Traditional Retailers Seeking Advice on Internet Merchants

Online stores are becoming a real hindrance to offline retail in developed markets. Large US retailer Target Corp. (the world's tenth largest retailer in terms of sales, which sells food, clothing, electronics, and interior items in hypermarkets) asked its suppliers to help him deal with the influx of buyers on the Internet, writes The Wall Street Journal. Buyers come to ordinary stores not for shopping, but to try on clothes or watch electronics, and then order these goods on the Internet at lower prices.

Target sent a letter to suppliers aleatherg them to design custom models for it that were not sold in competing stores. And if the release of special goods is not possible, the chain asks manufacturers to provide it with such discounts so that the goods on the hypermarket shelf cost no more than on the Internet. “We don’t want our stores to act as showrooms for online retailers that don’t make any investments to build stores,” says a letter signed by Target CEO Gregg Steinhafel. The company's management insists that mutually beneficial business development in an increasingly competitive environment is possible only with close partnerships between manufacturers and sellers.

Transforming offline stores into dressing rooms and showcases for online competitors is a big challenge for American retailers, from electronics retailer Best Buy to bookseller Barnes & Noble, but Target's tactics are unlikely to reverse the market trend, analysts say. In their opinion, exclusive goods and discounts from suppliers will not solve fundamental problems: the costs of online retailers for personnel and rent are significantly lower, and in many states taxes for online retail are lower.

For Russian retail, this problem is becoming increasingly important, said Andrei Shashkov, manager of Salomon, a store for tourism and outdoor activities. According to him, traditional retailers can lose up to 15% of turnover due to the fact that the buyer leaves them on the Internet. There is only one way out - to go online: create an online unit and sell goods there at a discount. Then the buyer will come, choose the product and buy it in your own online store.

Mid-price clothing dealers do not face serious competition from the Internet either. “If we talk about the medium plus price segment, then the critical mass of a female audience (from 30 years and above) buying clothes in online stores is still small,” says Olsen Rus’s Sales Director (Olsen brand) Lyudmila Klestova. Customers aged 30-40 years prefer to shop in offline stores.

Cannibalizing offline retail traffic with online stores is a long-term trend for the entire global market, agrees Denis Belov, the owner of the Boutique.ru project. And only for companies that are strictly focused on traditional sales, this becomes a real problem: most retailers seek to create their own Internet division. In Russia, the segment of online commerce is significantly behind in development from the markets of developed countries, and only a few online stores pose a real threat to offline merchants. “We sometimes have the opposite situation: people study the product on the Internet, and then look for it in ordinary stores. But gradually the audience of online retailers is developing, confidence in online purchases is growing, ”Belov commented. About this newspaper Vedomosti.