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Retail Chains To Strike Back Against Online Vendors

Posted by Soulskill on from the eye-before-you-buy dept.

Hugh Pickens writes "Marissa Taylor says the retail chains' worst nightmare are consumers who come in to take a look at merchandise in-store, but use smartphone apps to shop for cheaper prices online. But now stores like low-end retail chain Target plan to fight 'showrooming' by scaling up their business models and asking vendors to create Target-exclusive products that can't be found online. 'The bottom line is that the more commoditized the product is, the more people are going to look for the cheapest price,' says Morningstar analyst Michael Keara. 'If there's a significant price difference [among retailers] and you're using it on a regular basis, you're going to go to Amazon.' Target recently sent an 'urgent' letter to vendors, asking them to 'create special products that would set it apart from competitors.' Target's letter insisted that it would not 'let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands.' Target also announced that it had teamed up with a handful of unique specialty shops that will offer limited edition merchandise on a rotating basis within Target stores in hopes of creating an evolving shopping experience for customers. Target is 'exercising leverage over its vendors to achieve the same pricing that smaller, online-only retailers receive,' says Weinswig. 'This strategy would help Target compete with retailers like Amazon on like-for-like products.'"

34 of 532 comments (clear)

  1. So just like the old Sears crap? by Anonymous Coward · · Score: 5, Insightful

    This will work for a few weeks before people simply look up the equivalent part numbers. Sears tried this already. It sucked, made headaches, and didn't help the problem at all.

    1. Re:So just like the old Sears crap? by ackthpt · · Score: 4, Insightful

      This will work for a few weeks before people simply look up the equivalent part numbers. Sears tried this already. It sucked, made headaches, and didn't help the problem at all.

      This was once the way Montgomery Ward, Sears, J.C. Penney and other stores operated. There were certain products you could only get with their brand name on it. Sure, other stores would have something similar but you went on the quality reputation of the store you saw it in. Also gives them a bit of a leg up against copy-cats.

      Down-side and reality-check: Most stuff is being made in China, Thailand, Vietname, Bangladesh, etc. so they're passing the 'savings' on to the buyer and the consumer as well, by selling to all comers, rather than just one chain of stores. Further, China has a rotten track-record of selling stuff out the back door - contract with a Chinese mill for 100,000 fuzzy pink sweaters and you can bet, once they've finished your order, since they're tooled up for this model, they'll be dumping another 50,000 out the back door to whoever wants to buy them, no questions asked.

      Best of luck to them with that.

      --

      A feeling of having made the same mistake before: Deja Foobar
    2. Re:So just like the old Sears crap? by hairyfeet · · Score: 5, Insightful

      And the "store brands" will be shite on a crusty roll. look at the Best Buy "exclusive" computers, they are the lowest POS garbage that any OEM can scrape together, every part of them is crap from the caps to the plastic. it won't take long for people to realize the ones that can "only be found here" will be the junk piles, like those BB and Staples "exclusive" laptops where they stick some desktop CPU like a bottom of the line Celeron or Pentium in a cheap laptop and pass it off as a good deal.

      The best way is to not try to make funky store brands but to simply offer incentives to buy. When my oldest needed a laptop right that minute for class after the old Dell gave up the ghost he went to two local stores, the Staples and Best buy. The Staples were doing nothing but bait and switch, every model he would look at on the floor was magically out of stock but they could get him 'something similar' for a $300 markup, instead we went to the local BB and when they saw he was comparing prices the floor guy said "I'll throw in a bookbag and cleaning kit" and sealed the deal. Later when we checked online they sold it to him within $40 of the average price and the bookbag made up for the difference so we were happy.

      So you can still make the sale in retail, simply offer the customer a good deal. I went amazon for my netbook, not because i had something against the local shops, but all they had were Atom crap and i wanted an AMD, now i go into the local shops like Walmart and best buy and i see they have quite a lot of nice AMD Fusion based so if i needed another one I could be tempted if they throw in a little swag or offer a decent price. The local staples still sucks though, last time I went in there with a customer who wanted me there to help decide on some monitors for his business what did i see? same old bait and switch BS. I got so disgusted that even though the BB is 35 miles away i said 'Hop in my truck and we'll get you some monitors". treat the customer right they'll buy, try to screw 'em and watch those sales walk out the door, its really that simple. that customer spent nearly a grand on monitors that day and those sales COULD have been Staples if they wouldn't have tried to screw him. I can't bitch too much about their douchebag tactics though, the customer was so impressed i was trying to keep him from getting ripped off he bought an extra 22 inch and handed it to me for my trouble as well as threw $2000 worth of business my way building the machines for his office. So I guess i should thank Staples for being douches, it certainly made me look better by comparison.

