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Online shopping gets off to a fast start, but that's only part of what's clicking: The season's in full sale
(Newsday (Melville, NY) (KRT) Via Thomson Dialog NewsEdge) Dec. 6--The holiday shopping season is in full-swing now, and as always, consumers are looking for discounts and anything new in electronics. So what's new? Newsday spoke yesterday with Joel Evans, professor of marketing and international business at Hofstra University's Zarb School of Business. He has been studying the retail industry for several decades and has already done his holiday shopping.
This holiday season seems to be so much about cyber shopping. What's your take on that?
There's no question Internet shopping has grown from nothing. Brick and mortar stores may be in the 5 percent range in terms of sales growth this year. Online sales could go up 20 percent to 25 percent.
That sounds pretty impressive.
Well, despite those statistics, online sales still represent less than 5 percent of retail sales overall. The reason why the growth is so rapid is because the base is so low. All retail sales this year will be about $4.5 trillion. It's almost one-third of the U.S. economy. But online sales will be $150 billion to $175 billion. And that's the most optimistic estimate. That's only 4 percent of total retail sales.
But shoppers are using the Internet a lot these days, right?
Oh, yes. There's always a fascination with something new. But with all the hype about the Internet, Wal-Mart will do better than Amazon.com. Wal-Mart is a multibillion-dollar company. A lot of people use the Internet to see what they might want to buy. They get a sense of what prices are. But that just means the brick and mortars are doing so well. You can shop or be into shopping 24 hours a day. You can go online and then go to the store to pick it up if you want.
In the past, some experts were talking about online shopping as the be-all-and-end-all of shopping.
I remember seeing a magazine cover a few years ago saying, 'Is this the Death of Retailing?' I had to laugh. Brick and mortars are here to stay. A good example is Barnes & Noble. A few years ago, if you bought from them online you couldn't return things at the store. They blew their advantage over Amazon. Now Barnes & Noble doesn't do that anymore. They realize today you can buy things anywhere and return them anywhere.
Federated Department Stores, owner of Macy's and Bloomingdale's among others, reported an 8.5 percent increase in same-store sales in November while some discounters, including Wal-Mart, had disappointing starts. Is this a blip?
Well, Federated's sales as a company overall are not up. Same store sales are up because they closed some stores and people who used to shop at those closed stores went to the ones that are open, boosting those sales. But I do have to say I am surprised at Wal-Mart. To me, the major reason is they have been re-vamping many of their stores and customers are unhappy. They're putting a lot more emphasis on clothing at Wal-Mart. That's not necessarily what customers want to go to Wal-Mart for. Meanwhile, other stores have gotten tired of being clobbered by Wal-Mart and are running huge sales.
Is Wal-Mart due for a slide?
That would only be wishful thinking by some retailers. For all the things Wal-Mart does wrong in the area of human relations with employees, the managers are one smart group of people. No one should underestimate them. The $4 on generic drugs has got them a tremendous amount of good publicity and more business.
In general, how do you think the shopping is going?
I think it's a typical season. There's no reason for euphoria or doom and gloom. It's true housing prices are down, but the unemployment rate remains low. Peoples' earnings for the most part have stayed even with inflation.
How do you think retail on Long Island is doing?
I don't see a difference from the national trends. I don't see where we either lag the pack or are ahead of the pack. But we have a lot more building going on this year and in a couple of years the amount of retail space is going to explode again. There's the Commack area where a new Wal-Mart is going to be opening, for example. But in that same shopping center, there's already a Kohl's and a Home Depot. I'm surprised the Wal-Mart there is not open yet. Kohl's and Home Depot have been open for awhile.
Wall Street has done well this year. Does that mean more retail sales?
Yes, of course, it does. Wall Street plays into this heavily. People with the money can go for the big, expensive electronic items like HDTVs and such.
Are there any retail sectors that aren't doing so well?
It's a little too early to tell, but one area that seems to be slowing down is the sale of DVD movie titles. I think that's because there's a saturation level and a lot of the stuff is over-priced. There are a lot of these 30-year-old TV shows on DVD, but they're $55 to $60, and that's for one set.
Are there new retail trends you see on Long Island?
Well, the one chain that is really under-represented here and that is going to boom is Lowe's. They're getting property all over the place. They're coming in here big time. I think also you're going to see a lot of price discounting because there is so much competition.
Are there any retail stocks you'd recommend?
I'd be [wary] on retail stocks, mostly because of the competitive nature of the industry. It's also amazed me that Amazon was the darling of Wall Street and at one time had so little profit and Wal-Mart, with its tremendous revenues, has been a so-so stock. I think online stocks are still over-valued, relative to traditional retail.
Copyright (c) 2006, Newsday, Melville, N.Y.
Distributed by McClatchy-Tribune Business News.
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