Simplicity is king when it comes to a powerful business approach. Doing too many things is often met with failure–it is the clear-minded, steady handed approach of doing one or a few things well that makes for a solid company.
Big Box retailers are changing tactics in order to stay competitive. Companies such as Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT), and Sears Holdings Corporation (NASDAQ:SHLD) can still prosper in this tech age by following the age-old wisdom, “Same message, different method.”
Wal-Mart Stores Inc.
In addition, it has opted to increase lines of top-selling and high quality gadgets, such as Apple Inc. (NASDAQ:AAPL)’s iPad. The company has even added a new iPad app, a marketing gimmick aimed largely at more upscale urban shoppers to draw them back into the stores.
But that is not the only strategy it is using. Last year, Wal-Mart Stores, Inc. (NYSE:WMT) spent over $300 million buying up web-related companies in order to catch up with Amazon.com, Inc. (NASDAQ:AMZN) and eBay. Increasing its online inventory by 400%, it seeks to have a wider assortment of products online. The goal moving forward is to utilize the pressure on companies they buy to reduce their costs and pass savings to consumers. With Wal-Mart Stores, Inc. (NYSE:WMT) spending over $3.55 billion in online acquisitions in 2012, expect the online segment of the retailer to grow. With less costs associated with an online marketplace I fully expect future profits and margins to rise from this activity.
Target Corporation
Target Corporation (NYSE:TGT)’s approach focuses on one of its key advantages: price. To that end, it now boasts its aggressive price-matching policy. The retailer now matches prices that customers find at Amazon.com, Walmart.com, Bestbuy.com, Toysrus.com and Babiesrus.com, as well as matching its own online prices.
“Showrooming” – a term describing shoppers checking out items in a store but then buying cheaper online – has been an achilles heel of many big box retailers. Target Corporation (NYSE:TGT)’s policy, which expands on an existing ad-match policy, applies to items to be purchased at the register and previous purchases made within seven days. If a customer buys an item at a Target store and then finds the identical item for less elsewhere within one week, Target will match the price.
What is more, Target and WIRED, a media brand and source for the latest innovative technologies for consumers’ lifestyles, are offering WIRED Editors’ Picks for Target, a list of consumer electronics and gadgets designed to simplify and enhance digital music streaming, photography, personal fitness and more. This partnership does more than just advertise Target Corporation (NYSE:TGT) products. It also sets Target up as the ‘tech savvy’ alternative to other retailers – including tech specific stores like Best Buy and RadioShack. All of these price matching and partners translates to a company more tech savvy and poised for the growth of online retailing.
Target Corporation (NYSE:TGT) is also taking a page from Wal-Mart Stores, Inc. (NYSE:WMT) and buying up online retail outlets such as the Food Network and Rachel Ray to add to their growing online retail portfolio. This in turn translates to lower costs and higher profits moving forward.
Sears Holding Corporation
Sears Holdings Corporation (NASDAQ:SHLD) has been slow to follow suit, but it is also encouraging to see the growth of its community on the web. Earlier this year, it celebrated its one millionth MySears community member. It also has more than 1.5 million ‘likes’ on its main Facebook Page and 22,000 followers on its main Twitter page, all of which are continuing to grow. By expanding its reach into the far-reaching social networking platforms, Sears can benefit by drawing consumers to its online store as well.
Sears also has a ‘buy online – pick up in store’ policy, which seems to be working. Many thought the move would drive traffic and ‘impulse’ buying once customers were in the store. While this is true, the more beneficial aspect to it is that customers save a bundle on shipping. This allows the company to be more competitive in pricing. The company has recently introduced the ShopYourWay max, which allows for free online shipping if you pay a $79 yearly fee. Many consumers enjoy free shipping, and Sears has found a way to profit from it. With the investments in their online retail space and social networking Sears has finally started to turn the page now, and with the growth being seen the bottom line should continue to improve moving into 2014 and beyond.
Amazon.com Inc.
Don’t kid yourself — Amazon.com, Inc. (NASDAQ:AMZN) is above all a retail company. What is intriguing is that as retail giants such as those previously mentioned have plowed ahead to make their online shopping presence as convenient and enjoyable as in-store, Amazon is trying to step offline.
With its plan of creating a brick-and-mortar store, the drawback will be that pesky problem of overhead. The key to success will be moderation and plenty of steady planning, research, and implementation. It cannot rush into gobbling up real estate and suffer the same fate as companies that grew too fast and were left holding the bag when business slowed (Starbucks anyone?).
That being said, it is the mindset that keeps Amazon competitive. By continually asking, “How can we access more consumers,” it is constantly coming up with new strategies that will ensure future profitability. Amazon is the staple for online retailing, yet if there is money to be made by accessing consumers offline and capturing that market then they are doing well by their investors by investing in an off-line presence down the street from you. Wal-Mart Stores, Inc. (NYSE:WMT) has been incredibly successful by utilizing the brick and mortar stores. If Amazon can capture a fraction of the market share from Wal-Mart expect profits to vastly increase from current levels.
The trend continues: people will stay in their online shopping sanctuary where power lies in a few simple clicks and home delivery. Millions of convenience-seekers just find a few clicks of the mouse a better alternative to gallons of gas, crowded aisles and indifferent cashiers. The companies that are improving this process will succeed and are a good call for investors.
The article Which 4 Big Box Retailers Understand the Internet? originally appeared on Fool.com and is written by Casey Walters.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
