Enough Americans have begun shopping online that it’s more than just retail outlets feeling the effects. Even food service locations are noticing the slowdown in retail traffic.
A recent report from the Associated Press detailed how a slowdown in fourth quarter retail traffic – brought on by consumers choosing to shop online en masse, instead of at brick-and-mortar store outlets – had hurt earnings projections for Starbucks. The report noted that Starbucks blamed a “seismic shift” away from brick-and-mortar shopping and toward e-commerce transactions for its slowdown in revenue. The company’s sales increased at U.S. cafes by roughly 5 percent at the end of 2013, compared to 7 percent recorded in the same timeframe during 2012.
“The impact to us is that there are fewer people out and about in the weeks leading up to Christmas,” said Troy Alstead, CFO of Starbucks, according to the news outlet.
Another Associated Press report, citing sales information provided by Wal-Mart and Amazon.com, among others, noted that consumers have begun to shop online to such an extent that brick-and-mortar retail locations are struggling as a result.
“Consumer behavior evolved quickly, as retail foot traffic fell, while online purchases grew,” said Bryan Stockton, CEO of Mattel, according to the Associated Press. “From my perspective, the 2013 holiday period has to be one of the most transformative I have seen.”
Meanwhile, e-commerce company Amazon was able to “set records” in multiple different sales metrics, according to the AP report.
Ken Perkins, president of RetailMetrics, told the news outlet that Wal-Mart is one of as many as 33 major retailers who will be lowering their fourth quarter sales projections as a result of a slowdown in shopper traffic during the holiday season. He also noted that this will lead to increased competition – necessitating lower price points, in all likelihood – during the year to come.
“A highly competitive environment is going to be staring (retailers) in the face throughout the course of 2014 the pressure and competition are not going to abate at all,” Perkins told the Associated Press.
J.C. Penney even reported that its online sales had increased by more than 26 percent year-over-year during the final quarter of 2013, according to an Internet Retailer report. This illustrates the huge extent to which consumers migrated their shopping practices to online stores and to virtual credit card terminals during the end of 2013.Back To Blog