      --
      ACs don't waste your time replying, your posts are never seen by me.
    3. Re:So just like the old Sears crap? by mug+funky · · Score: 4, Insightful

      it's quite telling that this was modded "funny"...

      unfortunately the skillbase is rapidly ensuring that local made stuff will have less quality and higher price than the "cheap and nasty" Chinese counterparts.

      it's a race to the bottom, and in most sectors, the bottom has been hit.

      now that manufacturing is all but dead, and the internet has made retail all but dead, what will everybody do now they've been obsoleted? they can't work a factory, they can't work retail, they can't afford to live without a job.

      well done, western world. we've all fucked ourselves.

    4. Re:So just like the old Sears crap? by mug+funky · · Score: 4, Insightful

      from the quoted article:
      "(For statistical reasons, I chose to use figures that include mining and utilities as part of manufacturing.)"

      i'd like to know those statistical reasons.

    5. Re:So just like the old Sears crap? by artor3 · · Score: 3, Insightful

      A more accurate statement is "manufacturing jobs are all but dead". The US's real manufacturing output (in inflation adjusted dollars) has doubled over the past thirty years, and aside from a temporary dip during the recession has been steadily rising. But the number of people employed in manufacturing has fallen by ~30% over the same period... and that's without accounting for the population increase!

      The problem with the "decline" of manufacturing is that American workers are crazy productive. We can produce all that we need with far less than full employment. This should be a good thing, but because of our idiotic love affair with the failed "trickle down" theory of economics, we end up punishing millions of people, not because they're unwilling to work, but because we simply don't need them to.

      If we could get over our fear that someone might get something for nothing, we could simply start giving everyone enough money to get by, with jobs being something people do to get ahead, not to survive. If we don't do it soon, increasing automation will force the issue within a few decades.

    6. Re:So just like the old Sears crap? by SkimTony · · Score: 4, Insightful

      I think you're looking for this shirt:

      http://www.despair.com/madeinusa.html

    7. Re:So just like the old Sears crap? by pthisis · · Score: 4, Insightful

      That's a good thing. The problem is that Americans are conditioned to think manufacturing jobs = good, service jobs = bad. In reality that's not the case; pure manufacturing are the most brainless, automatable jobs ever. It would make zero sense to keep paying a person to use a pair of scissors to mow the lawn when you've invented the lawnmower, and likewise it makes no sense today to pay someone to put screws into the car frame when that's trivial to automate

      Yet we mourn the loss of manufacturing jobs--truly the shittiest and easiest to replace jobs out there. That''s mainly because of a historic stigma where all of the good service jobs get relabelled to something else.

      When it comes down to what you're actually doing, being a doctor, lawyer, engineer, or computer programmer are in actuality service jobs. So is being an artist or home designer or anything else where you're tailoring your service to the customer's needs. The burger industry paper hat stigma has made those jobs lobby to be called "professional" (as though manufacturing jobs or working the line at McDonalds somehow are amateur) or similar.

      But as the century progresses, it's the service jobs that are going to be the ones people want to have, and the loss of today's manufacturing jobs will eventually be viewed as just as good as losing all the coal-shoveling, cotton-picking, textile mill-working shitty jobs that machines replaced 100 years ago is today.

      --
      rage, rage against the dying of the light
  2. I do the opposite by Anonymous Coward · · Score: 5, Insightful

    I do the opposite of what this article suggests. I'll look up reviews or whatever online, and instead of waiting around for shipping I go out and buy it. I've even done this with Target.

    If they stop carrying these products, then I will never be buying from them, since they'll have nothing I want to buy.

    1. Re:I do the opposite by zAPPzAPP · · Score: 5, Insightful

      Every time I try to do this, the first 3-4 shops I visit don't have the item in stock.
      And of course none of them offers a list of their items online.

    2. Re:I do the opposite by firex726 · · Score: 3, Insightful

      Just lookup the item # online and call ahead to the store. If they have it ask them to hold onto it upfront and head over. If they don't, find another location/store.

    3. Re:I do the opposite by rec9140 · · Score: 5, Insightful

      "Just lookup the item # online and call ahead to the store. If they have it as"

      Whoosssssshhhhhhh!

      The whole point is NOT to use the phone! Point click go pick up. Seriously the level of stock intergration systems in the 21st century utterly sucks!

