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Luring Online Shoppers Offline

Stephanie Clifford|The New York Times
Thursday, 5 Jul 2012 | 10:45 AM ET

As online shopping has surged, traditional retailers have lost millions in sales to so-called showrooming — when shoppers check out products in stores that they then buy from Web sites like Amazon. It has gotten so bad that Best Buyeven replaces standard bar codes with special Best Buy-only codes on big ticket items so they cannot be scanned and compared online.

AP

Now some big retailers are taking a new approach to the dreaded showrooming by transforming their stores into extensions of their own online operations. Walmart ,Macy’s, Best Buy , Sears , the Container Storeand other retailers are stepping up efforts to add Web return centers, pickup locations, free shipping outlets, payment booths and even drive-through customer service centers for online sales to their brick-and-mortar buildings.

“We are living in the age of the customer, and you can either fight these trends that are happening — showrooming is one — or you can embrace them,” said Joel Anderson, the chief executive of Walmart.com for the United States. “We have a lot of assets, but they’re only assets if you embrace the trends of the customers.”

In making the changes, the big retailers are betting the future on shoppers like Sue Sheffer.

Ms. Sheffer, an information technology specialist in Bunker Hill, W.Va., shops for items like clothes, electronics and even coffee online. But she also likes to receive her purchases as soon as possible. When buying shelving from the Container Store, she ordered it on the Web in the morning and picked it up during her 30-minute lunch break that day. And there were no expensive shipping fees.

Fiona Dias, the chief strategy officer at ShopRunner, which coordinates shipping for retailers, called the trend “really an offensive strategy against Amazon and pure-play online retailers.”

“Unfortunately, stores have been portrayed as the ugly stepsister here,” she said. “They do have disadvantages, but the advantages of having a physical footprint are many.”

One advantage is the ability to reach customers who pay with cash.

In April, Walmart began allowing shoppers to order merchandise online and pay for it with cash at a store when they picked it up.

Even without the cash option, in the six years since Walmart has allowed online items to be picked up in stores, customer demand has been high. More than half of the sales from Walmart.com are now picked up at Walmart stores, Mr. Anderson said.

With the cash option, Walmart was trying to appeal to customers who did not have bank accounts or credit cards. Walmart says the majority of in-store purchases are made with cash or debit cards, and that about 15 percent are made with credit cards.

In the first weeks of the cash option, Walmart noticed that a different set of customers also found the service appealing. About 40 percent of the customers who paid with cash when ordering online ended up using noncash options, like a credit card or check, when they arrived at the store. They simply had not wanted to provide that financial information online. “There’s still a large segment of people out there afraid of identity theft or just plain putting their credit card online,” Mr. Anderson said. The service already accounts for 2 percent of Walmart.com’s sales.

Another advantage traditional retailers hold over their online-only counterparts is same-day delivery and returns. Sears, which has long offered store pickup for items bought on the Web, added a drive-through service a few months ago that allows customers to return or exchange purchases without leaving their cars.

Customers meet a clerk waiting outside the Sears, provide a mobile phone receipt or printout, and the merchandise is swapped. “People have a certain need for immediacy — they want something that same day,” said Tom Aiello, a company spokesman. “They want to have their hands on it; they don’t want to wait.”

The Container Store has also been pushing a drive-through service, a reflection of its altered approach to online shopping. Initially, executives viewed the pick-up-in-store feature as a way to draw consumers into stores and encourage customers to buy more. Now, they would rather close the deal on an online order as soon as possible so shoppers do not go elsewhere or forgo the merchandise altogether.

“Especially for that mom that’s got kids in the car and is trying to run five errands today, this allows her to put us on her list with no additional pressure,” said John Thrailkill, a vice president of stores for the Container Store.

He said that the online orders for in-store pickup also tended to be much larger than typical in-store purchases, and that customers who picked up orders in the store visited about 50 percent more often than customers who shopped only in the stores.

Many major stores, including Apple,Nordstrom and Best Buy, let people place orders online and pick up items within a day at a selected location, for going shipping charges. The retailers say this option is especially popular with bulky items that do not qualify for free shipping, and for people in a rush. Other places, like Cabela’s and J.C. Penney , offer in-store pickup for online orders, though with a delay of several days.

Macy’s and Nordstrom are going even further by integrating the physical and online merchandise selections.

Nordstrom last year added a feature allowing customers to search an individual store’s inventory via the Web. That follows the company’s decision three years ago to combine its online and offline inventories, so that if nordstrom.com was sold out of a size 8 Nicole Miller shift but a store in Los Angeles had the item in stock, the store would ship the item to the e-commerce customer. Macy’s recently integrated inventory, too. It has 202 branches that can send items to online customers, and will expand that to 292 by the end of the year.

Of course, online-only retailers are also shifting strategies. E-commerce companies that are part of the ShopRunner service, like Blue Nile and eBags, are now shipping to physical locations that are also part of the ShopRunner network, like Toys “R” Us, so that their customers can pick up items in stores, too.

Amazon continues to promote its Prime two-day shipping program so that its shoppers can get speedy deliveries. Alison Jatlow Levy, a retail consultant at Kurt Salmon, said she expected physical stores to go further toward the “showroom” model — carrying lots of products for shoppers to see and test, but asking customers to buy the merchandise via the stores’ Web sites or apps.

She also said there was a straightforward way for e-commerce retailers to respond to the latest moves. “You will definitely start to see online-only players open stores,” she said.

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