THIS WEEK: Brick-and-mortar retailers seem to be under a lot of pressure right now, facing shrinking margins and increased competition from not only other storefront retailers, but Internet sellers and direct sales by manufacturers. Will storefront retailers continue to have a place in the new millennium, and if so, will their roles shift? Will there be a continuing shakeout?
With this issue, TWICE launches a new feature -- Distributor Forum -- which will appear in every other issue of the paper. The new feature has been created to provide extended coverage of the distribution channel. Each month we will ask top distribution executives to address a critical issue facing the distribution industry specifically or the PC industry at large.
Dave Nalley, VP and general manager, consumer markets division, Ingram Micro:
I believe retailers will continue to play a significant role in the marketplace going forward. In order to be successful, however, they will need to change and evolve with the market and take advantage of new opportunities as they arise (e.g. the convergence of new technologies).
I also think they will engage in different ways of taking products to the end-user such as the Internet and various special-order options, such as kiosks.
As the channel continues to mature, I believe we will see a continuation of consolidation with both vendors and resellers.
Mark Greenwald, marketing director, D&H Distributing:
Brick-and-mortar retailers will always have a place in the new millennium. Much like the independent brown and white goods dealers in the '70s and '80s, the growth of the clubs and superstores created an awful lot of chaos and price degradation until the consumer figured out that the value-add the independent provided was important to the psyche of the customer -- as well as the knowledge the independent provided to the customer. It finally worked itself out.
Similarly, Internet e-tailers will provide a means for information and comparison. Price will always be an important factor in the buying decision, but the comfort level of the customer to receive technical support, the ease of returns, and being able to touch and feel the product will also keep brick-and-mortar retailers in the loop for purchasing products.
Even the maturity of the home shopping experience has not represented a significant percentage of sales compared to the personal shopping experience in the store. I believe the Internet will play a more significant role, but there will always be customers who will want the retail shopping experience in the store.
Terry Bazzone, VP and general manager, strategic business development, Tech Data:
Finding the precise combination of value, price and service to attract the consumer is always a challenge. The Internet is adding a dynamic dimension to the equation. What we see emerging are different types of consumers. Some, for example, will be inclined to buy over the web. Others strongly prefer in-person consultative selling -- a hands-on buying experience.
The price isn't always the most important factor. Strategies that go beyond offering good prices will remain highly effective as long as the consumer perceives the value.
The Internet does not spell the end for brick-and-mortar retailers. It does mean that many are adjusting their business models, leveraging the Net, and focusing on ways to bring new value to the in-store buying experience.
Kris Rogers, senior VP and general manager of U.S. distribution, Merisel:
While Merisel believes that there will be strong growth for web sellers, we also believe that retail will continue to see growth. The web channel is still very young, and we do not know that all product types will thrive in this environment given that some products require more information prior to sale, some products require service after the sale, and some products need to be demo'd before someone will even make a choice.
Merisel believes that mature computer buyers are more likely to buy commodity products over the web, since price tends to be the driver when informed consumers are making those purchases.
We also believe that new technology will not do well over the web, so that business will continue to be driven by retailers and VARs. We think that there are large numbers of consumers and businesses that, because of their buying criteria, will not necessarily want to buy on the web.
One example is businesses needing net terms -- many web sellers do not provide this -- or those requiring return capabilities and tech support services, which are not currently well-supported by web sellers.
In addition, many consumers like the tactile nature of the shopping experience, which they can't get on the web -- that's the same reason retailers still live on even though mail order exists!
However, Merisel does see Internet reselling as a growing channel, and we do expect that the industry will adapt to this new method of buying.