Shopper's day is coming

Web is forcing retailers to mend their pitch to consumers

January 30, 2000|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Putting the consumer at the center of retailing sounds simple but could prove revolutionary in the way Americans shop in the future.

Today, most retailers think of the product first, the consumer last, retail experts say.

But technology is bringing about dizzying change, offering consumers information and the ability to comparison shop on a global scale. With the Internet shifting power to consumers like never before, retailers are being forced to radically rethink how they approach consumers, experts said during a retail conference in New York this month.

"If you ask retailers today, they'll say they're consumer-centric," said Carl Steidtmann, chief retail economist for PricewaterhouseCoopers. In reality, "they're real estate-centric and merchandise-centric. The consumer is almost an afterthought."

But marketing in the 21st century will mean more than slapping an electronic version of the store on the Internet, consultants said during the National Retail Federation's annual conference.

In the future, successful retailers won't start by organizing stores around products or by region. Instead, they'll target a consumer segment -- whether baby boomers or the pre-teens of Generation Y. Then they'll entice those shoppers into their own online "community" with a blend of products, services and editorial content.

Changes in retail in the next decade will be tied to the rise of what Steidtmann calls "consumer nation," a growing global middle class with cheaper access to information through computer technology in everything from Palm Pilots to appliances to cars.

Shoppers will be able to go not only to traditional stores and to catalogs, but online through desktop computers, cable, wireless devices, kiosks -- even household appliances. Retailers will be there in any form that will help "make the brand relevant in the use of these technologies," said Steve Louis, a partner with Andersen Consulting. "It's all about making the brand relevant regardless of where the customer is."

Until now, the approach of blending commerce, content and community has been embraced mostly by Internet businesses, including some who didn't start out as retailers. But companies typically are relying upon commerce to generate revenue. And all have zeroed in on a particular niche.

Some that have cropped up include garden.com, for gardening enthusiasts, iVillage.com for women, Alloy for Generation Y, Harley-Davidson.com, for Harley riders, Shoplink.com, for dual-income families with kids, and iBelieve.com, for Christians.

All have tailored their products, services, and editorial content to their specific market.

Of that sampling, only iBelieve.com, which unveiled its Web site last week, has a traditional store presence, with the 346-store Family Christian Stores chain owned by a sister company. The Web site and the stores will combine marketing efforts, by using the stores' customer data base and by placing Internet kiosks in the stores, said Jef Fite, president of iBelieve.com.

Such sites offer a model for retailers who will need to distinguish themselves online, said Louis. It's not that the Internet will replace traditional shopping or even become dominant, he and others say.

But even a slight drain on store sales will disproportionately hurt operating earnings, Louis said.

Until now, retailers have reacted defensively but not very creatively, Louis said last week.

"What we see today are electronic replicas of the physical world," he said. "The brick-and-mortar store [has been] picked up and put online."

Louis likens the start of online retailing to the early days of motion pictures, when movies were modeled after plays, using a single camera and single angle. Similarly, some early television programs were modeled after radio broadcasts.

"We had two very powerful technologies in moving pictures and television, and the initial impression, we can look back and say, that sure was silly, but at the time it wasn't," said Louis

He expects the early days of Internet retailing to be viewed with the same amusement five or 10 years from now.

"We may look back and say it was the thing to do at the time, but it has morphed into something different," he said. "There's a bigger medium there to be exploited."

Retailers had better find their place in cyberspace, if only because more than half the U.S. population is expected to be making purchases online by 2003, according to Jupiter Communications.

Internet sales could eventually account for at least a quarter of all U.S. retail sales, but retailers need to be more creative online because they lose most of their land-based advantages, including location, which becomes irrelevant, and price and selection, which the consumer can easily shop for elsewhere.

The medium will ultimately be exploited through what Louis calls the Intention Model, organizing a retail operation around the intentions or goals of a particular group.

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