Has the Internet Really Hurt our Industry?

July 2012

One of my clients called me recently to tell me about something that happened in his store during peak prom season.  A girl came in asking to try on a particular dress.  He was probably correct in his assumption that she was the same girl that had already called earlier in the day to ask if that dress was in the store in her size.  While she was still in the dressing room his employee overheard her speaking on her cell phone, “Hi Mom, yeah, it fits perfectly” she said, “go ahead and order it.”  She then came out of the dressing room, handed the dress back to the sales associate and left.


Unfortunately, this is not an isolated incident.  If you own a retail store then you probably have experienced a similar situation, albeit perhaps not as obvious or blatant.  I doubt that anyone in our industry would dispute that the Internet has had an increasingly detrimental effect on the ‘in store’ business of Full Service Specialty Stores [FSSS].  What I will explore in this article are ways in which the Internet has affected our industry and offer some helpful suggestions to counteract some of the negative consequences we are experiencing.


First we need to look at the history of how the Internet has been used in our industry.  There was a time in the not too distant past when our industry was virtually unaffected by the Internet; but somewhere along the way a dramatic change took place.  This change took place with no fanfare and, although it would change our industry forever, at the time we were virtually oblivious to what occurred.  What was this earth shattering event that took place from which there would be no turning back?  It was when manufacturers decided to create websites that depicted images of their entire collections.


I have been in the industry since 1973, so I was around to experience this transition but I, as the rest of you, did not think anything of it.   After all, these websites were great tools for retailers to use to view the latest collections, get market dates and locations, and other such “business to business” information.  The prevailing thinking was that having a website that displayed the entire collection was a more expedient way for manufacturers to use the latest technology to convey this information to their retailers.  What was not considered in those early days was the fact that the entire world would now have access to this information; for the first time in the history of our industry consumers would be able to view manufacturers’ entire collections.


The technology was so revolutionary that no one made the intellectual leap (and quite a leap it would have been) to think that consumers would inevitably see items on these websites that they would not see in any store that they had the ability to visit.  Think about it; prior to this unprecedented dissemination of specific style detail availability, consumers only had access to the styles that were ordered by retailers within driving distance of their homes.  Now all styles that were available from all manufacturers were exposed to every consumer that had Internet access.  We have done some calculations to give you an idea of the difference.  An average consumer is within driving distance of three FSSS prom stores; [to clarify, a “FSSS prom store” in this scenario would be one that purchases “designer prom category” collections that are shown at the Atlanta, Dallas, and, Chicago markets.]  In each of those stores, in the course of prom season, she can view an average of about eighty different styles in her size; even if you take into consideration that she can see and ‘special order’ the dresses that are not in her size, that increases her options about eight-fold.  Assuming that there are no duplicate styles in any of the three stores, the average consumer was exposed to approximately 2000 different styles in the course of prom season [3 x 80 x 8 =1920].  How does that compare to the number of different styles that a consumer can view on the Internet today?  It is not even close!  The average consumer can now view over 20,000 different styles; and this is only taking into consideration the styles that are posted on the websites of manufacturers that show their collections at the major prom and bridal markets!


Here is another way to think of it; back in the days before the Internet, consumers would also see the 100’s of styles that manufacturers advertised in national periodicals.  Back then these ads usually included a ‘store listing’ so girls would know where they can purchase these styles; for a retailer to have their store listed they would place a minimum order on these advertised styles.  When the manufacturers started putting their entire collections on the Internet it was as if they nationally advertised their entire collection or mailed their complete catalog directly to millions of homes!


Once the manufacturers realized that their websites were not just being viewed by retailers but also by literally millions of consumers, it was not long before they added a list of their authorized retailers to their websites.  Basically this concept was adapted from the practice of listing stores in their national advertising; however the concept did not really adapt.  The consumer was now, in essence, being told that the entire collection was available in any store that was listed!  When we first launched eFashionCentral.com seven years ago I would speak with retailers that would tell me that they were receiving 100’s of calls a day during peak prom season.  Nearly all of these calls were from girls that were on the manufacturer’s website that found the store’s telephone number on the store locator list.


