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Christmas Gift Guide
Tech Industry

Offline retailers are coming to e-town

With the holiday shopping season creeping up fast, laggard retailers that missed last year's online rush are now busy e-commerce elves.

With the holiday shopping season creeping up fast, laggard retailers that missed last year's online rush are now busy e-commerce elves.

Among the offline stores expected to be selling by the fall are home furnishing company Pier 1, apparel retailer Banana Republic, and upscale home-product company Williams-Sonoma. Retail giant Wal-Mart, which is selling a limited number of items online, is also expected to expand its e-commerce store later this year.

Some offline retailers have been slow to move online because of fear, uncertainty, and "organizational inertia," said Geoffrey Bock, analyst at the Patricia Seybold Group. Some also have considered the Web a "passing fad," he said.

But any company with a catalog must realize that the Web is a crucial new selling channel, particularly during a holiday rush, said Miran Chun, analyst at market researcher ZD InfoBeads.

"I don't know what's holding them up," Chun said of the online laggards. "A lot of these guys have catalogs, and you would think that they would want to jump on the Net for that distribution system." Chun said companies moving online this fall will have to move fast to catch up to more established online retailers, including Nordstrom's, Crate and Barrel, J. Crew, and The Gap.

Pier 1, which is now tackling financial woes and stumbling offline sales, is nonetheless pushing forward with Web-based sales this fall.

"We've been working on it for awhile and we want to get it right before we debut it to the public," said Pier 1 spokeswoman Julie Hatch. The company plans to start selling 600 of its 5,000 available items online in the fall, and will also launch its Web-based gift registry at that time, Hatch said.

"We hope to have this ready to roll by November," she said.

Meanwhile, Circuit City opened its Web store last month, offering customers some 800 products, and has a plan to add more items before the holiday season. Williams-Sonoma is expected to open its online store in October. The company recently launched an online bridal registry.

Laggard Banana Republic, owned by The Gap, lacks even a Web site now, but is expected to open one this fall, before the holiday shopping spree. Old Navy, also Gap-owned, lacks any online sales offering as well. Meanwhile, the Gap stores have raced ahead with online sales, even providing in-store PCs for browsing its Web site.

International Data Corporation analyst Barry Parr divides the offline retailers into two groups: those that focused on brick-and-mortar stores (e.g., Old Navy) and companies such as Williams-Sonoma that have strong catalog and store businesses. For catalog-oriented stores, an online presence is a no-brainer, he said.

"They already have the backend systems to do a good job of fulfillment," Parr said. "It's just a matter of putting the damn thing online."

Parr said the process of developing a Web store is more difficult for companies that lack catalogs. Nonetheless, he said, companies such as Banana Republic and the Limited have few other ways to lure new customers, considering they have already targeted many in their retail stores across the United States. The online market is still up for grabs.

"I'm not sure what other growth opportunities they have available to them," Parr said.

But for some retailers, selling online, for now, may not make sense. Digital commerce analyst Ken Cassar of Jupiter Communications said books, music, and PC hardware and software will be the top online sellers over the next several years.

In contrast, Jupiter forecasts that by 2002 just 1.5 percent of apparel sales will be made on the Web. Still, Cassar said that in the long term, offline companies will need to take the plunge.

"If you look 5 to 10 years out, and they still haven't moved online, then they would have made a significant mistake," Cassar said.