As retail stores gear up for the busiest shopping season of the year, most will be watching not only traffic coming in their front door but traffic coming to their Web site. And if they're not, they're in trouble.
That's because this is the year in which Web commerce will make its serious debut, during the most serious of shopping seasons. It's no longer a question of whether retail stores should have an online presence to
promote their bricks-and-mortar operations, but of how much actual business they're doing in cyberspace.
This year consumer online spending is expected to total $2.4 billion, growing to $17.4 billion by 2001, according to Forrester Research. The Web is no longer a place for brochure-ware; it's now a conduit for actual transactions. With cyber-storefronts such as Amazon.com and CD posing serious competition to real-life retail stores, merchants must start putting electronic commerce operations in place now or they'll see these online shops cutting into their business.
There are several technology-related factors that are driving Web commerce, such as enhanced browsers, Java applications, security standards and other solutions that make online shopping easier, more compelling and safe. But beyond the technology is the behavioral shift toward online shopping, driven in part by the increased marketing efforts of IBM Corp., Microsoft Corp., AT&T Corp. and other companies pitching Web business. Consumers are shopping online -- not in mass, but in significant enough proportions to make it a viable channel.
Online merchants still face challenges. Harried holiday shoppers expecting to save time and money online still want personal assistance. Some online retailers, such as The Gap and Macy's, are providing e-mail gift reminder services, gift-wrapping and home delivery.
Other Web retailers take heed: If consumers don't find friendly, convenient service in cyberspace, they may hyperlink straight to their cars and head for the nearest mall.
Too often when earnings slump, companies take the budgetary ax to all manner of spending -- especially advertising budgets and payrolls. Eastman Kodak Co.'s painful new cost-cutting plan wisely protects advertising outlays as a key ingredient for building itself a better future.
Faced with diminished earnings, anemic film sales and a less than stellar new product record, Kodak's blueprint to cut expenses $1 billion over the next two years will cost 10,000 employees their jobs. There are probably few people in this country who, after living through the shrinking of corporate America, cannot empathize with the pain that causes.
Kodak's decision to protect its advertising presence is somewhat radical for companies in trouble -- and no one can doubt the need for drastic change at Kodak. While its overall marketing budget remains stable, Kodak will actually increase its $110 million in U.S. consumer ad spending in TV, radio and print by shifting some of its $200 million in marketing funds away from trade shows, direct marketing, promotion and merchandising. The additional ad dollars will support new products in 1998 as well as the existing Advantix and film lines.
Kodak still must come to grips with its struggling digital products and other shortcomings. But for a company trying to keep a brand viable in an intensely competitive market, sparing ad budgets the ax was remarkably enlightened. Kodak's long term resiliency will in part be dependent on its image in the marketplace among consumers. And that will help determine the future safety of