Armchair shopping: retailers face to face with options
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Until a few weeks ago, people in 204 homes in Coral Gables, Fla., could shop for tires from Sears, best sellers from the bookstore, and vacations from a travel agent - without leaving their living rooms.Skip to next paragraph
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These people were the subjects of a 15-month experiment by Viewdata Corporation, a subsidiary of the Knight-Ridder newspaper chain. Viewdata was testing consumer reaction to a ''nonstore marketing'' system. Using their television sets, telephones, and a keyboard, people could ask a variety of retailers what was available, how much it cost, and then place their orders.
Consumer reaction, says Viewdata president Morton Goldstrom, was ''very good.'' The company intends to have a permanent system installed in south Florida by 1983. A similar test involving shopping and banking is going on in Columbus, Ohio. And this week, the First Bank System of Minneapolis announced the beginning of a test of a ''videotex'' system in Fargo, N.D., based on a system being used in France. It will provide shopping, banking, and information retrieval services. Bookkeeping, financial planning, and commodity reports - particularly valuable in an agricultural area - will be available in 15 homes and small businesses in the Fargo area.
So consumers and communications companies are apparently getting ready now for the era of high-technology shopping; maybe in a few years retailers will be ready, too.
For retailers, the use of cable TV, home computer terminals, or videodiscs for shopping means adapting to some dramatic changes in retailing concepts as well as heavy investments in new equipment. And for most businesses, it means taking steps now to prepare for something that will not affect them for at least several years.
Early preparation is necessary, says John Moon, publisher of The Retail Management Letter, a Plymouth, Mich., newsletter, because many of the pieces that will change the way people shop are already in place. These include credit cards, computers, and cable TV and phone systems.
Industry observers are divided over how quickly electronic shopping is coming , and over exactly how people will use it. Some think the new techniques will have no major effect before 1990, at the earliest; others argue that a sizable percentage of homes will be using the new systems within five years.
''I think it will probably come in this decade,'' says Steve Carey, an analyst at Battelle Columbus Laboratories. ''Whether it comes by '85 depends on the recources put into it.''
And when electronic shopping does come, will people use computers and TV sets primarily for comparison shopping and find what products are available, or will they use them to place orders as well, as they have been doing for catalogs for many years?
Until recently, nonstore marketing was limited to catalog sales, home selling like Fuller Brush and Avon, direct-response advertising such as TV record sales, and vending machines.
While these traditional forms are intended to result in purchases, the new systems may be used more for comparing prices than for actual sales.
''I'm not at all certain about the purchasing aspect of this,'' says Terry Dorrington, vice-president of Management Horizons Inc., a Columbus, Ohio, management research and consulting firm. ''Anybody who thinks these systems mean the demise of retailing is totally wrong.'' He and other experts believe that most consumers still want to be able to see and touch the items they are buying, try on the clothes, browse through the books, talk to salespeople, and even mingle with other shoppers.
Still, he says, there's ''a ton'' of things retailers can and should be doing to be competitive in the new world of shopping.
The first step, says Mr. Moon, is building up a strong mail-order business. Depending on the retailer, this could mean starting one from scratch or improving one that is in place. Whatever the case, this will give a retailer the new inventory systems, special handling and bookkeeping tasks, and delivery arrangements needed to accommodate more at-home shoppers.
Retailers also need a much better, more tightly defined consumer profile, consultant Dorrington maintains.
''The era of mass marketing is behind us,'' he asserts. ''Stores can't be all things to all people anymore.'' Like the magazine industry, where specialization has become the key to survival, successful stores of the future will find a narrower, more specialized audience and cater to it.
He also suggests that retailers abandon the idea of trying to deliver everything to people's homes. With 50 percent of American women in the work force, people are just not home enough. Instead, he proposes a scattering of ''delivery centers'' where people could pick up their orders. Simpson-Sears, the Canadian subsidiary of Sears, Roebuck & Co., is opening several 5,000 -square-foot stores for just this purpose, he says.
Many retailers, of course, will have to install communications and computer systems for keeping records of available items and their prices, and for taking orders.
So far, says Maxwell Scroge, publisher of a Denver newsletter bearing his name, the new technologies for shopping have not won widespread use because of the number of competing systems. Until one of them wins widespread acceptance, he says, expansion will not go forward very fast.
The most likely winner of this competition, Mr. Scroge believes, will be the TV-telephone-keyboard systems similar to that used in Coral Gables. The videotex system going into Fargo replaces the TV set with a small, stand-alone terminal that can show financial information and computer ''pictures'' of products for sale.