Clicking to shop is fun but won't replace the mall
by J. Linn Allen
Chicago Tribune
For the many middle-aged men who would rather mow the lawn, replace a
light switch, clean out the garage - do anything - than go to a store to
shop, the Internet may be a godsend.
Indeed, a recent survey by Nielsen Media Research and Commerce Net found
that 64 percent of online shoppers are men like Terry Boss. A
47-year-old executive with a Washington, D.C.-based trade association,
Boss says he likes to poke around on the electronic marketplace on his
home computer as a way of relaxing after work.
But while middle-aged men often like to buy things such as computers,
TVs and sports equipment, they are not the driving engine of the retail
industry.
And that figures as one key reason the Internet is not likely to alter
dramatically the retail landscape of shopping centers, big boxes, strip
malls and downtown department and specialty stores in the foreseeable
future.
Real estate industry experts challenge reports such as a recent Time
magazine cover story predicting the death of the shopping mall because
people will be able to buy stuff faster and cheaper on the Net.
"We're quite bullish on land-based retail, generally speaking," said
Mary Ludgin, chief executive officer of Heitman Capital Management, the
investment advisory arm of Chicago's Heitman Financial.
Ludgin and others in the field acknowledge that sales of consumer goods
on the Internet are indeed going to grow at a rapid rate, but they still
will be only a fraction of total retail sales and will be concentrated
in certain categories of purchases.
Online shopping revenue this year is expected to approach $5 billion,
only about 0.2 percent of total U.S. retail sales, estimated to reach
$2.7 trillion.
And, not surprisingly, by far the biggest chunk of those sales are for
computer hardware and software, which accounted for 35 percent of the
total in 1997, according to Forrester Research, a Cambridge, Mass.,
technology research firm.
Other major categories were travel, 27 percent; entertainment (including
"adult" sites), 12 percent; books and music, 6 percent; and gifts,
flowers and greetings, 6 percent.
Many observers think those are the categories where the Internet will
continue to show shopping strength because (aside from entertainment and
services such as travel), they involve commodity items that are easily
shipped.
"In addition to the inroads that have already been made in book and
computer hardware and software sales, it is easy to envision online
retailers experiencing substantial gains in CDs, consumer electronics,
toys, gifts/flowers, and perhaps even groceries," wrote analyst Mike
Kirby of Newport Beach, Calif.-based Green Street Advisors, in a recent
column on the real estate industry.
But in the crucial clothing category dominated by female shoppers, the
on-line marketplace is negligible and suffers a crippling disability:
The goods can't be tried on, touched or seen in person.
On top of the advantage stores have in the clothing market, they serve a
social function that is being increasingly emphasized.
In the last decade, retailing "has taken on a more entertainment form,
and people hang out at the malls," said Tracy Mullin, president of the
Washington-based National Retail Federation.
Examples are the proliferation of multiscreen movie complexes and
entertainment-dining spots in malls, while trends may include offerings
of more how-to classes and demonstrations by retailers, Mullin said.
Building on malls' draw as gathering places is a strategy of Chicago's
General Growth Properties, one of the nation's biggest and oldest
shopping mall owners.
The company's tack is to add more service-related business to its tenant
mix, Executive Vice President John Bucksbaum said.
"Doctors, dentists, driver's license facilities, water departments,
places to pay bills, real estate and financial services - there's more
of it in place, and we continue to push it," Bucksbaum said.
And the company also is looking at ways to meet the Net head-on by
incorporating electronic retailing in its mall operations, Bucksbaum
said.
He said possibilities include using e-mail to send coupons and
promotions to frequent customers, cooperating with retailers with an
Internet presence to help bring shoppers into malls, and setting up
electronic retailing stations that have Internet access in the malls.
Such planning underlines that while bricks-and-mortar mall owners like
Bucksbaum feel no imminent threat, they aren't taking electronic
competition lightly.
"Our feeling is the Internet is certainly something you cannot ignore,"
he said. "We don't discount the impact of it. We're looking for ways to
complement our business with the Net so as not to get left behind."
Mall owners like Bucksbaum and store owners everywhere certainly have to
be aware of the consumer sales growth pace on the Net, which is expected
to be 98 percent this year compared with 4.2 percent for total retail
growth. Forrester Research forecasts Net sales growth at 64 percent in
1999, 53 percent in 2000 and 44 percent in 2001.
Indeed, online shopping does have certain compelling features,
particularly in the areas of comparison shopping and getting detailed
information about products and services.
Add the fact that youngsters are coming to regard computer use as second
nature and will likely embrace online shopping far more than their
parents do, and it is clear that the Internet will be an
ever-more-powerful retail presence.
But even as Net enthusiasm grows, store sales have been holding their
own as consumer spending grows. Comparable-store sales at department
stores across the country rose 3 percent during the first half of this
year from the January-June period in 1997, the International Council of
Shopping Centers said.
Some in the business suggest that catalog sales may be most hurt by the
Internet. But some catalog sellers, such as Lands' End, are rapidly
adjusting by doing more of their business online.
The most probable outcome is that cyber-shopping and physical shopping
will co-exist for the foreseeable future.
"In 50 years it's hard to imagine what things will look like," Mullin
said. "Certainly, we'll all be strapped to computers, but we'll still
need interaction. We won't be sitting in isolated rooms communicating
only by e-mail." |
