Will Online Stores Kill Brick & Mortar Stores?
Last week news came out that Best Buy’s sales performance was pretty weak. The speculation was that people going into the stores to look at merchandise, then going home and ordering it through online stores was the reason for the problem and that it might be time for them to start exploring a different business model.
Although I’ve been on the internet almost 20 years, I’m a relatively new online shopper. In the past couple of years I’ve purchased mainly small items like HDMI cords, DVDs, and my most recent purchase, a charging cable for my MP3 player, considered obsolete. The most expensive item I’ve purchased is a CPAP mask that no one locally carried in the store any longer, so it was a forced purchase.
A couple of days ago I went to buy some glucose strips so I can check my daily numbers, being diabetic. It turns out I haven’t reached the deductible level for my insurance plan this year, which means I have to pay the full price. The cost of these strips is $152; ouch!
When I came home, for the first time ever I decided to look online to see if I could get a better price. It turns out I can get the same number of strips from an online store for as little as $64; in essence, I can save 150% by ordering them online. Wow! And with shipping, it still comes to at least a 100% savings; I’d be stupid not to take that.
The thing about online suppliers is that they can get a lot of items and put them in a warehouse. In some cases the companies selling the items don’t even have to store them; they can get them directly from someone else and all they have to be is the middle man.
In regular stores, it’s all about the psychology of presentation. They know which items go with what, and they also know that they have to have so many of each item, especially popular items, because people come to stores with the expectation of walking out with whatever they want to buy.
True be told, that’s still the largest market, physical buyers. But the numbers are dwindling, and in this age of demands for the increase of worker pay and insurance coverage, companies like Best Buy, Sears, Penneys and others might go the route of reducing staff before trying something else; unemployment can help companies but it always harms communities.
Still, it’s hard to blame consumers for making smarter purchases. After all, even I buy my insulin at Walmart because it costs less than anywhere else locally since they have their own brand of insulin.
Luckily, there will always be some industries where buying things online isn’t going to work as well… or is that even true? Grocery stores will probably survive, but right now you can buy meats online and goods such as cereals online, along with canned goods, although not everything is as cost effective. Still, it’s something that even grocery stores might have to deal with in the future… other than dollar stores.
What’s your thought on this issue? Do regular stores have something to worry about or is this just a blip on the screen and will everything turn out okay?