December 27, 2024
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Retail firms seek to up odds

FREEPORT – Mail-order retailers L.L. Bean and Coldwater Creek are opening stores. Nordstrom and Banana Republic stores are online. And Internet retailers Amazon.com and eToys are launching printed catalogs.

In what is turning out to be a difficult holiday season, retailers hoping to expand business or just keep up with competitors are casting for customers wherever they can: online, in mailboxes and in stores.

Customers are clearly winners.

“It’s all terrific. The more options you have, the better,” said Jacquie Gounaris of South Freeport, who has shopped for gifts online, via mail order and in traditional stores.

The changes in retailing have led to a blurring of the lines between stores, catalog companies and online merchants.

Mail-order companies have gone online because it’s a cheap way to serve existing customers and perhaps snare new ones. For online companies, catalogs provide an inexpensive way to steer people toward Web sites, especially compared to TV advertising that dominated last holiday season.

And traditional bricks and mortar retailers are going both routes, said Kevin Silverman, an analyst at ABN AMRO in Chicago. “It’s a free-for-all,” he said.

It’s known as multichannel retailing because companies use two or three different “channels” – mail order, e-commerce and stores – to reach customers.

For example, an L.L. Bean customer can peruse items in the catalog, then go to a store to check out the products in person and finally, maybe after the kids have gone to bed, go online to make the final order.

“Things are definitely getting more complex,” said Rich Donaldson, spokesman for L.L. Bean, an 88-year-old mail-order company that opened its first major store in the United States outside of Maine last summer.

Retailers undertook the expansion expecting they’d see significant sales growth during the holiday season from all these channels.

But those expectations were dashed when sales slowed as consumer confidence took a plunge, the nation’s attention was diverted by the presidential election and rising fuel prices forced shoppers to spend more at the gas station than at retailers.

Another reason for the sluggish sales may be that the extra shopping days between Thanksgiving and Christmas, along with a late start of Hanukkah on Dec. 22, have caused some shoppers to procrastinate, said Ken Gassman, an analyst at Davenport & Co. in Richmond, Va.

At L.L. Bean, the online business has not boosted the bottom line as much as the company had hoped this season.

The company, which had sales of $1.06 billion last year, planned conservatively for the current holiday season and remains cautiously optimistic even though the growth of its online business has slowed, Donaldson said.

“Our plan was for sales to be exactly flat, and current trends would suggest that was a pretty good projection,” he said.

Nonetheless, analysts say companies have done the right thing casting a wide net for customers.

Lands’ End, for example, reports that 20 percent of people who buy online are new customers, which is especially lucrative since those buyers came to the Web site without the need for advertising to lure them, said Richard Baum, an analyst at Credit Suisse First Boston.

On the flip side, mail-order companies like Bean and Coldwater Creek feel that to expand their sales they, too, must enter a new channel by opening stores, the largest retailing segment that accounts for 90 percent of merchandise sales.

Idaho-based Coldwater Creek, which sells upscale women’s clothing, plans to open 80 stores in the next couple of years.

L.L. Bean is moving more cautiously. Last summer, it opened a 75,000-square-foot store at the Tysons Corner Center mall in the Washington, D.C., suburbs. The Tysons store will be the first of several East Coast stores designed to rival the flagship store in Freeport.

It seems to be a sound strategy for shoppers who aren’t enamored with the idea of shopping online or from a catalog.

“I like to see what I’m getting,” Marnie Akerley of Bar Harbor said as she did her Christmas shopping in L.L. Bean’s Maine store.

But traditional stores like Nordstrom, which launched a mail-order and online subsidiary last year, aren’t taking any chances. They’re going to the other channels to snare those who don’t like to shop.

That’s a sound strategy for customers like Liz Davis, 25, of Jersey City, N.J., who tries to avoid bustling stores and likes the fact she doesn’t have to worry about shipping gifts to her far-flung family. “I hate the crowds, and the salespeople bother me,” she said. “I would buy everything online if I could be sure it would fit and be exactly what I want.”


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