Retailers trying to keep up with online demand

You would have thought that retailers would have seen the dramatic opportunities at least by the early 2000s, when Amazon (Nasdaq: AMZN) and eBay (Nasdaq: EBAY) were establishing their places in the minds of customers. But traditional retailers are trying to play catch up now after years of predominantly using their websites as digital versions of flyers and newspaper inserts.

Rather than continue with their years-long fight with online-only web retailers, the big boys of Australian traditional retailers are slowly turning to the idea of “if you can’t beat them, join them”, by developing new sales platforms.

David Jones (ASX: DJS) set up its new “bricks and click” system by which customers find their desired items online at the department store’s website,  purchase it, and can come in to pick it up.

It’s not really radical thinking, but it has taken this long just to get to a level the company feels comfortable with. The company said that it wanted to watch and learn, and waited to implement a plan so as to avoid the cost of development and strategic errors if it attempted to do it too quickly.

David Jones has increased the number of products online to 90,000 up from 9,000, and already it is seeing increased sales from online. According to the general manager of marketing, digital and advertising, Adrianne McDermott, the online channel now influences up to 80% of company sales.

Harvey Norman (ASX: HVN) has also struggled and complained about online retailers, yet now has made the jump over, and just recently was named Best Multichannel Retailer by the Online Retail Industry Awards.

Like David Jones, it is finding that increased online sales are driving more traffic to the stores, especially for those items that customers like to get a feel for before they make the purchase decision. Once there, they may even pick up a few more things before heading home.

In the latest NAB retail sales survey, online sales have added up to $14.1 billion over the past year, yet still pure-play websites make up 94.6% of the online market. There still is a long way to go, but at least they’ve started.

Foolish takeaway

Just this month, Kodak, the once great camera and film company, has come out of bankruptcy. It had an opportunity to develop digital cameras long before other makers, but decided to hold off because it didn’t want to threaten its existing business at the time. Retailers here have finally seen the light, so it can only be a good thing.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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