PC Buyers Return to Stores
What item are consumers most likely to buy online? Computers, of course. In fact, in 2005, 47 percent of all computers were purchased online, according to NPD Group. Etailers like Dell are poster children for how the web will transform all retailing. But a funny thing is happening to computer buyers: they are starting to return to stores. In the first five months of this year, 60 percent of all computers were purchased the old fashioned way: in person.
So why are computer buyers returning to brick and mortar retailers? According to a recent story in The Wall Street Journal, as laptops have become more popular, “people have increasingly sought to touch and test out their computers before buying. Laptop customers, planning to carry their PCs around with them, pay more attention to styling, shape, and weight.” Anyone who has visited an Apple store, one of the nation’s leading experiential retailers understands how the store adds excitement to the computer shopping experience. It’s a fun place to just browse. And that excitement pays off. A successful retail store might reach $600 in sales per square foot annually. (In 2005, the U.S. average sales per square foot for non-anchor tenants was $366.) Tiffany & Co., the most successful large jewelry retailer, has annual sales of $2,666 per square foot. Compare this to Apple’s annual retail sales: they are $4,032 per square foot. The pleasure of shopping at an Apple store may be one reason why Apple is picking up market share and Dell is losing it.
Online retailers are fighting back by trying to improve the shopping experience on their sites. Online video, forums and customer reviews, price comparison features, and streamlined checkout. They are also adding more customer service. But one thing is clear: even in the category that consumers feel most comfortable buying online, there are limits.
Online jewelry sales, now about 6 percent of the market, clearly have a lot of growth ahead. This year, online sales of clothing were higher than computers, suggesting that consumers feel more comfortable buying fashion online. In 2006, online sales of skirts, suits and shoes were $18 billion, compared to PCs, printers, and software, which were $17 billion. That was 8 percent of all clothing sales according to Shop.org. But the transfer of sales from brick and mortar stores to online retailers isn’t unlimited, especially as more consumers consider jewelry as fashion, rather than as a commodity. And if jewelry stores can create a compelling retail experience like Apple has, consumers may even learn to enjoy shopping for jewelry.