Post by arfanho7 on Feb 25, 2024 0:31:31 GMT -5
Margin compression is where most studies of the online threat begin. In most though not all retail verticals online retailers can offer lower prices than brick and mortar retailers because of their lower cost structures. In the face of this price competition brick and mortar retailers find themselves either lowering their prices across the board instituting price match policies with online retailers or accepting that they will lose sales to customers who are showrooming.
In all of these circumstances either because of price reductions or fixed cost deleveraging when low or negative sales growth reduces the amount earned on fixed costs the brick and mortar retailer finds itself with shrinking margins. Online retailers lower cost structures are driven by a variety of cost efficiencies. From an employee perspective positions Ukraine Mobile Number List such as cashiers and sales clerks are eliminated. Automated check out procedures take their place and the need for stocking or tidying up merchandise at store level doesn t exist. Without a store network real estate costs are confined to a handful of distribution centers. points of distribution rather than throughout.
A store network means that forecasting can be more accurate and replenishment more timely and thus markdowns shrink costs and working capital needs are reduced. Online fulfillment and home delivery also create traffic problems for brick and mortar retailers. Brick and mortar retailers have long benefitted from merchandise lines that matched needs and trip drivers with impulses and wants within their stores.
In all of these circumstances either because of price reductions or fixed cost deleveraging when low or negative sales growth reduces the amount earned on fixed costs the brick and mortar retailer finds itself with shrinking margins. Online retailers lower cost structures are driven by a variety of cost efficiencies. From an employee perspective positions Ukraine Mobile Number List such as cashiers and sales clerks are eliminated. Automated check out procedures take their place and the need for stocking or tidying up merchandise at store level doesn t exist. Without a store network real estate costs are confined to a handful of distribution centers. points of distribution rather than throughout.
A store network means that forecasting can be more accurate and replenishment more timely and thus markdowns shrink costs and working capital needs are reduced. Online fulfillment and home delivery also create traffic problems for brick and mortar retailers. Brick and mortar retailers have long benefitted from merchandise lines that matched needs and trip drivers with impulses and wants within their stores.