In the News

Physical Stores Ramp up Technology Investments to Compete with Internet Titans

International Council of Shopping Centers - News Release

May 21, 2013

According to this news release:  “Physical retailers such as Target and Walmart are investing in technology to better compete with increasingly powerful Internet-based titans such as Amazon, Google, eBay, Facebook and Apple for consumers' attention and dollars, panelists said at a session Monday at RECon, in Las Vegas.

Increasingly, stores are scaling back their space needs and stocking only core merchandise while better facilitating ordering and delivery of their broader selections online, said Michelle Crames, vice president of social commerce solutions for Los Angeles-based Revionics. Walmart, for one, has acknowledged that it's allowing third-party vendors to sell goods on its website to expand its competitive offerings, she added.

Macy's is another brick-and-mortar-based retailer that is managing to grow e-commerce sales while maintaining traffic at its stores, said Lori Schafer, executive retail adviser for Middletown, Mass.-based SAS Institute. In 2012, 9.5 percent of Macy's sales were from e-commerce, Schafer said. 'Others are moving in that direction, including Walmart, which is making corporate acquisitions in the e-commerce space; CVS, which now has a chief digital officer; and Staples, which has shrunken its store footprint and become much more omnichannel,' she added.

Amazon isn't an easy foe to compete with. A $60 billion retailer today, it is projected to become a $100 billion retailer by 2015 and a $200 billion juggernaut by 2017, noted Schafer. ‘At its current growth rate, Amazon will surpass Walmart in annual sales in 2023,’ she said. The company has diversified into business-to-business sales, data mining, TV and movie production and other industries, mostly in an effort to drive retail traffic to its site, Schafer said.

Moreover, Amazon is committed to building up to 150 fulfillment centers throughout the U.S. ‘That's so they can fulfill their plan of being able to make same-day delivery to every home in the U.S.,’ said Deborah Weinswig, managing director of New York-based Citigroup.

For that reason, Amazon isn't overly concerned with the Main Street Fairness Act, recently passed in the Senate and soon to be considered in the House. ‘They are going to be in every state anyway,’ said Jeffrey Newman, an attorney and senior partner in the real estate department of Newark-based Sills Cummis & Gross.”