By Tim Conneally, Betanews
This Friday, May 15, the United States Census Bureau will release its revised quarterly e-commerce market estimate, in which the government looks at overall retail performance and compares it with the online retail environment. Since the turn of the millennium, e-commerce has been expected to eventually supplant on-site shopping, and has represented an increasing portion of all retail sales. That is, it did until 2008.
Because of the recession, the Census Bureau last year predicted that growth would all but cease in e-commerce. The National Retail Federation found that these predictions were mostly true, and marked a 2% decline in Internet spending in 2008, the first such decline since becoming recognized as a significant retail channel.
This is only a symptom of the overall hit retail spending has taken. President and CEO of the International Council of Shopping Centers Rene Tremblay recently said, "The 'build it and they will come' mindset that is in vogue throughout the developing world no longer applies in North America." Tremblay's group predicts that even with tax rebates, shopping in US chain stores will be down about 1% in the next month.
Today, the Commerce Department said that total retail sales fell 1.3% in March and a further 0.4% in April.
Citing a study from Forrester Research, the National Retail Federation said it expects companies to continue to shift their goals toward the acquisition and retention of Web customers, while brick-and-mortar stores will remain, for all practical purposes, on subsistence level.
During 2008, hundreds of retailers filed for bankruptcy, and about a half dozen national chains closed their doors to their physical retail shops to re-focus their attention solely upon Web-based sales.
CompUSA -- The popular computer retailer shut all but sixteen of its 104 stores, was bought by TigerDirect owner Systemax, and shifted to a position where it dealt mostly in online transactions. According to Google's Alexa, the site's page views have dropped by 5% in the last three months.
The Sharper Image -- This gizmo storefront filed for bankruptcy in 2008 after three straight years of losses and expensive litigation over its Ionic Breeze air purifiers. It may have closed all 184 of its stores in June, but it continues to exist online. The Sharper Image's online property plummeted in unique visits this year, earning 31,045 visits in April 2009 versus the 200,000 hits it achieved at the same time last year.
Linens n' Things -- After filing for bankruptcy and closing down all retail outlets last year, this housewares store lost more than 90% of its online traffic. Yesterday, the company announced that it has "re-opened" under new management and will be continuing as a solely e-commercial company.
Circuit City -- During 60-year old consumer electronics retailer Circuit City's liquidation, former competitor CompUSA cast aspersions on the company's methods. Now, however, the defunct company has sold its trademarks and Web site to the same company that owns CompUSA, Systemax. Though details of the transaction have not yet been made public, a resurrection of the brand could be quickly approaching.
No company yet has gone from being a wholly brick-and-mortar shop to a wholly virtual one and had numbers to back it up. But the deck is stacking up in favor of an upcoming boom in online business, where competition is king, and economy of scale is no longer an immediate advantage.
Copyright Betanews, Inc. 2009