distribution channel would lower Amazon’s labor costs, thus increasing its capacity to further reduce prices of products. As a result, traditional retailers would face even tougher competition against online retailers.

Online shopping is set to radically change the dynamics of the retail industry with increased consumer reach. It is expected to continue flourishing with mobile transactions increasing and online retail sales projected to reach $434 billion over the next four years. Even big box retailers are entering in to the e-commerce market. Online shopping will be disruptive for the following reasons:

• Industry leaders such as Walmart, Target and Costco have a significant physical. Will find it difficult to adopt online channels.

• Industry leaders do not have as much expertize in the online channels in comparison with ‘younger’ competitors such as Amazon.
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