No one can escape it.
Consumers are becoming more attuned to the Web than ever, and the retail industry hasn't been spared.
A recent survey by the industry's trade group, the National Retail Federation, predicted that consumers will complete about 39.5 percent of their shopping online this holiday, the highest percentage in the study's history. That's not accounting for all the purchases started online or on a smartphone or tablet, but completed at the store. These shoppers raised U.S. cross-channel retail sales to $1.2 trillion last year, according to Forrester Research.
But which retailers benefit most from the online shift—online pure plays or traditional stores? The answer today may be different in a few years.
In the current environment, Amazon has an inherent advantage over brick-and-mortar stores with a Web presence, said Mike Willoughby, chief executive officer of PFSweb, which designs and manages e-commerce sites for brands such as L'Oreal and Fifth & Pacific's Kate Spade.
That's because the online giant has invested in warehouses all over the country, giving it quick access to inventory around the U.S. and allowing it to offer same- and next-day delivery, he said. The retailer pulled farther away from the pack when it announced last week that it will work with the U.S. Postal Service to offer Sunday delivery to cities around the United States in 2014.
Amazon's recruitment period
What's more, the retailer offers a breadth of products at low prices and a high convenience factor, said Anne Zybowski, Kantar Retail's vice president, retail insights. She referred to the holidays as "Amazon's recruiting period," and pointed to a 2012 study that said 30 percent of shoppers started their search on Amazon. That's double the amount that started on Google.
"Even if they're not purchasing that has some big influence," she said.
Once people try the site and realize how easy it is, trial becomes habit and they become regular shoppers. The company's shopper base expands by about 15 percent each holiday season, which it has done a good job retaining, she said.
The only way for traditional retailers to compete, Willoughby said, is to pour investments into things that make it easier for shoppers to move between online and mobile devices and the physical stores. This means building out distribution centers to make delivery faster, and making it easier to do such things as buy an item online and return it to the store.
Traditional retailers "stand the most to gain, but the problem is they really have to have an effective omnichannel strategy to realize that advantage," he said. "I think that's a preferred shopping experience for a lot of people, when they get that personal touch."
A recent report by Forrester analyst Sucharita Mulpuru backs up Willoughby's thesis. According to the report, Forrester expects that by 2017, the Web will influence half of all retail purchases in some way, via features like store locators, price checks, and ratings and reviews. Retailers who create platforms that allow shoppers to identify what they want online, and then enable them to visit a store for immediate fulfillment and zero shipping costs, stand the most to gain, the report said.
Part of the challenge facing brick-and-mortar stores is that so much of their strategy and capabilities are focused on the four walls of the store, Zybowski said. They need to "suspend their agenda" a bit to meet shopper expectations, and if they do, having a physical presence could give them an advantage down the road over online pure plays.
"The biggest disruption to Amazon and e-commerce is some of the multichannel players getting it right," she said.