      X store should be able to ACCURATELY tell me that widget 12345 is in stock in store 788 with 32 and its accurrate when I pulled it.

      I've seen this all to often from all sorts of stores offering pick it up now services...

      Then ... how can it be in stock in the store and be out of stock online? ? ? HMMM??? IT CAN NOT!

      The store should shove it in a box and UPS/USPS it to me! If the warehouse is out of stock and stock is in the store(s) then ship it to me! GO FETCH TIME! Hence why accurate stock systems need to be in place, and I seriously find it out of place that in 2012 this is not the norm.

      --
      1311393600 - Back to Black
    4. Re:I do the opposite by djdanlib · · Score: 4, Insightful

      As someone who worked in retail for 8 years, I agree with this. Retail employees would MUCH rather you called ahead. They will even call other stores to find it for you, if you ask. Otherwise, you'll show up and get angry with them, and their job sucks enough already. So yes, please do call ahead if you know exactly what you want. Press the 7 or 11 digits on your phone, it's not hard!

    5. Re:I do the opposite by Grishnakh · · Score: 3, Insightful

      It depends on what you're getting. If you're buying milk, bread, and a bunch other low-value/high-volume groceries (i.e. it would cost a lot to ship $100-200 worth of groceries by Fedex), then Amazon really isn't a realistic choice, and Target makes it pretty easy by having everything in one place. For high-value items, it's totally different.

      Also, clothes are generally better bought locally, since you can try them on before buying them. Sure, some online places let you return clothes easily, but that gets expensive with shipping charges, plus prices online seem to be very high for clothes, whereas it's easy to find stuff on clearance (for 50-90% off) at local stores.

    6. Re:I do the opposite by djdanlib · · Score: 4, Insightful

      They will have to go looking for it either way, except this way they have fewer angry customers. It's a good scenario.

      Angry customers don't tend to come back, and they spread the word about their anger. That means even fewer customers, which means fewer dollars going to the store, which means lower ratings of the store inside the company, which means they allocate fewer employees. Retail workers should be good with that idea.

    7. Re:I do the opposite by BonemanPgh · · Score: 3, Insightful

      Before buying a Kindle I actually wanted to use one to decide on the Touch, Keyboard, or Standard edition. Buying via Amazon has a 30 day return policy, free shipping both ways so it would be zero risk to buy one through them. Every retailer has the same exact price on them. Disclaimer - I worked in retail sales at a place very much like Best Buy 20 years ago. I started out at Best Buy, units were on a ultra-sensitive anti-theft cable that triggered three times while I was looking. All units on a demo loop which was worthless for evaluating the normal tasks I'd do with the thing. Best Buy has a 15 day return policy, they will not match Amazon's, even if I purchased their extended warranty. I went to Target, units also on demo loop, sales staff that was helpful, courteous, and knowledgeable. Their return policy - exchange only 30 days, no exceptions. I think they also offered some extended warranty that didn't include damage. Next was Staples. Same demo loop, extended warranty available, hard to figure out from the brochures what the policies were. Group of employees talking to each other 10 feet from me, no offers of help. I couldn't be bothered to spend my money there. I had to drive past an HH Gregg and figured I'd see what they had while I was at it. Helpful employee, a unit that was not on a demo loop, 30 day return for refund policy, reasonable price on an extra warranty that covers accidental damage. I bought it from them immediately. At each store (Staples excepted) I asked to try the unit outside of demo mode and they could not or would not. I also asked "Why should I buy this from you instead of Amazon?" The ONLY store that had a value proposition same or better than Amazon was HH Gregg, and their poor employee could not give me a single reason why I should buy it from him. I had to drag it out of him. The brick and mortars need to focus on providing a better overall value, and that includes their employees being able to enumerate exactly WHAT that better value is.

  3. Well, good for them by Anonymous Coward · · Score: 5, Insightful

    At least they're not trying to legislate their way out of it.

  4. Right.... by _LORAX_ · · Score: 4, Insightful

    Don't bother adding *real* value, just make it harder for the consumer in the long run. This will end well.

    1. Re:Right.... by vux984 · · Score: 5, Insightful

      Don't bother adding *real* value

      I'm curious what "real value" you suggest they add?

      The local bookstore has a coffee shop, lets you preview the books in comfy chairs, has kiosks to let you see what's in stock and where in the store it is, a whole bunch of staff, a club/rewards card...

      And its pretty busy too.

      But half the people i know, walk in browse around, look it up on amazon on their smart phone, and if they can get it a dollar cheaper online will walk out without making a book purchase.

