Shoppers won’t find any Cyber Monday deals today at Ross or Marshalls, the two discount retailers. Sure, they want your business. But you’ll have to get in your car and visit one of their bricks and mortar stores. Unlike virtually every other national retail chain, neither Ross nor Marshalls sells online.
Yes, you read that right. Online shopping isn’t an option – not today or any day.
Ross and Marshalls are among a handful of big stores that have avoided e-commerce, or at least got a late start. Their take-it-slow strategy is a sharp contrast to the intense online focus of rivals, many of which have been selling on the Web for close to 15 years. How can a retro retailer survive in the digital age? It depends.
“If you’re a company that competes very heavily with Amazon, there is no option,” said Sucharita Mulpuru-Kodali, an analyst with Forrester Research. “But if you have unique products or you’re focused on your stores, you can afford to be a holdout.”
Despite its outsized reputation, online shopping plays a relatively small role in retailing. E-commerce accounted for only 5.9 percent of overall retail sales in the third quarter, up from 4.7 percent a year earlier, according to the U.S. Commerce Department.
Still, many bricks and mortar stores pay close attention to their online businesses and spend lavishly on them. Technology, staff and giant warehouses filled with merchandise are costly. A number of retailers have also gone so far as to open research labs in Silicon Valley to stay on the cutting edge of innovation.
Bricks and mortar stores vary widely in their success online. Nordstrom’s direct sales business, which includes e-commerce, makes up nearly 14 percent of the company’s overall revenue. But for others, e-commerce remains insignificant. Target, for example, has said that online accounts for less than 2 percent of its overall sales.
Whatever the case, the hype over online retailing reaches its annual zenith today. For the past eight years, the e-commerce industry has made a big marketing push the Monday after Thanksgiving – dubbed Cyber Monday – by offering a flurry of one-day discounts.
Ross and Marshalls won’t be participating, for obvious reasons. Both have Web sites, but the only things shoppers can buy through them are gift cards. Compare that with nearly every other bricks and mortar retailer like Wal-Mart, Macy’s and Best Buy. Their sites are filled with sweaters, tablet computers and big screen televisions for sale along with special Cyber Monday offers to entice shoppers to click “buy.”
Marshalls may eventually join the e-commerce revolution, according to its parent, TJX Companies. For now, though, TJX is learning the ropes via T.J. Maxx, Marshalls’ sister retailer, which quietly restarted online sales a few months ago after an eight year hiatus.
“We plan to build on what we learn before we focus on e-commerce for our other businesses, but eventually, we see e-commerce working for all of our chains,” TJX said in a statement.
Executives had pulled the plug on the T.J. Maxx’s original foray into online retailing because of dismal sales. This time around, however, T.J. Maxx is taking a cautious approach by limiting the amount of merchandise available online, helping to keep costs down and minimizing the complexities of managing a huge inventory.
“TJX expects to continue with our deliberate approach, grow smart and offer additional categories and functionality to TJMaxx.com over time,” TJX said.
TJX paved the way for its online comeback by acquiring Sierra Trading, a retailer with a big e-commerce business. The $200 million deal last year gave TJX the expertise and technology infrastructure it felt it needed.
Selling online can be complicated, particularly for discount retailers that buy up big lots of leftovers. Records of how many shirts they have in a particular size and color are often lacking. Furthermore, for the past few years, they’ve had to compete against flash sale sites like Gilt and Zulily, many of which are big money losers. Turning a profit when a rival is willing to lose money on every order is difficult.
H&M, the fashion retailer, proves the point about the complexity of getting going in online retail. It had promised three years ago that it would open a U.S. online store, but twice delayed the project to work out the kinks. Over the summer, the company finally flipped the switch and started taking online orders. Because of its late start, H&M let rivals like Zara get a big head start.
Of course, H&M has been busy. In recent years, it’s opened dozens of stores across the country.
Mulpuru-Kodali, the analyst, said that such a delay is probably not too serious. It’s better for fast-growing retailers to focus on their new stores, even if it means disappointing some customers that prefer shopping online.
“Online sales aren’t so important for stores that are aggressively expanding their bricks and mortar operations,” she said. “The Web is essential for companies that are mature and looking for a new channel of growth. You have limited resources and it’s better to stick to your knitting.”