Our software solution is compatible with credit card processors such as this one. You will have access to lowest rates in the industry for credit card processing and a Point of Sale system for your retail establishment.
The momentum at which eCommerce vertical is witnessing a change is directly related to the consumer’s changing purchasing habits. Accordingly, they need to think about the investment they need to do before foraying into the online vertical and goals they need to achieve. Because of the sudden change in the milieu of eCommerce vertical, many retailers are downsizing their physical stores as sales through the web stores are increasing.
Todays consumers are spending less time and money on purchasing products through physical stores as compared to online stores. This trend in purchasing products online has out-paced sales through the in-stores. Additionally, customers are increasingly involved in checking products in-stores and then purchasing them online as in showrooming. This is particularly evident in case of multiple retail store owners such as Gap Inc., Target Corp. and Best Buy Co. Inc. Therefore, retailers are increasingly cautious while making strategies about multi-channel operations and real-estate investment as the online sales reported a double digit growth.
A major retail chain store Abercrombie stated that approx. 19% of sales is generated from online vertical in 2013 that was 3.5 more than 2012. Similarly, Target Corp. reported that a fifth of sales are coming from online. According to a report of Top 500 Guide, most of the store based merchants are witnessing this kind of trend where their sale through the online vertical is increasing fast as compared to physical store sales.
| Web Sales as a share of total sales is increasing for many retail chains | |||||
| Online sales 2010 | Online sales as a % of total sales | Online sales. 2012 | Online sales as a % of total sales | Store count, 2010-2012 % Change | |
| Lowe’s (North America) | $ 198.7 million | 0.4% | $ 757.5 million | 1.5% | 0.3% |
| Staples (North America) | $ 10200.0 million | 42.2% | $ 10,300.0 million | 42.2% | -0.7% |
| Target (US) | $ 1330.1 million | 2.0% | $ 1930.0 million | 2.6% | 8.7% |
| Wal Mart (US) | $ 4095. 0 million | 1.6% | $ 7700.0 million | 2.9% | 3.0% |
| Online Sales, 2013 | Store count, 2010-2012 % Change | ||||
| Abercrombie & Fitch (US) | $ 405.0 million | 14.4% | $777.0million | 29.% | -17.7% |
Source: Top500Guide.com, company annual reports.
A survey done by Bureau of Labor Statistics’ American Time Use states that between 2004 and 2012, the average time spent on shopping through physical stores dropped to an average of 13%. A similar trend is also seen in the year-end holiday season when the foot fall traffic fell 14.6% as compared to previous year.
Conversely, reports from the US Commerce Department states that online sales are increasing at a double digit growth and were 16.9% higher in 2013 as compared to previous year. Changes that are happening in the online vertical are also impacting other industries also especially real estate. The rates of retail space are hovering still above 10%, according to a data from CBRE Economic Advisor, a commercial real estate service firm.
However, the retail space development is witnessing its lowest phase as real estate companies are still waiting for retailers to occupy the existing retail space. Economist at CBRE states that the retailers are increasingly adopting omni-channel approach and this is affecting their plans for adopting physical stores. This in turn affects the plans of real estate developers.
| Retailers are building fewer and smaller stores | |||||||
| Avg square feet of new stores, 2009 | No. new stores | Avg square feet of new stores, 2009 | No. new stores | Avg square feet of new stores, 2009 | No. new stores | % change in size,2009 to 2013 | |
| Lowe’s (North America) | 1,58,295 | 56 | 153,750 | 16 | 147,150 | 4 | -7% |
| Staples (North America) | 20,154 | 8 | 21,210 | 7 | 12,000 | 1 | -41% |
| Target (US) | 1,72,888 | 52 | 1,43,859 | 7 | 138,135 | 15 | -20% |
| Wal Mart (US) | 1,86,101 | 116 | 151,056 | 75 | 135,862 | 103 | -27% |
| Total 231 | 115 | 123 | |||||
| Average | 134359.5 | 117468.8 | 108286.8 | -23.7% | |||
Source: CBRE – Econometric Advisor’s Dodge Pipeline
GAP Inc., a clothing and accessory company reduced its retail space by 7.6% in 2013 in the US as compared to the year 2010. However, online sales and further increase in the integration of web in stores by the company has leaded it to roll out 652 stores in November 2013. This helps the multi-store retailer to generate 19.3% more online sales in 2013.
Retailers are also using a different type of strategy to increase the physical store sales. For example, Macy’s Inc. is shifting its stores’ location to places where it believes that more sales per square foot can be derived. It closed 5 stores in Kansas City and St. Louis but also opened 6 new stores in Las Vegas and Palo Alto. The year end of 2013 showed that 63% of sales coming from online sales, which is 37% higher from the previous year. Additionally, this year, the company is going to adopt buy online & pick in-store format for all its 675 full-line department stores. This also helps retailer to offer same day delivery of online orders. On the similar pattern, Target.com has reduced opting for physical stores from 52 in 2009 to 15 in 2013. It also started buy online and pick in-store program which resulted 10% of online sales.
One thing is very clear that the milieu in online vertical has not only impacted the retail industry but also other industries such as real estate, supply chain and logistics. It also changed the retailers’ future strategies of increasing their sales by mixing online and off-line stores.
