Wal-Mart, Target brace for online shift in retail
Brick-and-mortar stores are using different strategies to ward off competition from online retailers.
The world's largest brick-and-mortar retailers, including Wal-Mart (WMT), Target (TGT), and Best Buy (BBY), are working hard to develop their online presence.
With the increasing penetration of Internet and smartphones, online retail has witnessed enormous growth rates. According to research firm Forrester, U.S. online sales are expected to reach approximately $279 billion by 2015 from $152 billion in 2008.
The brick-and-mortar retailers are using different strategies to cope with increasing competition from online retailers.
A few of them are discussed below:
- Wal-Mart is promoting store pickups for items bought online to save shipping fees. According to Bloomberg, in the last year, Walmart has spent in excess of $300 million in buying up web-related companies in order to catch up with Amazon and eBay.
- Target has increased its online inventory by 400% to have a wider assortment of products online.
- Best Buy is matching online prices and offering free shipping to win customer loyalty.
However, according to a William Blair & Co. study, Amazon is the undisputed leader in terms of pricing as its prices are on average 14% lower than Target's and 9% lower than Wal-Mart's. It is still early to comment on the likely shape and structure that the online retail industry will take in the coming years, especially with the expected advancement in digital and mobile technology.
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