It's versus the rest as retailers fight for holiday shoppers

Traditional retailers are fighting back against the online giant with discounts and convenient shipping in the busiest US shopping period

PUBLISHED : Friday, 29 November, 2013, 4:10am
UPDATED : Friday, 29 November, 2013, 4:10am

This holiday shopping season, it is Amazon versus everyone else.

The online giant has attracted customers from the likes of Wal-Mart and Best Buy with low prices and convenient shipping.

Now, physical stores are fighting back and going head-to-head with Amazon as the contest for customers heats for the busiest shopping period of the year.

Stores are matching the lower prices on and offering the same discounts in stores as on their websites. For its part, Amazon is giving customers the option to pick up items at physical locations and adding Sunday delivery.

The two sides are duelling over shoppers like Jessica Danielle, a speechwriter who plans to do the bulk of her Christmas shopping on Amazon.

"All the time spent going to brick-and-mortar stores, is it worth my time?" said Danielle. "I don't think so."

There is a lot at stake for both sides. Amazon has built a following but wants to grow its business globally. Meanwhile, brick-and-mortar retailers struggle to keep shoppers from using their stores as showrooms to test out and try on items before buying them cheaper on Amazon.

The holiday season ups the ante. Online and traditional retailers can make up to 40 per cent of their annual revenue in November and December. And this year, they are competing for the growing number of shoppers who are as comfortable buying online as in stores.

Holiday sales are expected to rise 3.9 per cent to US$602.1 billion, according to the National Retail Federation. Of that, about US$78.7 billion is expected to be online, up 15 per cent from last year. Here is how the fight is playing out.

One of Amazon's biggest advantages is its low prices, because it does not have the high costs of running physical locations.

Last year, some retailers offered to match the lower prices that customers find on websites like Amazon during the holiday season. And this year, more have made this a policy heading into the holiday season.

Electronics retailer Best Buy even is offering to refund the difference if a customer finds a lower price after they buy something up until Christmas Eve. The strategy could eat into profits, but retailers hope there will be an increase in sales.

A growing number stores are also using physical locations to their advantage.

"Everybody was telling me 'these stores, that's really a liability that you have'," said Hubert Joly, Best Buy's chief executive. "Absolutely not. It's an asset that you have 1,000 warehouses strategically located close to the customers."

Best Buy is among the retailers using their locations as distribution hubs from which they can ship goods that customers' order directly to their homes.

But Amazon is widening its distribution network. It added 8 million square feet of distribution centres, hired 70,000 people and added 1,382 robots to help get packages out the door.