from the Chicago Sun Times


Internet can't match stores

   September 26, 1999

   BY SANDRA GUY BUSINESS REPORTER

   Shopping on the Internet--touted by some as the wave of the future--is
   not going to make shopping in person a thing of the past, studies now
   say.

   In fact, the Internet could do just the opposite--lead people to
   stores.

   Stores can market their wares on the Net, whetting the appetite of
   shoppers who later go to the store for the actual purchase.

   This plays off the enduring attraction of shopping in person,
   surrounded by the dazzling sights, sounds and smells of the retail
   world, not to mention the need to touch.

   "There is no way that malls will be replaced by the Internet, because
   you will always have people who want to touch and feel the
   merchandise," said Kathy Fogerson of Champaign, who was shopping
   recently at Water Tower Place with two friends.

   Fogerson said she uses the Internet to see what merchandise a store
   carries but prefers to go in to make the purchase.

   Internet sales account for only 1 percent of retail sales nationwide,
   and that figure is not likely to exceed 10 percent on average, said
   Kevin Mundt, worldwide group director for retail and consumer practice
   at Mercer Management Consulting, New York.

   The firm's research is based on surveys of 1,020 Internet users
   nationwide.

   Still, the key to success for retailers depends on their ability to
   use an online presence to point customers to their bricks-and-mortar
   stores and to design the stores so shoppers think their experience is
   exciting and worthwhile, Mundt said.

   The retail strategy is called "clicks and mortar."

   Jacadi, a children's clothing store at Water Tower Place, uses its
   home page on the shopping mall's Web site to tout its fashions,
   suggest gift ideas and to attract out-of-town shoppers.

   The degree to which online sales threaten bricks-and-mortar sales
   varies widely, depending on the retail category.

   Online sales of computer hardware and consumer electronics, for
   example, are expected to reach 16 percent of a total $52 billion by
   2002, says Jupiter Communications, a New York consulting company.

   Yet only 1.1 percent of an estimated $175 billion in clothing and
   accessories sales is expected to happen online by 2002, Jupiter says.

   "It's important to remember that catalogs took off 20 years ago, but
   they've reached only 6.5 percent to 7 percent penetration in retail,"
   Mundt said. "That's not a huge loss.

   "For apparel and the `soft' home market, I don't think the Web threat
   is that great."

   One likely reason for the low penetration is the enjoyment shoppers
   get from the physical experience of a mall. It's the feeling of being
   part of the crowd, as well as the visual and sensory stimulation of
   the stores' floor shows.

   "The better retailers will figure out that the Net is an important new
   channel," Mundt said. Their challenge is to reach new customers, offer
   greater choices, even if that means setting up in-store kiosks with
   Internet access, and to keep the mall experience as exciting and
   convenient as possible.

   That's what Water Tower Place is counting on. Its Web site
   (www.shopwatertower.com) features real-time sales and lets online
   surfers browse through each store.

   Chicago-based General Growth Properties, the second-largest mall owner
   in the country, is taking a similar approach.

   The firm teamed up with CoolSavings.com, the biggest distributor of
   coupons over the Internet, to advertise price discounts in stores at
   36 of its 125 malls (www.coolsavings.com). Retailers at Northbrook
   Court in Northbrook offer coupons via the Web site.

   "This is a way to communicate directly with customers and do it with
   greater knowledge about the customers," says CEO John Bucksbaum.
   "E-commerce gives us the ability to direct-market to specific
   customers based on their likes and dislikes. We can tailor our
   activities to what the customer wants."

   Though the coupon offers are intended to entice online shoppers to
   travel to the malls, the important goal is for the retailer to capture
   the sale, Bucksbaum says.

   Because retailers agree on the importance of the bottom line, perhaps
   a more intriguing aspect of online retailing is the damage it may
   cause catalog sales.

   Direct merchant Lands' End, which has outlet stores in Niles,
   Schaumburg, Evanston and Lombard, is devoting its largest single-issue
   ad campaign to its Web site to try to drive customers from its
   traditional catalog-ordering business to online shopping.

   ***

   A big selling point: You can't window-shop on a PC

   Shoppers give several reason why they are not ready to scrap the
   bricks and mortar for a totally online shopping experience.

   "You really can't do much window-shopping when you're on a computer,"
   said Brenda Wener, who was shopping at the Marshall Field's store at
   Water Tower Place. "Half the fun of shopping is looking around for
   things you don't really need."

   "It will never replace the whole social aspect of shopping and going
   to the mall," said Jeri Luth, who was shopping along Chicago's
   Magnificent Mile with some friends.

   "You don't get that same interaction [on the home computer] that you
   do at the mall."

   Kathy Washa, who was shopping with her two kids at Jacadi, a
   children's apparel store in Water Tower Place, said, "Just for size
   purposes, I still need to come to the mall to see how something fits."

   Washa said she does use the Internet to check out the merchants and
   products but always goes to the store for the purchase.


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