Stores regroup to battle Amazon
NEW YORK — This holiday season, it's Amazon vs. everyone else.
The online giant has attracted customers from big store chains such as Wal-Mart and Best Buy with low prices and convenient shipping. Now, stores are fighting back and going head-to-head with Amazon as the contest for customers heats up during the busiest shopping period of the year.
Stores are doing things like matching the lower prices on Amazon.com and offering the same discounts in stores as on their web sites. For its part, Amazon is giving customers the option to pick up items at physical locations and adding Sunday delivery.
The two sides are dueling over shoppers such as Jessica Danielle, a speechwriter who plans to do the bulk of her Christmas shopping on Amazon. “All the time spent going to brick-and-mortar stores, is it worth my time?” said Danielle, 31, who lives in Washington. “I don't think so.”
There's a lot at stake for both sides. Amazon has built a following but wants to grow its business globally. Meanwhile, brick-and-mortar retailers struggle to keep shoppers from using their stores as showrooms to test out and try on items before buying them cheaper on Amazon.
The holiday season ups the ante. Both online and brick-and-mortar retailers can make up to 40 percent of their annual revenue in November and December.
Holiday sales are expected to rise 3.9 percent to $602.1 billion, according to The National Retail Federation. Of that, $78.7 billion is expected to be online, up 15 percent from last year, according to Forrester Research.
One of Amazon's biggest advantages is its low prices. It can charge less for everything from TVs to T-shirts because it doesn't have the high costs of running physical locations.
Last year, some retailers offered to match the lower prices that customers find on websites such as Amazon during the holiday season. And this year, more have made this a policy. Best Buy is offering to refund the difference if a customer finds a lower price after they purchase something up until Christmas Eve. The strategy could eat into profits, but retailers hope sales will increase.
Staples is among retailers offering the same discounts online and in stores during big shopping days such as Black Friday. “We want customers to be able to shop however they want and whenever they want,” said Alison Corcoran, Staples senior vice president.
Stores had long seen their physical locations as an albatross, but now, they're using them to their advantage.
“Everybody was telling me ... ‘these stores, that's really a liability that you have,' ” said Hubert Joly, Best Buy's CEO. “Absolutely not. It's an asset that you have 1,000 warehouses strategically located close to the customers.”
Best Buy is among the retailers using their locations as distribution hubs from which they can ship goods that customers order directly to their homes. Wal-Mart, for one, said items ordered online and shipped from stores usually are delivered in two days or less.
But Amazon.com Inc. is widening its distribution network to offer speedier delivery, too. Amazon added 8 million square feet of distribution centers and hired 70,000 people to work in them. It partnered with the postal service to deliver some packages on Sunday.
“This year, we're able to be faster and have more in-stock items,” said Amazon spokeswoman Julie Law.
Back in stores
Other retailers are trying to get shoppers into stores. Gap Inc. has expanded its service that allows shoppers to reserve items online and then pay and pick them up within 24 hours at many of its Banana Republic and Gap stores.
And options that allow customers to order and pay online and then pick items up at stores are popular. That led Renada Skannal, 27, to go to Walmart.com to order protective gear that her nephew could wear when riding a bike her mother is buying him for Christmas. Her mother picked it up at a store to save time and shipping costs. “I want to make things easier for me,” said Skannal, who lives in Jackson, Miss.
At the same time, Amazon has started offering pickups at physical locations. Last year, it introduced lockers in 10 cities for customers to pick up items in stores such as 7-Eleven and Rite Aid. But some competitors, including Staples and RadioShack, which initially welcomed the lockers, have taken them out.
Ultimately, experts say the battle is over customer service. StellaService, which tracks customer service, found that between August and October the time to talk to a live agent on Amazon's customer service line was one minute, compared with two-plus minutes at Best Buy and six minutes at Staples.
“When it comes to customer support, Amazon ... sets the standard for everyone else,” said Jordy Leiser, StellaService's CEO.
But brick-and-mortar retailers are catching up and in some cases, surpassing Amazon by working on their customer service. For instance, Amazon resolved the issue when a customer called 86 percent of the time between August and October, according to StellaService. Best Buy had a 97 percent success rate.
“Online retailers have put so much pressure on brick-and-mortar stores,” said Marshal Cohen, chief retail analyst at market researcher The NPD Group. “Brick-and-mortar retailers are trying to make people feel like the store cares again.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Lower gasoline prices fail to spur consumer spending
- S&P 500 logs 47th record high close for year
- Retailers that won’t open on Thanksgiving hope move pays off
- Federal agency checking whether Highmark has enough doctors in Medicare plan
- Westinghouse to construct colossal nuke plant in Turkey
- Google applies tech to medical device
- Thanksgiving deals called the best
- Iron ore price decline hurts U.S. Steel’s cost advantage over rivals
- Housing prices nudge upward as more homes on market
- Butler County firm Deep Well Services tackles tough gas wells
- Health care, gas drilling industries await Gov.-elect Wolf’s footprint