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The Changing Nature of Retail

Recent moves by Walmart and Macy’s illustrate the challenges all retailers face.
By Mark Roberti
Aug 15, 2016

Last week, Macy’s announced it was closing 100 stores, and Walmart announced it was paying $3.3 billion for Jet.com, a one-year-old e-commerce retailer that tried to take on Amazon directly. Both moves show that conventional brick-and-mortar retailers are struggling to attract shoppers to stores. But the two retailers are pursuing different solutions to the same problem.

Macy’s is one of the first companies to attempt to become a true omnichannel retailer. It is using radio frequency identification technology to improve store inventory to the point at which it has confidence to enable you to buy products online (even from your phone while in the store), and then pick up those products in one of its stores, or have them shipped from the store to your home. This transition, of course, takes some time—not just for Macy’s to execute but for customers to embrace.

Let me explain what I mean.

In the early years of the Internet, many people were afraid to put their credit card number into a website to buy things. Over time, people got used to doing that, and now very few people think twice about it (even with the database breaches that have occurred).

Similarly, customers are not comfortable with, or don’t believe in, omnichannel retailing. This past weekend, it was brutally hot and humid in New York, where I live. My home does not have central air conditioning, so I wanted to buy another room air conditioner. I went to the Lowes website because I have no faith that Home Depot will have the stuff it thinks it has (see Is This What Passes for Retailing?). I found an air conditioner that was right for the room size, and the Lowes website said the item was available for me to buy it online and pick it up in the store. I thought about this for a second and then decided not to buy it online.

Here’s what went through my mind. I’ll buy it online and I’ll get to the store and look around for someone who can tell me where my item is. It will take 10 minutes to find the right person, who will then take another 20 minutes to try to locate my purchase, and then come back and tell me that the store doesn't have my item. It will take another 10 minutes to refund my purchase and buy a new air conditioner.

So instead, I just drove to the store with the intention of buying that air conditioner. My local Lowes had a number of models but not the one I had picked out online. I wound up buying a different model.

It’s possible, of course, that Lowes had the model I wanted somewhere (I didn’t bother to ask because that would have involved a 20-minute search), but I, as a shopper, have no faith in store inventory systems, and I believe most other shoppers are the same. And this is the big problem retailers face. People know if they order an item through an online retailer, they will get that item every time (I recently bought a dehumidifier from Amazon and would have purchased the air conditioner from Amazon, except it was so hot I needed it right away).

Walmart, in buying Jet.com, is trying to win customers by having a dual-channel strategy. Some people will shop at stores, and the retail giant hopes to win younger shoppers by offering them an alternative to Amazon.

Macy’s, on the other hand, is using RFID to build trust among its shoppers so that they will believe that the retailer does indeed have the merchandise they ordered online. It takes time to change perceptions. Eventually, when all retailers are using RFID (and that day is not as far off as many think), shoppers will have as much faith in store inventory as they do in e-commerce inventory.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

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