Why Brick-and-Mortar Stores Will Trump Online in End: CEO
Even as more retail purchases are made online, it is the brick-and-mortar stores that will win out in the end, said Toys ’R Us Chairman Jerry Storch.
“The world is evolving,” Storch said during an interview with CNBC’s “Squawk Box”Tuesday.
“The Internet is transformational, but it’s not just the exclusive playground of Internet-only companies," he said. "In fact, it’s the stores that are going to win in the end because of the physicality. Everything that’s going on the Internet is about mobile and about physical, the ability to see what’s going on in my neighborhood and act on it immediately.”
As a result, Storch said retail stores are becoming mini-distribution centers for the Internet. That trend will grow even more as retailers put in place “buy online, pick up in store” programs like Toys ’R Us has done. (Read More: Hot Holiday Toys—Even Santa Needs a Reservation.)
This new reality also will require brick-and-mortar retailers to hire more workers to provide these new services, according to Storch. This suggests that although retailers are hiring more workers for the holidays, it may be more a reflection of what is going on at the business rather than optimistic views about the economy.
Toys ’R Us will be hiring more seasonal employees than it did last year. About 45,000 jobs will be added, compared to 40,000 last year. The additional staff reflects the need to have more people to process the online orders and requests for Toys ’R Us’ toy reservation program, Storch said. (Read More: Toys ’R Us Plans to Boost Hiring for the Holidays)
He expects these programs to be very popular with customers.
“For a lot of people, it’s better to go to the store because you get the immediacy,” he said. He added there were other advantages such as avoiding shipping charges that customers appreciate. For example, a grandparent can order a gift online for a grandchild who lives across country and have the gift picked up at a store near where the child lives. Also, customers don’t have to wait for a delivery person to arrive, and it makes it possible to order really heavy items, such as a swing sets online, and the item waiting for pick-up at the store.
“You go whenever you want,” he said.
Last year, about 15 percent of Toys ’R Us’ holiday staff remained with the company into the new year. Storch expects that may happen again.
“We’re adding stores, and we’re growing very rapidly on the Internet, as I mentioned. Plus, these new services require more people,” Storch said. “If you’re going to have free layaway, if we are to fulfill the promise of providing service in our stores ... you need people to provide those services.”
Toys ’R Us is not the only retailer who has announced plans to hire more workers this holiday season. (Read More:Happy Holidays! Retailers Looking to Staff Up)
Kohl's plans to boost its hiring by 10 percent, and some of those workers also will be supporting the company's online business.
Wal-Mart Stores also plans to hire slight more workers than it did a year ago, while Targetplans to scale back its hiring this year.
—By Christina Cheddar Berk, CNBC.com News Editor