Shopping in a Coffin-Cold Aisle

THE MOOD at the National Retail Federation’s annual conference wasn’t so much downbeat — as might be expected — as erratic: up one minute, down the next. What you felt depended on whom you listened to. Perhaps the most emphatic opinion came from an attendee who declared that younger shoppers are “more willing to use technology rather than go shopping in a coffin-cold aisle.” A panel of retail analysts bolstered this view, noting that malls are uninteresting and must be reinvented as entertainment destinations. The only route to better retail sales, the panelists said, is for merchants to increase their gross margins, and consumer interest, by a return to the art of merchandising, lack of which has made department stores, for instance, all seem the same. The panelists suggested that the merchandise sales figures for 2002 were not quite so gloomy as reported in the press, partly because the latter tends to use “like store” sales figures, up only 1.5% in 2002, whereas “total merchandise” sales show a gain of 7.8% for the same period.

According to Forrester Research retail analyst Christopher M. Kelley, the number of households that shop online has grown from 5% in 1997 to 43.3% today. By the year 2007, Kelley predicts, two-thirds of all U.S. households will be shopping online. Newer Web buyers are increasingly mainstream.

THE SHOW MUST GO ON Metro AG chairman Dr. Hans-Joachim Körber, in accepting his award for International Retailer of the Year, described his company’s sophisticated approach to entering overseas markets. In a brief luncheon presentation that was so remarkably comprehensive and entertaining that it stole the show from the other retail luminaries’ speeches, Korber gave absorbing insights into selecting the best formats for operating in different countries.

Another noteworthy session at NRF — noteworthy in that its participants were unusually forthcoming with information — was a panel discussion on online retailing. Karen Reed, a senior vice president at traditionally reticent Coldwater Creek, revealed the numbers behind the company she called a “true multichannel retailer.” Last year, the business was 26.8% store retail (42 stores); 43% catalog, and 30.2% Internet (up from 20% in 2000). Of a total of $465 million in sales in 2001, $144.2 million came from Web transactions. All systems and processes are fully integrated. “We have consistent pricing, integrated merchandise, and customer-friendly returns,” Reed said. “Operationally, it’s a lot more difficult, but we feel it’s the right thing to present to the customer.”

Giving another twist to the multichannel equation, Thomas Epting, operations vice president at Uncommon Goods, lauded his pure-play’s year-old foray into paper catalogs. “There are several things about the catalog business we love,” he said. “It’s a much more interesting business to build. The most cost-effective way to get customers to the Web site is with a paper catalog. We use the Internet as a testing bed for a product before we put it in the catalog.”

The panel’s third member, Bill Bass, previously a Lands’ End e-commerce manager and now vice president of Sears Direct — and something of a fixture in the retail celebrity speaking circuit — more than made up for the loquaciousness of the other two; he did little more than repeat what we already knew about Sears’ acquisition of Lands’ End.

At a panel session on online inventory disposition, a sleepy audience woke up with a jolt when Patrick Byrne, the maverick CEO of online liquidator Overstock.com, said things that went against the grain. “Normal e-commerce on the Internet is a loser,” he declared. “What e-commerce is for is liquidation.” In contrast to the platitudes from representatives of eBay and AOL, Byrne’s observations highlighted some not-very-pleasant truths. “Retailers don’t cut inventory, and they don’t move it when they should,” Byrne said. “They don’t understand the true cost of carrying inventory.”

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