For a short time this was a tremendous advantage to FSSS and manufacturers.  Consumers were able to shop a manufacturer’s entire collection and then contact their local retail store to purchase any style in any available size and color.  Many stores found this to be a nuisance, but most welcomed this additional business.  As new manufacturers entered the industry most just automatically set up their websites with images of all of their styles and a list of their authorized retailers.

For the increasingly growing demographic of “Internet shoppers” what a FSSS ordered for their stores had become completely irrelevant.  The “Internet shoppers” could now shop for virtually everything that was available to them and purchase it from whatever store they chose that was listed on the manufacturer’s store locator.


So when did it all go wrong?  It was not long before a few innovative FSSS owners realized that they could put up their own websites.  The “Internet shopper” would no longer need to jump around to dozens of manufacturer websites to see everything that was available to them; they could now shop, and even place their order right on the retailer’s website.  Within a few years it was not only FSSS retailers that had websites, but many “Internet only” retailers started appearing on the scene and before long (and up until today) the battle over the “Internet shopper” became fierce.


Currently there are over 1000 websites where consumers can place orders online for nearly all of the popular “designer prom category” collections.  Only about ten legitimate retail websites are truly in the “Internet only” category.  Keep in mind that the only thing that makes a retailer “Internet only” is the fact that they do not have a brick and mortar location.  Did you know that the single largest ecommerce prom website has a brick and mortar location?  It is only 400 square feet, but it is an actual brick and mortar location.  Of course, I do not know their actual numbers, but I would say that it is safe to estimate that they sell well over 100 dresses through their website for every dress they sell in their store.


Let us go back to the story about the girl that tried the dress on and then called her mother.  Of course, we all assume that that this girl saw the dress on a website; perhaps, but not necessarily, at a discounted price, and then found a store that had the dress in her size so she can try it on before she ordered it from the online retailer’s website.  Let me draw another scenario for you; one that could have happened in January 2012 or in January 1982.  A consumer is in her local prom store, she spends four hours with a sales associate; she finally finds the perfect dress but they do not have her size.  The sales associate assures her that she can special order it in her size.  The consumer pulls out her cell phone (or runs to a pay phone and finds the yellow pages, if it is 1982!) and starts calling local stores to simply ask them,  “do you have this style in stock?”  When she finds a store that has it, she goes directly to that store.  She takes up perhaps fifteen minutes of the second store’s time trying on the dress to make sure that it fits; then she calls her mom back at the other store to tell her to have the sales associate, the one that she spent four hours with, order the dress for her in her size.  I don’t think that anyone would think that the girl did anything unethical, especially if she was concerned to take up as little time in the second store as possible.  After all, the store where the sales associate that spent four hours with her would ultimately get the sale; that certainly seems more fair.  Here is another scenario that is much more common.  A girl visits three prom stores and spends two hours with the sales associate in each store.  Then she goes back to one of those stores to purchase her dress; was she doing anything wrong to the other two stores?  What if she visits the three stores and does not find anything that she likes, but then goes to the Internet and finds something online that she loves that none of the three stores had?  Should she be forced to go back to one of the stores to have them order the dress for her or does she have the right to order the dress that she wants right there on that website?  You may be thinking, “yes, she can order it on the website, but only if that retailer has an actual brick and mortar store”; but does it really matter whether the online retailer has a store or not?  The reality is that none of the three stores who invested time with her are getting the sale!


Is there a solution?  First of all, as much as we might hate it, we have to realize that the Internet is a convenience that the consumer is not willing to give up.  For those of you that think that consumers will not buy a prom, pageant or even a wedding gown that they have not tried on, just ‘try on’ this statistic…one out of every four people that got married in 2011, met on the Internet.  The Internet it is not going away and it is becoming more and more commonplace for girls to shop for and order dresses over the Internet that they have never tried on.  This is not to say that they have not tried on lots of dresses in their local stores, but many times they find the dress that they will ultimately purchase, a dress that they have never tried on, on the website of an online retailer.  But don’t lose hope; there are some basic things that we can do as an industry to bring the business back to the FSSS or to at least make for a more even playing field amongst all retailers:

1)     Immediately stop purchasing from manufacturers that allow their collections to be discounted on the Internet.  Let manufacturers know that your order is contingent on the fact that you can cancel your order and return everything that they have shipped, if their collections are perpetually being advertised at prices lower than MSRP on ecommerce websites

2)     Check the website of every manufacturer that you intend to order from to be sure that they do not list “Internet only” retailers separately from their brick and mortar stores.  “Internet only” retailers (or even brick and mortar retailers that have large ecommerce sites) should only be listed once in their particular city and state.  Manufacturers should be encouraged to not list “Internet only” retailers at all.  However, if they are listed, it should be noted on the manufacturer’s website when the retailer is “Internet only” and is not open to the public.

