Retailers Combine Online, Traditional Shopping

Retailers are trying new ways to win over Christmas procrastinators.

Brick-and-mortar chains seeking ways to improve this season's soft sales made it easier for last-minute consumers to finish their shopping on Christmas Eve. More customers this year will be able to pick up in stores on Tuesday, the last shopping day before Christmas, orders placed online.

For retailers, it can mean lower shipping costs - protecting profit margins - and the potential for more last-minute business when consumers visit.

"There is not a whole lot you can do at the 11th hour, but this is one of the few levers you can pull," said Sucharita Mulpuru, an e-commerce analyst at Forrester Research, about what the industry calls "omni-channel" shopping.

"If they can convince even 1 percent more customers to come to their stores, that's a big win."

Sales at retail stores, excluding e-commerce, fell 2.1 percent this past weekend, the busiest of the season, according to data firm ShopperTrak. That came three weeks after a poor showing on Thanksgiving weekend, raising concerns the season is turning out to be a bust.

Stores wouldn't say how much in-store pickup would contribute to sales, but Wal-Mart Stores is offering three times as many products this year as last year that can be picked up in stores under this service.

Target Corp started its in-store pickup service in November for select items, and Macy's Inc is testing it at about 10 Washington, D.C. area stores.

Gap Inc's "reserve-in-store" service, launched in June and expanded before the holiday season, lets shoppers go online to ask one of 600 Gap or Banana Republic stores to hold up to five items. The service was available on Christmas Eve.

Shoppers now visit 3 to 3.5 stores per trip, down from 4.5 to 5 stores in 2007, according to Bill Martin, founder of data firm ShopperTrak. That makes it even more important for retailers to make the best use of their shops.

Another benefit to offering in-store pickup: Shoppers like it. More than 40 percent of people wanted the relatively new, unknown service, according to a poll for Reuters conducted last week of 3,308 online shoppers by Bizrate Insights.

BIGGER SHARE OF THE HOLIDAY E-COMMERCE PIE

Blending e-commerce and stores is already paying off for some.

Online orders filled by a mix of both stores and e-commerce distribution centers accounted for 21 percent of e-commerce sales this holiday season compared with 17 percent in 2012, according to eBay Enterprise CEO Chris Sadirakis.

EBay Enterprise clients include Aeropostale, Dick's Sporting Goods, Toys R Us, and GNC.

The use of stores to help fill online merchandise sent to shoppers' homes is also increasing. The ability to use unsold merchandise in stores to fill an online order helps margins by moving an item that might otherwise have ended up in the clearance bin.

Macy's Inc now uses 500 of its 810 stores to help fill orders, up from 300 last year, and Kohl's Corp began "ship-from-store" service this year at 200 of its 1,100 stores. Wal-Mart is testing it at 35 of its 4,100 U.S. stores.

The next step, according to many analysts, will be for stores to provide the same-day delivery already available in some major cities by Amazon and EBay.

Amazon shoppers can get same-day delivery on Christmas Eve in major cities such as Seattle and New York.

EBay Enterprise's Sadirakis told Reuters he expected same-day delivery to be a much bigger part of the 2014 holiday season as retailers fine-tune it in the next year.

"You want your website to get people into your stores, and you want your stores to get people to shop on your website," said ShopperTrak's Bill Martin.

Otherwise, retailers will continue to see traffic drop, he warned.