Online retailer Amazon (AMZN) hit a 52-week high last week. So did Priceline (PCLN), Expedia (EXPE), and eBay (EBAY). Even Overstock (OSTK) made the list.
On the 52-week low side of the ledger, Wall St. found Sear Holdings (SHLD), Circuit City (CC), Staples (SPLS), and Borders (BGP). Same store sales for last month were disappointing for most retailers.
The rotation toward buying online seems to have come to pass. And, if bricks-and-mortar retailers want to know where their business went, they can blame it on a slow economy and high gas prices. Or, they can admit that a huge amount of their business is going online.
Part of the trend is driven by convenience, but another important aspect is that shoppers can get reviews and ratings of products online before they buy. According to a recent study by iCrossing, "About 49 percent of those surveyed said they look for customer product reviews and evaluations, up from 40 percent two years ago." It’s much harder to get a review in a store.
Forrester Research expects US online sales to hit $157 billion this year. The figures should rise to $272 billion by 2001, which would make it a little under 10% of total retail sales.
Although a number of large retailers like Wal-Mart (WMT) have large and well-trafficked sites, the movement online is going to continue to do significant damage to store traffic.
That means the companies like Home Depot (HD), Best Buy (BBY), and CostCo (COST) better start pushing the opportunity to buy at their websites harder and start looking at closing under-performing stores. And, that is likely the path which the most intelligent retailers will take over the next two or three years. Measuring store sales and attrition by location may well allow some of these companies to prune their number of locations. But, they have to get those customers to stay with them online.
Douglas A. McIntyre can be reached at firstname.lastname@example.org. He does not own securities in companies that he writes about.