Retailing can be vaguely described as the business of selling goods or services to the final customer. This particular area of business is extremely important to the economy, totaling an estimated three trillion dollars in sales per year. Retailers are in constant battle among themselves to find new and innovative ways to meet the customers’ needs and wants in order to secure a share of the market.
There are numerous channels through which retailing can be performed. The most prominent form is the brick-and-mortar operation. This category consists of the physical store locations where customers can go to browse through the selection of merchandise. These operations have been a staple in communities for years past and will most likely remain for years to come. However, their stronghold on the retail industry is being seriously threatened by the extraordinary growth of e-commerce. E-commerce is defined as the business of retailing conducted over the Internet.
Although the retailing industry is a driving force behind the economy, its magnitude leaves little room for growth. The industry has reached its maturity, sales have not grown in great proportions, and expansion has slowed (Loeb, May 1998). In addition, the level of competition is at a high. Customers have more choices than ever on how to spend their dollar with the abundance of stores and catalogs (Maruca, Jul/Aug 1999). These conditions have lead retailers to search for a different channel by which to reach consumers.
A relatively new development has been the introduction of Internet-based retailing. It is estimated that online sales have tripled between 1997 and 1998, reaching roughly nine billion dollars. With the growing number of households joining the Web each day, projections indicate no signs of slowing down anytime soon (Anonymous, Aug 1999). Interactive retailing can prove to be a real threat to existing businesses. A recent article by Bob Woods discussed a report from Jupiter Communications LLC which “claims that most of the growth will come at the expense of traditional retailing” (Aug 13, 1999, p. 11). The report goes on to state that a large part of Internet sales is not growth, but a shift in dollars from traditional retail channels. In order to regain lost sales, many brick-and-mortar outlets have ventured into the World Wide Web. A new study has discovered that sixty-two percent of all online sales come from retailers who have made that transition (Hogsett, July 26, 1999).
The impact of the surge of online shopping can only be presumed at this point. It has been argued that e-commerce will change the face of retailing permanently, making traditional retailing obsolete. On the other hand, it can be said that e-commerce will act a supplement, but not a replacement for brick-and-mortar operations.
It is my opinion that traditional retailing will not become extinct due to the expansion of the Internet’s capabilities. The sense of taste and touch will always create a need for consumers to be able to purchase specialized items in person, rather than through a computer screen. The act of shopping also satisfies a social need. Jay Scansaroli and Vicky Eng stated that shopping is “about being in a community, browsing, discussing items with others, stumbling across the unknown” (Jan 1997, p. 4A).
Instead of competing for customers with traditional retailers, I expect that online shopping will cater to a distinct segment of the market; those who value time, convenience, and comfort. With the increase in two-income families and single parent households, the ability for customers to shop at their leisure is a great advantage. Those who are “willing to shell out a few extra bucks for a saved minute or two” will benefit most from this trend (Neuborne, July 26, 1999). Just like the introduction of the catalog did not destroy traditional retailing, neither will the Internet. Brick-and-mortar stores will remain intact to provide for those customers who desire interaction with others, and who require face-to-face judgments regarding certain purchases. Although online shopping has the advantage of creating databases to collect information to bring customer service to new levels, it has not been able to utilize its full potential. In the end, it is difficult to predict the exact futures of retailing. Consumers are individuals, and their lifestyles create different needs. Their choice will ultimately depend on which medium will serve them best. Some will choose the traditional outlet. Some will choose the Internet.