      I think they've realistically done everything they can, short of simply matching amazon's prices. But that's not a value add, and a race to the bottom is a losing proposition for the retail world... amazon can lower prices more than a store in can. So they'll be out of business before they can win.

    2. Re:Right.... by Grishnakh · · Score: 4, Insightful

      Trying how? What extra features are they going to slap onto a HDTV made in China that aren't already on other models available everywhere else? That's my point: you're not going to get truly exclusive products when you just buy them from China like all your competitors.

      Their attempts will be just like all the "exclusive" products people here have already mentioned: slightly different SKUs (12345T instead of 12345) so they don't have to price-match and it's harder to compare with online prices, slightly different model numbers with no real differences, etc. Other retailers have been doing this stuff for ages. Someone even posted a link to an Atari 2600 that Sears rebranded way back in the early 80s.

  5. The problem with this is by jodo · · Score: 5, Insightful

    The problem with Target-exclusive products is there will be no way to read reviews as there will be essentially none online. And I don't buy anything of substance without researching it.

    --

    "Don't Follow Leaders." Bob Dylan
  6. ie, the mattress model by TheGratefulNet · · Score: 4, Insightful

    anyone who has shopped for a mattress in the US knows that the brands have all colluded (the S-brands; funny how the 'sleep' companies insist their names also start with an S) to change their model names from store to store!

    some stores are willing to help you decode the names into equivalent model names in their stores; but usually its a fixed game against you, the consumer.

    so, target and others want to play the mattress game?

    you know, when you declare war on your own customers, it may backfire. just saying...

    get wise, retailers. don't pull this shit, please! decades of this mattress syndrome has made mattress shopping as frustrating as used car shopping, and about as unpleasant. you want that image stuck to YOUR products and 'show rooms'?

    re-think this, guys. I'm pretty sure you don't really want what this will get you.

    --

    --
    "It is now safe to switch off your computer."
  7. Luddites by Tablizer · · Score: 5, Insightful

    Instead of fight against "lookers", embrace them. Who cares how the sale is made: if having a store improves online sales, that's a good thing. And, have the stores shift into a service center instead of just a physical catalog. A physical presence to demonstrate features first-hand and help trouble-shoot on-the-spot is sorely lacking online.

    Change with the times, guys. Sure, you'll have to shuffle around your business model a bit, but the sooner you embrace the new model instead of fight it, the better.

    --
    Table-ized A.I.
    1. Re:Luddites by Bucky24 · · Score: 3, Insightful

      So are you willing to pay an admission fee to Best Buy, or should these "services" be offered for free too?

      Works for Costco, doesn't it?

      --
      All the world's a CPU, and all the men and women merely AI agents
  8. Reviews by Hatta · · Score: 4, Insightful

    If I can't find any reviews for products on independent sites, I won't buy them. So if Target only carries custom products, I'm a lot less likely to find a review for that product. That means I won't be shopping at Target.

    At this point, the only reason for B&M stores to exist is for time critical situations when you can't wait a day or two to get your item off the internet. There's no way they're going to be able to compete with the internet on price. Compete on convenience and charge for it. Yes, it will be a smaller market, but that's progress.

    --
    Give me Classic Slashdot or give me death!
  9. Costco is ahead of the curve on this by jmichaelg · · Score: 4, Insightful

    Costco already beats online retailers with three strategies:

    1) It sells extras with the package that are not included with the regular offering. My roomba came with extra room markers and extra filters.
    2) When the first two roombas I purchased crapped out, Costco exchanged them no questions asked. I had to try three units before I got one that worked reliably. Had I bought from Amazon, I would have had to pay to return the units and that's assuming they would have accepted them back.
    3) Costco prices goods very aggressively.so they're usually around the same price as what's offered online.

  10. That's not their worst nightmare by hawguy · · Score: 4, Insightful

    A retailer's worst nightmare isn't people that come into their stores and comparison shop online while they are surrounded by in-store advertising and are subject to impulse purchases. Their worst nightmare is people like me that usually choose to research and shop online without ever setting foot in the store.

    If Target starts selling a bunch of house-brand crap that I can't research online, I'll be even less likely to buy something there. Unless it's cheap stuff like cleaning supplies, but I usually just buy the store brand of stuff like that anyway.

  11. Re:babysrus does alread by cheater512 · · Score: 4, Insightful

    Brother printers are similar. Over here in Australia, you can get the HL-2240 but in Office works the exact same printer is the HL-2242.

