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Rethinking Retail in the Internet Age

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Wal-Mart, Macy's, and others try to find clever uses for their acres of brick and mortar.

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MINYANVILLE ORIGINAL Have you visited a mall lately? If so, you know they're howling wildernesses, lacking only tumbleweeds tumbling across the faux marble floors to complete the analogy.

But don't believe your eyes. Look at the numbers: Retail sales figures released last week show that sales in June at stores open at least a year hit their worst monthly numbers in three years, and it has been an epically lousy three years. Two-thirds of 20 major retailers missed their estimates, including Costco (COST), Target (TGT), and Macy's (M).

The economy is getting all the blame, but we'll see if that holds up on July 23, when Amazon (AMZN) reports its latest quarterly results.

Meanwhile, it seems to have dawned on brick-and-mortar retailers that maybe they can't just wait out that Internet fad. It may be too late for them to dominate online retail the way they once dominated shopping, but at least they're trying, in several ways, to leverage their strengths:
  • Some retailers are beginning to use their stores as pick-up centers and more, to complement and boost their online businesses. According to a report in The New York Times, Macy's, Wal-Mart Stores (WMT), Best Buy (BBY), and Sears (SHLD) are among the retailers that offer their store locations as customer pickup and return centers, and some are even offering drive-through customer service. They're betting that customers will appreciate the instant gratification, and the savings on shipping.
  • It will take more than that to save Best Buy, which is struggling to survive fierce online competition for brand-name electronics. According to AllThingsD.com, the company is testing a sleek store redesign. The prototype near its Minnesota headquarters looks a lot like an Apple store, but with the Geek Squad manning the help desk instead of Apple's Geniuses. This ought to be hopeful news for the remaining geeks. Some of them are losing their jobs in an expected layoff of 2,400 employees, announced last Friday.
In both of the examples above, the real selling point is service-the human touch being the only thing they've got that online shopping lacks. Improve service or die: That was the message of one retail executive, in a recent speech to an association of chain store executives in Malaysia.

But you didn't have to go to Kuala Lumpur to get that message.
No positions in stocks mentioned.
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