Christmas Shopping for Fun & Profit

The trend is undeniable and irreversible. Santa is buying all his presents at Amazon.com this year. At least he's buying them from the comfort of his home (in bed and in his pajamas with his laptop, if I know him at all) from some online retailer or another. And this is a good thing. The economies of scale mean that Santa is getting a better price and the comments of previous customers and patrons (the real value of online shopping) help to guarantee  the gift he's buying won't break in a week and isn't a rip-off. Everyone goes home happy.

Well, everyone except for the brick & mortar retailers. The people with heating and lighting bills and clerks and salespeople and leases. 

And there's also this issue of the Christmas shopping experience. There's something to that. Sure it's a monumental pain in the ass. It's crowded, probably cold, and nine times out of ten you can't find what you're looking for at all or you could have found it cheaper online. But I don't think that's the point. I think that shopping for Christmas presents is an integral part of the season that, when abandoned, is missed--despite its obvious shortcomings as an activity. Not to quote too directly from any one apocryphal Christmas song, but the hustle and bustle of Holiday shopping and coming into a warm store  from the cold are sensual memories that most of us have and recall with pleasure. Christmas shopping--despite all of our moaning and groaning about it--is one of our national Holiday  pastimes, as real as hot dogs at Baseball  games and fireworks on the Fourth of July. 

There's no denying that the ease of online shopping will make it dominant in the years to come and that we will inevitably lose some of the physical retail outlets we are familiar with as they succumb to the Amazon.com / Walmart pinch or move themselves entirely online to cut costs. But there is certainly a future for retail, particularly at the Holidays. I'm not convinced that consumers will ever be comfortable with purchasing the majority of their clothing online. There will always be the need for boutique shops and niche retailers specializing in the large and fragile items that do not take well to shipping. Finally, most retailers will find a way to capitalize on the things that send us scrambling out into the cold and traffic in the first place: the experience. Macy's has cultivated this "Christmas Shopping Experience" for years, and it packs the store, all ten floors of that massive store each and every year. Other major retail chains have always done well to associate themselves with Christmas shopping, Gap comes to mind, but in the future I think we will see more and more retailers focus on the ambiance even more than the Holiday advertising and specials. The ambiance is why we've left our beds in the first place. 

The future of Christmas shopping is online, and the future of retail is Christmas shopping for fun.  

Update on Tuesday, December 8, 2009 at 9:16PM by Ryan Hindinger

Shortly after I posted this yesterday I put it out in my twitter feed like this:

It was quickly pointed out to me by the L&T @meechypants that I had perhaps been in error in proclaiming Toys'R'Us "doomed".  

Toys'R'Us is not the best example of a retailer that is looking at a bleak future as a result of online shopping.  For starters, it's a toy store.  Toys have not ever gone out of style and they are particularly popular at Christmas.  Also, toys are not big ticket items that are likely to be passed over during tough economic times, like computers and other high-end electronics are.   As the new CEO of TRU put it rather succinctly, "We sell toy cars, not real cars, and they don't need financing."  True enough.  And while TRU was very recently more than $6 Billion in debt, thanks to private investors and the poor fortunes of their competitors--TRU recently purchased both KB Toys and FAO Schwarz--there is hope that the company may become publicly traded again in the near future.  

Toys'R'Us is nowhere near out of the woods yet, but their survival as perhaps the only large "Toy Store" in America seems assured in the short term.  In the long term however, I still think their business model, at least in its current incarnation, is headed for the abyss.  The Baby Boomers are not yet taking full advantage of the online marketplace.  They will continue to buy their grandchildren toys at retail outlets.  But as their purchasing power and--sadly--their numbers dwindle in the decades to come, and the internet generation becomes parents themselves, the retail stores whose products are neither unique nor difficult to ship will have to adapt or disappear.  It's entirely possible that Toys'R'Us will become an online merchant mogul and survive for centuries to come, but to do that they will have to abandon the majority of their stores and become a completely different type of company.  That's a very difficult trick to pull off. 

So I offer up the correction that Toys'R'Us is not dead...yet.