Major Retailers Gearing Up to Battle Amazon at Holiday Time

You might not want to think about the holidays just yet, but major retailers have been laying out and executing battle plans since the final cash register drawers closed on 2010.

The main investment for many large retailers, according to Bloomberg, is online. “Last holiday season, online sales reached a record $32.6 billion, up 12 percent over the previous year,” according to market researcher ComScore Inc., Bloomberg reports.

Even though the overall economy is struggling, that dollar amount is expected to go up at the end of this year. Bloomberg points out that some “budget-conscious shoppers” are now making their purchases online, where prices can easily be compared and free delivery can get products directly to their end destinations.

“Many brick-and-mortar retailers have had their ‘a-ha’ moment as Amazon continues to grow and the Internet is getting more viable,” said Mick Mountz, chief executive officer of Kiva Systems Inc., which builds warehouse robots that help orders get fulfilled quickly, according to Bloomberg.

Some of those retailers just weren’t ready to fulfill the number of online orders they received, the site notes, using Midwestern department-store chain Von Maur as an example. “We were totally blindsided and it was chaos -- people running around the warehouse with printed order sheets, grabbing items and sending them out,” Chief Operating Officer Melody Westendorf told Bloomberg. “We were getting stuff wrong, orders were very late, and we had a lot of unhappy customers.”

To keep pace, Amazon is opening 15 new distribution centers this year, Bloomberg reports. Meanwhile, Walgreen is spending more than ever on its e-commerce efforts this year, Bloomberg reports. “We’ve had a sense of urgency and are focusing on bringing in new customers online more than anything else,” Sona Chawla, president of e-commerce, said. One successful digital effort is the drugstore. Customers send photos of their medicine labels using their mobile photes to refill prescriptions.

Toys “R” Us is also putting major cash into its online division, Bloomberg reports. “We need to look at the online store and the brick-and-mortar stores the same,” said Gerald Storch, CEO of the company.

“Coming out of the recession, retailers realized it’s going to be a lot more competitive for consumers’ dollars,” said Al Sambar, a retail strategist at consulting firm Kurt Salmon, Bloomberg reports. “You can no longer be that guy still playing with the wooden tennis racket when everyone else is picking up metal and graphite.”