Lecture 11: Brick and Mortar vs E-Commerce

Central Questions

  • How do consumption theorists approach the case of brick and mortar vs e-commerce?
  • How might classical theorists approach this case?
  • How might contemporary theorists approach this case?
  • The main focus when discussing about the case of brick and mortar vs e-commerce is on acquisition of a product / service

Schultz and Block Video 1

  • In the video clip, the discussion evolves around the issues within retail, in which people are not spending their money in brick and mortar. Instead individuals are increasingly participating in shopping online (e-commerce)
  • Retailers such as Macy’s, Coach and Walmart are competing with e-commerce. Brands are increasingly beginning to reshape themselves, shifting from the department store to online stores

Schultz and Block

  • Why is the shift to online shopping occurring, who does it and why? E-commerce is overtaking brick and mortar, forcing them to change their strategies
  • It is important to note that e-commerce is not simply abstract. There is an existence of brick and mortar establishment for online retailers (Ex. Amazon has multiple warehouses)
  • However, both brick and mortar and e-commerce are targeting the same consumer, but different techniques
  • One aspect of this shift to e-commerce is lower overhead cost, where online retailers such as Amazon do not need to maintain store fronts
  • Another aspect is that customers are also responsible for this shift, where people are increasingly following to shop online
  • Therefore, customers are driving the evolution of retailers. The wheel of retailing
  • What is happening to cause consumers to shift focus from retail physical establishments to the ethereal world of online and electronic systems?
  • Research Questions: Is online shopping growing in the US? Who are the leading retailers in online selling, what is their growth pattern? How do customers search for products online? Is it similar or different from how they search via brick and mortar retailers? What type of promotional incentives do online customers use? Are traditional shopping incentives as effective online as they are offline?
  • They found that online shopping is going down from 2011-2013, but we might say something different nowadays. It has become easier for people to shop online through smartphones, tablets, computers
  • Furthermore, even though number of people seems to be going down, the volume of online shopping purchases is increasing
  • Amazon is the major online seller, beat out EBay and kept rising. They sell multiple kind of commodities, gaining peoples’ trust to shop from Amazon
  • Looking at technology, Best Buy in 2013 seems biggest, but Amazon might overshadow it nowadays
  • In-store comparisons preferred for home decorator and gift cards, as well as apparel. However, it looks like retail stores are being used to search and evaluate, and online is being used for purchase (Ex. Going to a retail store for fashion products to search and evaluate the product, and ordering it from the same retailer online for a cheaper price) (Ex. Amazon Prime card is a major factor in moving customers online from predominantly brick and mortar retailers)
  • Another idea here is the existence of globalization, where there is a shift from local shopping / stores to ordering products online. However, at the same time, e-commerce provides a major advantage for local businesses to expand their reach both online and locally

Schultz and Block Video 2

  • The video clip discusses trends in retail, where brick and mortar remains to be prominent for consumers and e-commerce has not completely taken over
  • The challenge that department stores have recently had includes the kind of products being sold, which are available online for cheaper prices

Sepkenci and Tigert Video 1

  • In the video clip, the news report discusses the transition from Zellers to Target, and how it resulted to the rise of a campaign amongst employees, who felt it was not fair to start all over again by applying for a job at Target
  • Furthermore, brick and mortar employees tend to differentiate from those working for online retailer, being fundamentally different

Sepkenci and Tigert

  • Four major sections to this article. Changing nature of the consumer markets in North America (evolving demographic, economic, social trends). Restructuring of the competitive spaces in the retail industry and evolving trends. Most salient developments in retailing enterprises. What’s next 30
  • Demographic Change: Changing population boom in the USA starting the late 80s (millennials). The retail landscape is changing based on how the products are being acquired based on the changing population
  • Furthermore, they argue that Canadian population is going to recede, while American population is becoming more diverse ethnically.
  • They found that incomes are shrinking in the US at this time (during 2010), related to the US economic recession
  • Aside from the consumption cycle, other changes have affected it (Ex. Digital / online access has changed the retail world dramatically. we saw the rise and fall of the rental store. Cable TV has dramatically increased,however, it has actually decreased today. The article was written in 2010). Demand for cars has changed. Also, Walmart and Target have come onto the scene by expanding to supercentres
  • Furthermore, moving production (outsourcing) has had a major effect on the success of retailers, as well as their ability to create no name or generic products
  • Additionally, Sepkenci and Tigert discuss a trinity of value seeking US customers, including global value retailers (they provide means to purchase the product) and global value providers (they provide the stocks / products)
  • They argue that key categories of retail include discount department stores, dollar stores, warehouse membership clubs, off-price merchants, factory outlets, category killers (refers to when retailers stock more than one type of product. A major example of this is Amazon), lower margin department stores (they have a variety of different price points),specialty retailers, extreme value supermarkets
  • Wal-Mart is a system of distribution nowadays, which means that they have the capability to ship online, hire a lot of employees, based on the fact that it is such a massive/unique system
  • 5th quintile retailers (specialty retailers) fairly resilient over time (upper-middle class). Specialty retail is different from targeting value-seeking consumers
  • Additionally, malls are going on the wayside
  • How are retailers going to react? Brick and mortar retail hard to establish internationally, thus they move online. For e-commerce, this is not an issue whatsoever because they started online from the beginning, and their distribution points have already been established
  • Wal-Mart vs Amazon? Amazon is winning big time since they have a larger variety of products, with fast shipping
  • Furthermore, the Rule of 2 (refers to when two retailers competing against each other) seems to be applying in Canada fairly well, because there seems to be two retailers competing against each other in a specific area / location (Ex. An area where there is a Second Cup and Starbucks)
  • Also, it is important to note that certain goods / services are not available on e-commerce, such as buying a coffee, getting nails done or getting a tattoo

Sepkenci and Tigert Video 2 and 3

  • The first video discusses Target exiting Canada because they opened/replaced a lot of existing stores in the country at the same time.
  • The second video discusses the failing of Target generating positive profit, resulting to the retailer closing in Canada. Retail experts argued that price difference was a major factor for the failure of the retail chain

Amazon GO (Video)

  • The first video discusses the advantage of Amazon GO, where customers can go to a retail store, and avoid checkout lines and pay directly from the app
  • The second video discusses the disadvantages of Amazon GO, with the lack of Amazon stores, unemployment. Amazon GO is still confusing for consumers to adopt to

Classical Theorists Comparison

  • In the current case of brick and mortar and e-commerce, it is difficult to compare them to classical theorists
  • Adorno and Horkeimer discuss mass production, and this can be related to e-commerce. Adorno and Horkeimer would argue that due to the advancement of technology, labor is being replaced by the system of automation, accelerating capitalism with products being massively produced and consumed on a global scale

Contemporary Theorists Comparison

Eckhardt et al. would argue that specialty consumption is still evident with the existence of high cultural capital

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