Today I was happy to share my thoughts on retailing, supply chain, and Holiday Shopping (in-store vs. online) with Nathaniel Meyersohn and Neil Saunders on CNN..
First, when style, color, brand assortments are limited due to inventory availability consumers face greater frustration online than they experience in-store.
In-store a consumer can simply view, touch, try on whatever assortment is available during their visit. Online shopping tends to be more surgical and more difficult to browse for precise colors and fits.
Next, as we and our brand and retail partners have learned over the past few years, the marginal net profit contribution is greater for an in-store sale than for an online sale, for the same item sold at the same price.
Although brick-and-mortar sales require high “four wall” costs (real estate, personnel, utilities, etc.) online sales require substantial costs of “pick and packing” of inventory, boxing, handling, outbound freight to consumers, and large reverse logistics costs due to high return rates (returned freight from consumers, inspection, repacking or refurbishing, etc.). We’ve paid the tuition for this education, and it was an expensive lesson to learn.
Finally, when consumers shop in stores the average basket size is greater. When consumers walk through a store, they make “impulse” purchases (“oh, look at that…”) and “radiant” purchases (related items displayed adjacent to key items, for instance, belts presented near pants).
Therefore, when inventory is limited, we prefer to drive consumers to in-store purchases over online purchases.
At Randa Apparel & Accessories, our in-store marketing includes increased visual merchandising via our dedicated sellers and in-store merchants, store signage and point-of-sale fixtures, print advertising, co-op ads with our retail partners, and even social media encouraging consumers to “buy now” at a store near them.
Happy and safe Thanksgiving holiday to all.
David J. Katz - The Alchemist 