Soft home snuggles into a happy home on Web
February 17, 2003,
Still a relatively new industry segment for retailers, the Internet is growing up fast, becoming an essential part of core marketing strategies.
"Some categories make no sense online. Our top three, four vendors from the stores are not online because the customer did not respond to them," said Gene Domecus, senior vp, e-commerce, for macys.com. In addition to home fashions, basics like denim and men's underwear do well online, unlike some designer merchandise.
Yet, it's become equally clear that every company's formula for developing Internet business is unique and still evolving.
The insights were shared among panelists at a conference by shop.org, the National Retail Federation spin off group for online retailers.
Customers expect if not demand a retailer's online presence as well as a seamless experience between it and its other business segments, providing logistical challenges. But a well-run site can support a retailer's business in ways not imagined only a handful of years ago: for example, extending brand loyalties, testing new businesses or simple clearance.
But having a website for the sake of simply having a website is a waste of a valuable asset, panelists agreed.
"A multi-channel presence doesn't mean you have a multi-channel strategy," said Dale Achabal, director, Retail Management Institute, Santa Clara University. "Most retailers today have a multi-channel strategy. Things are really evolving — best practices don't exist."
Catalog retailers have a natural advantage for moving to the Internet, since they already are disciplined in knowing their customers well and tracking information, Achabal said.
Macys.com, whose home store works well online, has seen its share of changes over a relatively short period of time. The site, which serves both Macy's East and West divisions, which each have their own assortments and calendars, was born out of a bridal registry, said Domecus.
The site, which will be absorbed back into the Macy's division as of March 1, is down to two channels, after dumping the Macy's By Mail catalog. The site was re-built in 2001 to reach markets out of store areas.
More than enough
"Two channels are right for us, not three," Domecus said. "The Internet alone can carry more than enough business for us."
Assortments online are also significantly different than those in the stores, he said, as well as more edited.
Though apparel is more than 40 percent of the merchandise in the stores, it doesn't work online. The home store does, however, and is about 45 percent of the site's merchandise. That represents about 80 percent of the stores' home assortment.
Logistical concerns include product returns and sales calendars. Macy's East and Macy's West have different assortments, so the site has to make sure that a customer can return online items anywhere in the country. If an item is sold in Macy's East, for example, but not Macy's West, a phantom bar code must be created.
The two divisions also hold sale events at different times The one-day sales, for example, are on Tuesdays at Macy's West and Wednesdays at Macy's East. The site had its first one-day sale last fall to coincide with a one-day sale on a Wednesday.
"One of our successes from last year was to become as promotional as the stores," Domecus said, particularly in the fine jewelry and textiles categories.
He indicated that the Internet is an even more ideal venue than the stores to "explode" items. Higher price points don't work as well online, however.
The site has also raised the average check by offering free shipping, often with qualifiers, he said. "That's our coupon, if you will … It's such a lift in sales."
The macys.com site previously used stores for its fulfillment, but now uses its own inventory from a central distribution center.
Fifth Ave strategy
Saks Fifth Avenue's site, where home is a very small portion of the online assortment, was at first a very separate part of Saks' strategy.
Launched in 2000, it has since evolved to become more integrated, said Denise Incandela, senior vp of business development and Saks Direct.
Like Macy's, Saks also dumped its catalog, called Folio, in 2001 and now uses its store book as a catalog.
"We do want one consistent brand and consumer experience" across channels, she said. The direct channel allows it to test new categories, like gourmet gift boxes, and offer new services.
It is still working on how to bring in-store experiences such as trunk shows online, but at the moment customers can view and pay their Saks Fifth Avenue bills online.
Saks also launched its bridal registry in stores and online last month.
The direct business is a small part of the overall company, Incandela said, yet is able to support stores by clearing out older merchandise and enhancing gross margins. The site generated a lot of new customers, and those customers that use both channels spend more, she said. E-mail advertising is also one of its more successful online initiatives.
Saks uses the "unusual but successful" method of fulfilling its Internet business directly out of the stores, she said, using 14 locations.