Oren Michels | Co-Founder & GM
June 20, 2012

What's In-Store for Retail

 

Call it evolution, or maybe schizophrenia: Two unrelated stories in the news this week highlight what’s happening in the retail industry right now (and how a few good applications might help).

First, the bad news: The Department of Commerce just reported that retail sales dipped .02% in May, following a similar decline in April. That’s the first back-to-back drop in two years, and it couldn’t come at a worse time. The biggest single factor is a 2.2% drop in gas station sales (despite falling gasoline prices) but even leaving that out of the equation, retail spending is basically flat.

And then there’s this: A survey of more than 200 branded manufacturers and 1,300 retailers found that a retail-integrated eCommerce business model boosts sales figures across the board, both online and in-store. In this arrangement, branded manufacturers sell directly to consumers via their online presence, then pass those orders along to local retailers for delivery. In fact, more than half the manufacturers surveyed reported higher sales in this arrangement, while 10% say their online sales actually doubled.

While these manufacturers stand to gain in many ways—stronger retail relationships, greater inventory at local outlets, more data on consumers—the benefits to retailers may be even greater. Among other findings, the same survey notes that 65% of retailers saw enhanced store profit or customer acquisition through retail-integrated eCommerce, while 23% claimed it increased both.

The real story is not that consumer spending is slightly down or slightly up, depending on the larger economic picture; it’s that consumer spending practices are undergoing a radical transformation. Shoppers still walk into stores to buy what they need. But they now also have a plethora of options available—smartphones, tablets, gaming consoles, in-store kiosks—and each offers a major shopping channel that basically didn’t exist even a few years ago.

In 2011, according to a Forrester research study, US online retail sales passed $200 billion; in five years, that’ll jump to $327 billion. The biggest beneficiaries, the report notes, are savvy retailers who see the value in integrated selling tools with innovative applications, from rich media to easy payment services.

A solid API strategy has always been a good idea. The way the market is going, it could spell the difference between survival and success.