As we shift towards an age of internet shopping, some retailers are falling behind. Five years ago, online sales contributed to about 5% of a retailer's total sales. Now, it has jumped to 9%, and continues to climb. It is becoming clear that there are items people just don't want to buy in-store anymore, and those who fail to offer good online shopping services seem destined to go out of business.
For retailers, the future seems to have only one certainty: they need to step up their services. Websites need to be easy to find and navigate, and offer products that are more convenient to buy online. Stores need to be more fun to visit, with sales associates who are helpful and have good knowledge of the products for sale. Some stores, like Borders, will fall victim to offering products that people are more willing to buy online. Others, like Barnes & Noble, will develop ways to keep customer loyalty while advancing to the digital era, with new products like the Nook.
The bright side to all of this is for the consumers. The world of retail is about to be much more fun and easy for the everyday shopper, which means a better experience every time you enter a store. Also, stores will become easier to navigate, with many products being sold online only. While retailers may lose out on online shopping, consumers are sure to win big.
Source: http://www.economist.com/node/21548241
I agree that retailers need to refine their services to cater to the demand of consumers if they want to survive in today's economy. It is true that Borders went out of business because it could not compete with stores such as Barnes and Nobles, which promoted the use of electronic devices. However, as you said, there are winners in this situation, the consumers. As consumer benefits increase, so does the consumer surplus and as some businesses are suffering, the producer surplus for them is decreasing.
ReplyDeleteIt seems to be that Online shopping has become a substitute market to retail shopping. As online shopping technology gets better, retail shopping sales will drop even more.
ReplyDeleteI believe that the best solution for retail shopping would be to attempt to target a different market. If they can differentiate the retail shopping experience enough, consumers will be able to pick between just getting clothes online and an experience of shopping.
However, they probably have a long time before online shopping develops the technology to beat retail shopping.