    I think that is to get around the 'we'll beat any other price by 10%' gimmicks though.

  12. Why I never shop retail anymore... by EmagGeek · · Score: 5, Insightful

    ME: "Hey, do you have an XYZ Widget Plus in stock?"

    Them: "No, that's not a normal stock item, but I can order one for you and have it here in a week for $250"

    ME: "I can order it from Amazon Prime and have it here TOMORROW for $215, sorry."

    The ONLY reason to go into a brick and mortar store is if you absolutely have to have it right now. Brick and Mortar did not adapt to the advent of online shopping. It's their fault. They needed to realize that they could no longer sell commoditized items. They would have to offer some REASON to pay MORE in a store. Without a significant value add, there's no reason to even set foot in a store anymore.

  13. Re:No diff by DogDude · · Score: 4, Insightful

    You don't get it. They don't want your business. That's why they're doing this. They're "firing" their bad customers. Businesses do it all of the time.

    --
    I don't respond to AC's.
  14. try service for a change by reemul · · Score: 5, Insightful

    I'm with you - the one idea that the big box stores absolutely refuse to contemplate is competing based on _service_ instead of _price_. Most of them already used low prices to kill off the local small stores that provided real service to the shopper and community, now that they're getting creamed by Amazon they suddenly are all about supporting the local store.

    You want to be the "local" store, Mr. Big Box Chain? Try some actual service. Stores that make sense, staff that understands the product and wishes to help rather than just upsell warranty packages, "sale" prices that are actually below the normal price that I need less than 2 seconds to find with my phone. Some products I really want to be able to touch and examine with my Mark 1 eyeball, which I just can't do online. Or ask questions in real time, with the product in front of me. Make that happen, make the experience pleasant, and I'll buy from the physical store over the online store if the prices are even close.

    Too often I go into a place like Best Buy absolutely intending to buy a specific thing and fail. The stores are laid out to some layout designed to make you walk past as many impulse purchase racks as possible, rather than getting you right to the thing you actually want to buy. The staff isn't judged on whether they are helpful or even friendly - their metrics are all about sales, without teaching them any skills at interaction that might make sales happen. The item might not be in the place it should be, but good luck finding a minion to check the system for where it is, or whether it is out of stock. Forget service, try to go to Best Buy and not get angry.

    As long as the brick and mortar guys lose on both sales and service to the online retailers, they're inevitably going to die, unmourned. I acknowledge that they probably can't win on price. How about, just for giggles, trying service, just once?

    --
    You're just jealous 'cuz the voices talk to *me*
    1. Re:try service for a change by ediron2 · · Score: 5, Insightful

      Actually, customers largely refuse to buy based on service. Among the service-is-king tier, there's room in the market for Neiman Marcus and... uh... well, that's it. Everyone else that tries, regrets the move. It's like newspapers blocking access to content behind a paywall. Everyone has to try eventually, and each time it fails: consumers race toward the bottom on cost far faster and more forcefully than they pay attention to quality and service. I don't like this, but it's a dominant rule of market economics. Incidentally, the same market economics are behind America's jobs *sprinting* to China. The example I've been watching most recently is the Raspberry Pi team's decision that they can't afford to manufacture in the UK as they'd hoped. Time and costs were too much to overcome.

  15. Partnerships and don't focus on product by devleopard · · Score: 3, Insightful

    They're not going to stop this. A limited number of products that people comparison shop for can be made in store-specific versions (will there be a Target-only version of Madden?)

    Why not embrace it, and partner with Amazon? They could even do a location-based search agreement.

    They should push their advantages, which is not the product. They don't make Playstations or hair dryers, so to try to make your product your competitive advantage will always fail. They should push their sales focus to things that can't be comparison shopped easily (clothes, food, low cost items). Emphasize the time element (not a Target item, but I frequently buy computer and technology products at retail that I could easily save money at NewEgg on). Take the emotional approach: Make people feel guilty about not paying sales tax that benefits their state and municipality, and point out that buying local = jobs. Focus on ease of returns, and try to make that process easier. Emphasize services. Tell delivery horror stories. Etc, etc... I'm sure any or all of these can be argued down, but the bottom line is, a brick-and-mortar has competitive advantages, but they're not the product they're reselling, and it's not price.

    --
    The best thing about a boolean is even if you are wrong, you are only off by a bit.
  16. Re:For those with plenty of money to spend? by Dahamma · · Score: 3, Insightful

    No, that's Whole Paycheck^H^H^H^H^H^H^H^H Foods...