TORONTO — If you’ve gotten comfortable ordering things online for home delivery, you’re fostering a habit you could be forced to break or scale back one day.
Amazon and companies like it which promise to deliver everything from groceries to diapers to clothing to your front door at no charge are destined to curtail the practice, according to Jerry Storch, a veteran North American retail executive.
Storch, who now heads up Hudson’s Bay Co. as chief executive said Amazon’s “super cool” factor is propelling interest and new sales at the moment, as is Amazon’s model of delivering some goods to the home for free.
Both the cool factor and delivery model may well “dissipate” over time, he said.
“It doesn’t last if you don’t make money,” Storch told a conference hosted by the Retail Council of Canada in Toronto on Tuesday. And Amazon, which continues to make steady incursions in Canada — and is now the biggest online retailer here — still doesn’t.
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Miles ahead
A report from BMO Capital Markets published last month indicated Amazon had an estimated $1.9 billion in Canadian sales last year. That puts the Seattle-based Internet giant miles ahead of bricks-and-mortar retailers like Sears Canada, Walmart Canada and Hudson’s Bay. Canada’s iconic department store chain had digital sales of about $91 million in the same period, according to BMO.
Still, like other Canadian retailers now responding to Amazon, Hudson’s Bay is trying to ramp up digital sales quickly by making shopping for clothing, household goods and other products easier on smartphones and tablets.
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Through the first three months of the year, Hudson’s Bay digital sales were up 35.1 per cent, helped by the addition of Saks and Off 5th, two higher-end banners HBC bought in 2013.
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Storch said online sales will inevitably rise to be a dominant form of shopping behaviour, but shoppers will cover much of the cost of delivery themselves by picking up products at stores for the majority of sales.
Central hub
Orders placed from work and home, on phones, computers and tablets have created at least 100 ways customers can order and receive goods now, he said. But a physical visit to the store is required 70 per cent of the time, by HBC’s count. “Stores are not obsolete, they’re the central hub,” the department store exec said.
Ultimately Amazon and online retailing firms will increasingly converge with traditional retailers by opening physical stores or partnering with those who have them, Storch predicted — an idea Amazon is experimenting with in the United States now.
“It’s just too expensive to ship a football to somebody’s house,” he said.
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