2010 Increase in Internet Sales Outpace Traditional Brick and Mortar Store Sales Increases
Today I find myself sitting on an airplane bound for Denver with a bag full of magazines to read. The first one out of my bag is the December 27 Furniture Today Planning Guide. In it was a recap of the 2010 furniture and bedding sales for retailers and suppliers. Retail sales increased 2.9% in 2010 from 2009. But 2009 was down 8.1% from 2008 which was down 6.2% from 2007. If my math is right, we as an industry are still down over 11% since 2007.
The next magazine out of my bag was the January 2011 issue of Intenet Retailer. In the feature commentary they wrote that overal retail sales in the 4th quarter were up 3% but online sales were up 13.5% and mobile commerce more than doubled.
These trends are not disappearing. Internet specialists like HayNeedle and CSN are growing. But so are the online offerings of Top 100 retailers.
If you are a rep selling to furniture stores you better helpmthem figure out how to sell your stuff online. If you are a traditional retailer that has not embraced the Internet or mobile sales yet, you are giving up the strongest new channel of retail sales.
Don't get left behind! Make 2011 be the year you embrace E-commerce sales.
As always, feel free to comment.
Rose commented:
Thanks guys, I just about lost it loknoig for this.
Sable commented:
Check that off the list of things I was cofnsued about.
Supply Chain Suzie commented:
Hi Mr. Root,
I can't help but commenting as I have seen first hand how the mfgs threw the B&M's under the bus with their supply chain strategies.
B&M's need to really open their eyes at the supply chain strategies going on in the e-commerce platforms unbeknownst to them and seek comprehensive support from the manufacturers wishing to display their products on their floor space. Cannot expect B&M's to support their products without huge incentives as they have become the showroom for the sit, feel, touch and see shoppers to use and then go point, click, buy at the best price on the web, all the while paying no sales tax for most purchases. Or direct from manufacturer through direct buy? What happened to vendor relations and strategies. The business model is broken and the e-commerce srategy of the mfgs left the B&Ms in a peril and with the overhead, and risks of operations damaged long-term prospects of B&M retailers.
Large companies have the volume, inside staff to develop effective e-commerce solutions and compete with the drop shippers that mfgs allowed to open lines with no pricing structures to support B&Ms.
The e-commerce arena has been a paradigm game changer for all retailers, not just home furnishings, but home furnishings retailers were not allowed until several years ago to sell online. The growth and who got to go first came to those who had the funds, knowledge and connections/permission to get up and running quickly.
The e-commerce platform has also allowed companies to easily enter industries they were not in before as they could just add another category to their already large e-commerce database and business, i.e., Walmart- Target, Home Depot, etc.
CSN and Cymax, Buy.com these companies were able to open up the lines which had been pretty much closed through channels of distribution to somehow be able to grow these companies to huge scale within less than a decade as online only etailers? The affect on long term health of B&Ms is significant. Buy.com sold last year to a huge Japanese e-tailer which is really a drain of income for the US and one has to ask which ones will sell out next, or perhaps they are already owned by a foreign private equity investor.
The issues are really complex and pervasive and without significant assistance and support from mfgs for the B&Ms the competitive situation is not going to change. Bailed out banks have not extended significant assistance and I think the real question is who was allowed to sit at the table when all these e-commerce changes were occurring that created this version of the B&M troubles? How do we as business partners want the US retail market to look and feel and operate in the next decade?
Supply chain innovation is great but it has been implemented with little concern for small business or B&M operations and not sure if there is a sincere desire for B&M's to survive as long as the bottom line is good for mfgs.
As an industry member for many years, it has been unsettling at best to witness the demise of our businesses and our industry through implementation of strategies without regards to long-term consequences.
I love e-commerce and the tools it provides as do most folks but the mechanisms of how things have changed so quickly is disturbing and not sure if they are in the best interest of the US.
Gotta run, going to see about Robb & Stucky auction.
Best Regards,
SSS
Supply Chain Suzie commented:
Hi Mr. Root,
I can't help but commenting as I have seen first hand how the mfgs threw the B&M's under the bus with their supply chain strategies.
B&M's need to really open their eyes at the supply chain strategies going on in the e-commerce platforms unbeknownst to them and seek comprehensive support from the manufacturers wishing to display their products on their floor space. Cannot expect B&M's to support their products without huge incentives as they have become the showroom for the sit, feel, touch and see shoppers to use and then go point, click, buy at the best price on the web, all the while paying no sales tax for most purchases. Or direct from manufacturer through direct buy? What happened to vendor relations and strategies. The business model is broken and the e-commerce srategy of the mfgs left the B&Ms in a peril and with the overhead, and risks of operations damaged long-term prospects of B&M retailers.
