sealPurdue News

January 10, 1997

Internet sales won't doom retail stores, expert says

WEST LAFAYETTE, Ind. -- Despite what some experts are predicting, shopping on the Internet does not mean the demise of malls and retail outlets, says a Purdue University expert.

"We've heard people crying wolf before," says Richard A. Feinberg, director of Purdue's Retail Institute and head of the Department of Consumer Sciences and Retailing. "When the home shopping networks first appeared on television, experts started telling us that consumers would eventually do all of their shopping at home by phone. What these purveyors of doom fail to realize is that a tremendous number of individuals truly enjoy the shopping experience. They love to see, feel, smell and try out merchandise before they buy."

Feinberg acknowledges that television shopping channels and Internet shopping have taken a bite out of on-site outlets' profits, but he says the bite hardly draws blood.

"Estimates show that retail sales on the Internet will grow from $500 million in 1996 to approximately $7 billion in 2000," he says. "Those figures sound impressive until you compare them to the $2.3 trillion in retail sales and $70 billion in catalog sales in 1996."

That's not to say doing business on the Web isn't a good idea for retailers, Feinberg says.

"The Internet is a profitable outlet for a few select types of businesses," he says. "Candy, coffee and flowers appear to be doing well."

Before retailers go on-line, Feinberg says, they need to take a close look at their customers and their services. By encouraging local customers to shop on your Web site, you may be discouraging them from visiting your store. That's not good, since a large percentage of retail sales are "impulse" sales, Feinberg says. However, if you have a product that appeals to people 3,000 miles away, the Internet can be a great way to reach them, he says.

"If your customers and services are unique and fairly narrow in scope, there's a much better chance your product will be discovered and sell well on the Internet," he says. "But, you have to remember that Internet shopping is nothing more than an electronic catalog and that returns will kill you, as they do with regular catalog sales. Returns are a tremendous headache in an electronic medium."

Feinberg also warns of Internet "thieves" who charge thousands of dollars for spots in virtual malls.

"The National Retail Federation will help you set up a Web page for $199," he says. "But don't be fooled into thinking you're going to get rich selling on the Internet. People love to shop in stores. It's as American as baseball and apple pie -- and to get those, it's still quicker to jump in the car."

Source: Richard A. Feinberg, (765) 494-8296; e-mail,
Writer: Victor B. Herr, (765) 494-2077; e-mail,
Purdue News Service: (765) 494-2096; e-mail,

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