Can Retailers Keep Paces With Shoppers?

By Sarah Nassauer 

Can traditional retailers keep pace with consumers as they increasingly use technology to shop? That is the question confronting hundreds of executives as they gather in Las Vegas this week.

After one of the strongest winter holiday shopping periods in years, many retail chains find themselves in a position of relative strength compared with where they stood a year ago. A strong economy and high employment has Americans willing to spend, but they are visiting stores less often and increasingly using smartphones to check prices or just check out.

At the Shoptalk industry conference starting Sunday, executives from retail and technology, including Amazon.com Inc., Google, Macy's Inc. and Walmart Inc., will meet to discuss how they will navigate the coming year.

"It's the first time in a very long time when it feels like the wind is at our back as an industry versus we have to walk into very strong headwinds," said Steve Barr, leader of the retail and consumer sector at consulting firm PwC.

In the most recent quarter, Target Corp., Macy's, Best Buy Co. and Walmart said an overall a strong economy and solid holiday spending helped revenue growth. Retailers finally have the money to get basics right -- customer service, store remodels and better technology -- details that will help traditional chains compete with each other and online, said Mr. Barr.

"The elephant in the room is Amazon, but there is no single technology or magic potion that is going to instantly provide a solution."

Amazon's purchase of Whole Foods last year put in motion a race for brick-and-mortar retailers to add home delivery services and for Amazon to increase sales in categories traditionally sold from stores. Walmart said Wednesday it plans to offer home delivery of groceries in 100 metro areas by year's end. Target, Kroger Co, and Costco Wholesale Corp are adding more cities and products to their home grocery delivery services.

Higher consumer spending and lower corporate tax rates have helped retailers spend on new technology and improving stores. But profit pressures remain and any perceived bump on the road to compete with Amazon can hurt.

Online sales growth slowed at Walmart in the most recent quarter, though overall sales were strong and Walmart has made big moves to grow online, including buying online retailer Jet.com for $3.3 billion. The day of the earnings announcement, Walmart's stock fell more than 10%, the biggest one-day drop in the price since 1988. Walmart executives have said they are still on track to achieve 40% U.S. e-commerce sales growth in the current fiscal year.

Retailers should focus on pleasing customers, not just beating Amazon or keeping up with Walmart's investments in the space, said Brendan Witcher, vice president at Forrester Research. "The reality is they aren't usually behind their competitors. They are behind their customer," he said.

"If you don't understand your customer there is no technology in the world that is going to save you."

Last week, the industry had a stark reminder when Toys "R" Us Inc. set plans to close all its U.S. stores, succumbing to a hefty debt load that limited its ability to compete with both Amazon and discounters.

Write to Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

March 17, 2018 08:14 ET (12:14 GMT)

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