Borders' Chapter 11 bankruptcy filing has lots of retailers wondering what’s next for both online and brick-and-mortar merchants.
Esther Swilley, a University of Kansas marketing and technology professor, said retailers better hold on tight because they are in for an interesting ride.
The dot-com era was round one of changing the face of retail. This is round two, Swilley said.
Some changes retailers should prepare for:
- The closure of some 200 Borders stores could impact those surviving mom-and-pop retailers that rely on Borders to draw consumers to shopping plazas and then to their front doors;
- Projected sharp, across-the-board price increases over the next five to eight months doesn't just mean worries for brick-and-mortar retailers. Online retailers have reason for concern, too, Swilley said. Inflated commodity prices mean fewer customers, regardless of the venue. With limited dollars up for grabs, the biggest changes to the shopping arena will likely be retailer-driven rather than consumer-driven
- We may start seeing an online sales tax across the board within the next year or two. Retailers may try to lessen that old tax-free mindset with lower shipping costs, but regardless of where you buy, you're going to start paying a sales tax online because state governments are hurting financially.
- Expect more retailers to diversify but not when huge risks are at stake. For example, online movie rental service Netflix has slowly been phasing out mailing movies in favor of bulking up its instant streaming film catalog. The ongoing turf war with Redbox and Blockbuster could have Netflix deciding to become an information distributor, adding e-books to its product offering, Swilley said.
- More retailers will begin to expand the shopping space in physical stores by removing display aisles and widening the distance between them, lessening movable inventory and decreasing the likelihood of being stuck with slow-moving products.
- Expect more brick-and-mortar retailers to charge for shipping from its websites.
- To get consumers offline and through the door, brick-and-mortar retailers offer more coupons, have limited in-store only specials, hold release parties and even host guest authors and speakers. If physical stores are able to offer unique incentives — such as guests — that online stores can't, it may allow those physical retailers to stay in the fight.
"Everybody's just trying to hold on to what they've got," Swilley said. "The goal right now is not to lose ground, even if there's no ground to be gained for a while. Everybody just wants to hold steady, and that's not going to be easy.
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