Sunday - October 15, 2000

Brick and Mortar Houses Still Rule Over Internet

While Internet users are multi-channel shoppers, their channel of choice is the traditional brick-and-mortar store. A recent survey conducted by PricewaterhouseCoopers, the world's largest professional services organisation, indicates that it is imperative for retailers to have a multi-channel presence to reduce the risk of losing customers to multi-channel competitors.

Even in this multi-channel world, online retailers have ample opportunity to increase their share of spending. "Online retailers need to capitalize on and support their unique shopping and service competencies, while finding ways to achieve parity with stores on factors related to returns and product pricing and selection," comments Mary Brett Whitfield, Columbus-based Director of the PricewaterhouseCoopers E-Retail Intelligence System.

Strong Cross-Channel Influence
Consumers have a multi-channel approach to shopping today. A recent survey of Internet users indicates apparel and electronics purchases at any given retail format are definitely influenced by shopping experiences at other formats. Internet purchases of both clothing and consumer electronics are more likely to be influenced by shopping experiences at other channels than vice-versa.

In the apparel category for example, about half of Internet users surveyed indicate that their recent online purchases were influenced by shopping done at catalogs or stores. At the same time, about one-third of catalog clothing purchasers and one-fourth of store clothing purchasers indicated that their purchases were influenced by experiences they had online.

Similarly, in the consumer electronics category, one-half of online purchasers were influenced by shopping experiences at stores and just over 40 percent of store purchasers were influenced by shopping experiences at online shopping sites.

What is Online's Share?
Survey results indicate that Internet users who have purchased clothing or consumer electronics in the past six months concentrated their category spending with stores. In fact, stores garnered more than 70 percent of expenditures in both categories.

In comparison, catalogs captured 11 percent of Internet users' expenditures on clothing for themselves during the past six months while online retailers secured 10 percent of spending in the category. Internet users generally find shopping online easier than shopping catalogs. "These results indicate that catalog retailers may find incremental sales simply by moving their catalogs online and promoting the online shopping site in the catalogs," states Whitfield.

Ford Uses Internet for Customer Customization
According to Wharton:

"Customization based on consumer preferences was clearly not a part of Henry Ford's thinking. As legend has it, when the founder of the Ford Motor Company was asked about varying his Model T just the tiniest bit, Ford said gruffly, 'They can have any color they want, so long as it is black.'

But that is not the way to survive now in the automobile business, said James Yost, Ford's vice president and chief information officer, during a Wharton e-commerce seminar on October 4. 'Job One is now the customer. It is the basis for shareholder value. We used to be a manufacturing company which made great products. Now we want to be known as the consumer company in the automotive space...'"

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