Large companies have the volume, inside staff to develop effective e-commerce solutions and compete with the drop shippers that mfgs allowed to open lines with no pricing structures to support B&Ms.
The e-commerce arena has been a paradigm game changer for all retailers, not just home furnishings, but home furnishings retailers were not allowed until several years ago to sell online. The growth and who got to go first came to those who had the funds, knowledge and connections/permission to get up and running quickly.
The e-commerce platform has also allowed companies to easily enter industries they were not in before as they could just add another category to their already large e-commerce database and business, i.e., Walmart- Target, Home Depot, etc.
CSN and Cymax, Buy.com these companies were able to open up the lines which had been pretty much closed through channels of distribution to somehow be able to grow these companies to huge scale within less than a decade as online only etailers? The affect on long term health of B&Ms is significant. Buy.com sold last year to a huge Japanese e-tailer which is really a drain of income for the US and one has to ask which ones will sell out next, or perhaps they are already owned by a foreign private equity investor.
The issues are really complex and pervasive and without significant assistance and support from mfgs for the B&Ms the competitive situation is not going to change. Bailed out banks have not extended significant assistance and I think the real question is who was allowed to sit at the table when all these e-commerce changes were occurring that created this version of the B&M troubles? How do we as business partners want the US retail market to look and feel and operate in the next decade?
Supply chain innovation is great but it has been implemented with little concern for small business or B&M operations and not sure if there is a sincere desire for B&M's to survive as long as the bottom line is good for mfgs.
As an industry member for many years, it has been unsettling at best to witness the demise of our businesses and our industry through implementation of strategies without regards to long-term consequences.
I love e-commerce and the tools it provides as do most folks but the mechanisms of how things have changed so quickly is disturbing and not sure if they are in the best interest of the US.
Gotta run, going to see about Robb & Stucky auction.
Best Regards,
SSS
Supply Chain Suzie commented:
Hi Mr. Root,
I can't help but commenting as I have seen first hand how the mfgs threw the B&M's under the bus with their supply chain strategies.
B&M's need to really open their eyes at the supply chain strategies going on in the e-commerce platforms unbeknownst to them and seek comprehensive support from the manufacturers wishing to display their products on their floor space. Cannot expect B&M's to support their products without huge incentives as they have become the showroom for the sit, feel, touch and see shoppers to use and then go point, click, buy at the best price on the web, all the while paying no sales tax for most purchases. Or direct from manufacturer through direct buy? What happened to vendor relations and strategies. The business model is broken and the e-commerce srategy of the mfgs left the B&Ms in a peril and with the overhead, and risks of operations damaged long-term prospects of B&M retailers.
Large companies have the volume, inside staff to develop effective e-commerce solutions and compete with the drop shippers that mfgs allowed to open lines with no pricing structures to support B&Ms.
The e-commerce arena has been a paradigm game changer for all retailers, not just home furnishings, but home furnishings retailers were not allowed until several years ago to sell online. The growth and who got to go first came to those who had the funds, knowledge and connections/permission to get up and running quickly.
The e-commerce platform has also allowed companies to easily enter industries they were not in before as they could just add another category to their already large e-commerce database and business, i.e., Walmart- Target, Home Depot, etc.
CSN and Cymax, Buy.com these companies were able to open up the lines which had been pretty much closed through channels of distribution to somehow be able to grow these companies to huge scale within less than a decade as online only etailers? The affect on long term health of B&Ms is significant. Buy.com sold last year to a huge Japanese e-tailer which is really a drain of income for the US and one has to ask which ones will sell out next, or perhaps they are already owned by a foreign private equity investor.
The issues are really complex and pervasive and without significant assistance and support from mfgs for the B&Ms the competitive situation is not going to change. Bailed out banks have not extended significant assistance and I think the real question is who was allowed to sit at the table when all these e-commerce changes were occurring that created this version of the B&M troubles? How do we as business partners want the US retail market to look and feel and operate in the next decade?
Supply chain innovation is great but it has been implemented with little concern for small business or B&M operations and not sure if there is a sincere desire for B&M's to survive as long as the bottom line is good for mfgs.
As an industry member for many years, it has been unsettling at best to witness the demise of our businesses and our industry through implementation of strategies without regards to long-term consequences.