3)     Never purchase from a manufacturer that sells directly to the consumer on their own corporate website.  Many manufacturers are doing this openly with the excuse that they also have retail stores.  Others are more discrete and may have obscured the fact that they are selling direct to the consumer.  Here is the bottom line – a consumer should not be able to place an order right there on the manufacturers website.  If the manufacturer has retail stores. then those stores should be listed once in their respective city and states.  Retail prices should never be posted on the main website; in all instances, the consumer must leave the manufacturer’s website and arrive on a separate retailer website to make their purchase.

4)     Take into consideration the manufacturer’s attitude about the Internet and Internet sales?  When a manufacturer considers online sales in general, is there an attitude that is supportive of FSSS’s?  This will take some “due diligence” for you to discern, but this is something that you can no longer ignore.  If a manufacturer really wants his or her collection to be purchased from a retailer that will actually extend real service to the consumer, then they will want to help drive the business to you as a FSSS.  For example, is the manufacturer informing consumers (on their website and in their national advertising) that consumers should only purchase from authorized retailers that are listed on their website’s store locators?  If adopted by all manufacturers, this one policy would educate the consumer of a simple way that they can know for sure that they are purchasing an original designer product.  Because a consumer is viewing the list of stores near where she lives, it will bring back the standard of buying local even if she ultimately orders from that local store’s website.  It will also virtually eliminate the problem of Chinese factories selling counterfeits over the Internet.  If every manufacturer added this phrase to their website and to all their national advertising it would eliminate the problem of counterfeit items being sold over the Internet, “BUYER BEWARE! If you purchase from any store or website that is not listed as an Authorized Retailer on our website then you can be absolutely certain that you are purchasing a counterfeit product of inferior quality.”


Many manufacturers are already abiding by these rules.  Unfortunately, there was one rule that was never established before the Internet got to the point where it is today and it is with this that we have the biggest issue.  Why should “Internet only” retailers be allowed to sell these products online when there is no possible opportunity for a consumer to take time in their “store” to try items on from the collection?  You can give it your best shot, but chances are you are not going to win that battle.  The overarching rule of establishing a retail outlet and placing minimum orders are being met by these retailers.  Manufacturers have every right to sell to any retailers that meet these basic criteria.  It simply was never in the “rule book” that someone had to actually have a brick and mortar store to be an authorized retailer.  There are some manufacturers that have imposed “no internet” policies on their collections and in some instances these have been beneficial to FSSS’s.  In the prom and pageant category however, the missed opportunity of being exposed to an ever increasing population that wants to shop on the Internet, will far out way any benefits that they are experiencing by barring their products from the Internet.


There is one more bit of advice that I have for FSSS’s that already have a website or that are considering getting one; and it is a flash-back to the days before the Internet.  Retailers got so overwhelmed with the idea that they can have everything that they have access to displayed on their sites, that they have forgotten that their particular selection is what truly defines them as a FSSS.  It is very rare that you will see a FSSS website that shows what is in their store on their website.  As a result every website is starting to look alike because every website has virtually everything!  Sure it is time consuming, but just as you have developed a loyal following in your store, you should represent what is special about your store on your website.  There is nothing that better represents what makes you special than showing the world what you have selected from the 20,000 options that were available!


Sal Macaluso is CEO of eStyleCentral.com an Internet marketing program that is currently used by over 250 full service specialty stores.

Has the Internet Really Hurt our Industry? One of my clients called me recently to tell me about something that happened in his store during peak prom season. A girl came in asking to try on a particular dress. He was probably correct in his assumption that she was the same girl that had already called earlier in the day to ask if that dress was in the store in her size.
Major manufacturers embrace the eStyleConnect app that can be used by retailers to write orders digitally using a laptop, notebook, iPad, or other tablet. Click the "More Info" button below to view a demo of this amazing program and to sign up to use the eStyleConnect app at the upcoming Atlanta Market!
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