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It's "Click to Buy" for Retailers

Zacks Equity Research

Gone are the days when retail was all about brick & mortar.  “Click to buy” is the new name of the game, as "transformation" is the new mantra among the retailers.

With changing times, an increasing number of consumers are using smartphones and tablets to purchase items. Thus, retailers like Macy’s Inc. (M), Aeropostale Inc. (ARO), J C Penney Company Inc. (JCP) and many others have incorporated e-commerce platforms to bring in incremental sales.

Retailers are now largely concentrating on buyers’ needs with huge discounts, free shipping and providing ease of shopping, in order to attract consumers to the online platform. 

Adding to the services string is the announcement of Pay Pal, a division of eBay Inc. (EBAY), which entered into deals with 15 retailers, to provide shoppers with the flexibility to pay for their purchases via phones, Reuters reported.

Despite these initiatives, it is clear that a huge chunk of sales will inevitably be lost to online giants like Amazon.com (AMZN), as well as smaller and more localized shopping portals. Given this trend, retailers are also tightening costs and focusing on operating efficiencies to enhance shareholder’s value.

The technological advancement in marketing, such as ecommerce and online business, provides a win-win situation between buyers and sellers. For buyers, it is primarily convenient (more choice, less time spent, user references/feedback), while for sellers, it is primarily cost efficient (requires relatively less real estate and enables companies to expand the existing customer base globally).

Moreover, it also enhances the visibility and reputation of the retailer as a global firm offering great fashion and value at the same time. On the other side, shoppers get the benefit of purchasing researched products at the best prices, as they can compare the prices being offered by various companies.

Going forward, the players who will be able to cater to the needs of consumers will grow volumes and will have the final laugh. Moreover, the ratio of converting shoppers to buyers will also depend on the continued economic recovery and improvement in the job market. This will ultimately boost consumer confidence while increasing their spending.

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