I love e-commerce and the tools it provides as do most folks but the mechanisms of how things have changed so quickly is disturbing and not sure if they are in the best interest of the US.
Gotta run, going to see about Robb & Stucky auction.
Best Regards,
SSS
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Stephen Midwest VP commented:
Freight. I tell my Bricksters that no online catalogue can compete with an in-house, sit-down, touch and buy it scenario...in fact, if they have a prospect that is 'looking'...and walking to save money with point/click shopping...to remind them there is NO FREE RIDE. That couch, bed, bunk or whatever may be(is) advertised with free shipping...but trucks/delivery personnel do not come cheap...virtual shopping can be an avenue to sell goods and yes, my retailers should embrace it...I have product @ CSN myself...but the deal in a nutshell is the BEST price and shopping experience will always be right there in the store...period.
Tom commented:
First of all, I'm very pleased that Furniture Today is giving the reps a venue to speak their minds. Thanks FT! More importantly, while I'm sure Mike's intentions are positive, to suggest that retailers market their goods on the internet is a very poor idea. Yes, they can build a site and post the goods, but consumers will not shop there, not unless they spend a ridiculous amount of money marketing their site. The net stores that Mike mentioned, CSN and Hayneedle, both have multi-million dollar infrastructures and literally hundreds of employees populating their countless micro-sites. One independent retailer has no shot at competing with this, unless they have millions to invest and even then, they need the expertise and skilled employees to pull it off.
The best thing a retailer can do on the internet is to take advantage of the social networking tools (that are free) to bring people into their store. Put every commercial on youtube, use their newspapers websites to advertise and produce press releases frequently to build more interest in their company's exciting promotions.
Most importantly... retailers have stopped going to market. Why? They can learn so much at a market. If they never visited a showroom, it could still be critically important to them. They should attend the various workshops, window shop to see what's hot and new, but most importantly, they should NOT use market visit all of the vendors that they already buy from! Reinvention, that's what retailers need!
William commented:
Furniture already sells very well on the Internet. This fact tells you that, despite industry concerns, an important segment of consumers are willing and able to make furniture purchase decisions in the virtual world.
The question that every furniture retailer should be asking, is how can I best use the Internet to market to my customer. Remember, the majority of Internet users use it as a pre-purchase research tool. They may or may not purchase online, but the web is for many customers their newspaper, yellow pages, TV, radio and billboard...in short their point of contact for marketing.
Don't complain about virtual retailing. Use it to your advantage. Many of your customers have already made this choice. Join them.
THOM commented:
Several questions that come to mind.
1. Does the future of internet shopping help or hurt the Brick and Mortar stores?
2. When a consumer has put most of the Brick and Mortar stores "out of business", where will customers go to see/touch/sit on these on-line products?
3. When margins are down to nothing becuase of price wars, who will be left standing?
Don't get me wrong, the internet is a wonderful tool but how do we as an industry help our retailers when they are being attacked from all sides?
If you had a store and your products were all over the internet, would you not get tired of being the "internet showroom" for these companies?
We just need to consider protecting our future by not destroying the past...
THOM commented:
Several questions that come to mind.
1. Does the future of internet shopping help or hurt the Brick and Mortar stores?
2. When a consumer has put most of the Brick and Mortar stores "out of business", where will customers go to see/touch/sit on these on-line products?
3. When margins are down to nothing becuase of price wars, who will be left standing?
Don't get me wrong, the internet is a wonderful tool but how do we as an industry help our retailers when they are being attacked from all sides?
If you had a store and your products were all over the internet, would you not get tired of being the "internet showroom" for these companies?
We just need to consider protecting our future by not destroying the past...
Jamie commented:
Hello Mr. Root,
Yes, I do agree that the internet has created yet another challenge for the brick and mortar stores. I also believe it will grow in the next couple of years, but I do think and hope that there are still people out there that want to sit on the sofa before they buy, see the tone of the wood of the coffee table or bedroom suite and by God feel the hand of the leather.
This is where the Up to Trend retailer can combat this by several ways. Other than the obvious of having motivated sales people that literally float the client through all sales steps and build and honest professional relationship with their client to the whole environment of the retail atmosphere. Yes, I apologize that I maybe a little traditional at 46 years old, but as a Sales Rep in Ontario, Canada I see alot of big mistakes that occur infront of my eyes that retailers should wake up and smell the coffee. Brick and mortar stores need to realize the power of the net, embrace it, learn from it, but then take to a higher level of serving the client.
Sincerely I have had only one coffee this morning
Have a good day!
Jamie
