Internet shopping is convenient, but not for everyone, and that’s a challenge for retailers.
For department stores like Macy’s, in-store holiday sales were weak enough to trigger the decision to close nearly 70 stores in 2017. Online sales were strong, but not strong enough. CEO Terry Lundgren said Macy’s is experiencing “declining traffic in our stores where the majority of our business is still transacted.” The closures will “streamline operations so it can invest more in digital efforts…”
However, some retailers, like TJ Maxx, are focusing on the “real-life retail experience” and “view e-commerce as a supplement to its shops, a way to drive real-life traffic.” CEO Ernie Herman says, “While it’s [e-commerce] a small part of our business, we see it as highly complementary to our physical stores. We are being methodical in how we grow this business.”
The TJ Maxx method is to buy small batches of “excess items on the wholesale market…to scoop up stylish stuff in bulk and resell it at a steal.” Simeon Siegel, an analyst at Instinet, says it’s a different inventory-buying model than used by department stores that stock up on large orders of fewer items predicted to sell.
“You’re buying closed-out product and you’re buying samples,” said Siegel. “You have to be very attuned to the numbers and very attuned to the fashion. The vendor base that you need to be plugged into and the intelligence that goes into buying the product is the most important asset they have. You need to find the most compelling stuff.”
For TJ Maxx customers, inventory is compelling enough to shop offline to experience the “thrill of the hunt” in-store.
Whether retailers focus on e-commerce or in-store inventory management strategies, shoppers still make the final choice.