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Battle for holiday shoppers heats up

November 27th, 2013 3:10 pm by AP

Battle for holiday shoppers heats up

In this March 14, 2004, file photo, a worker scans bar codes in the book warehouse area at the Amazon.com shipping and receiving facility in Fernley, Nev. Brick-and-mortar retailers like Wal-Mart and Best Buy for years have been contending with Amazon’s r

NEW YORK — This holiday shopping season, it's Amazon vs. everyone else.

The
online giant has attracted customers from big store chains like
Wal-Mart and Best Buy with low prices and convenient shipping. Now,
stores are fighting to get customers back during the busiest shopping
period of the year.

Stores are doing things like matching the
lower prices on Amazon.com and offering the same discounts in stores as
on their websites. For its part, Amazon is giving customers the option
to pick up items at physical locations and adding Sunday delivery.

The
two sides are dueling over shoppers like Jessica Danielle, a
speechwriter who plans to do the bulk of her Christmas shopping on
Amazon. "All the time spent going to brick-and-mortar stores, is it
worth my time?" said Danielle, 31, who lives in Washington, D.C. "I
don't think so."

There's a lot at stake for both sides. Amazon has
built a following, but wants to grow its business globally. Meanwhile,
brick-and-mortar retailers struggle to keep shoppers from using their
stores as showrooms to test out and try on items before buying them for
less on Amazon.

The holiday season ups the ante. Both online and
brick-and-mortar retailers can make up to 40 percent of their annual
revenue in November and December. And this year, they're competing for
the growing number of shoppers who are as comfortable buying online as
in stores.

Holiday sales are expected to rise 3.9 percent to
$602.1 billion, according to The National Retail Federation. Of that,
about $78.7 billion is expected to be online, up 15 percent from last
year, according to Forrester Research.

Here's how the fight is playing out:

PRICE WAR

One
of Amazon's biggest advantages is its low prices. It can charge less
for everything from TVs to T-shirts because it doesn't have the high
costs of running physical locations.

Last year, some retailers
offered to match the lower prices that customers find on websites like
Amazon during the holiday season. And this year, more have made this a
policy. Best Buy even is offering to refund the difference if a customer
finds a lower price after they purchase something up until Christmas
Eve. The strategy could eat into profits, but retailers hope sales will
increase.

Staples is among retailers also offering the same
discounts online and in stores during big shopping days like the day
after Thanksgiving known also Black Friday. "We want customers to be
able to shop however they want and whenever they want," said Alison
Corcoran, Staples senior vice president.

SPEEDY DELIVERY

Stores had long seen their physical locations as an albatross, but now they're using them to their advantage.

"Everybody
was telling me ... 'These stores, that's really a liability that you
have,'" said Hubert Joly, Best Buy's CEO. "Absolutely not. It's an asset
that you have 1,000 warehouses strategically located close to the
customers."

Best Buy is among the retailers using their locations
as distribution hubs from which they can ship goods that are ordered
directly to customers' homes. Wal-Mart, for example, said items ordered
online and shipped from stores usually are delivered in two days or
less — quicker than having them shipped from warehouses across the
country.

But Amazon.com Inc. is widening its distribution network
to offer speedier delivery, too. Amazon added 8 million square feet of
distribution centers and hired 70,000 people to work in them. It also
added 1,382 robots to its line to help get packages out the door. And it
partnered with the U.S. Postal Service to deliver some packages on
Sunday.

"This year we're able to be faster and have more in-stock items," said Amazon spokeswoman Julie Law.

BACK IN STORES

Other
retailers are trying to get shoppers into stores. Gap Inc. has expanded
its service that allows shoppers to reserve items online, and then pay
and pick them up within 24 hours at many of its Banana Republic and Gap
stores.

And options that allow customers to order and pay online
and then pick items up at stores are popular. That led Renada Skannal,
27, to go to Walmart.com to order protective gear that her nephew could
wear when riding a bike her mother is buying him as a Christmas gift.
Her mother picked it up at a store to save time and shipping costs. "I
want to make things easier for me," said Skannal, who lives in Jackson,
Miss.

At the same time, Amazon has started offering pickups at
physical locations. Last year, it introduced lockers in 10 cities for
customers to pick up items in stores like 7-Eleven and Rite Aid. But
some competitors, including Staples and RadioShack, which initially
welcomed the lockers, have taken them out.

WHO WINS?

Ultimately,
experts say the battle is over customer service. StellaService, which
tracks customer service, found that between August and October, the time
it took to speak with a live agent on Amazon's customer service line
was one minute, compared with two-plus minutes at Best Buy and six
minutes at Staples.

"When it comes to customer support, Amazon ... sets the standard for everyone else," said Jordy Leiser, StellaService's CEO.

But
brick-and-mortar retailers are catching up and in some cases surpassing
Amazon by working on their customer service. For instance, Amazon
resolved the issue when a customer called 86 percent of the time between
August and October, according to StellaService. Best Buy had a 97
percent success rate.

"Online retailers have put so much pressure
on brick-and-mortar stores," said Marshal Cohen, chief retail analyst at
market researcher The NPD Group. "Brick-and-mortar retailers are trying
to make people feel like the store cares again.


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