Clicks and bricks

“WE TEND to overestimate the effect of a technology in the short run and underestimate the effect in the long run,” observed Roy Amara, an American futurologist. This is certainly proving true of retailers and their attitude to the internet. After a panic at the turn of the millennium about the impact on their industry of online shopping, bricks-and-mortar stores settled into making only modest alterations to their business model or, ostrich-like, trying to ignore it. Few have so far made the radical changes needed to meet the threats from, and tap the enormous potential of, e-commerce (see article).

Such inaction threatens retailers' survival. Online sales are now approaching $200 billion a year in America. Their share of total retail sales is creeping up relentlessly, from 5% five years ago to 9% now. People in their 20s and 30s do about a quarter of their shopping online. True, few ladies who lunch will buy their Christian Dior dresses online; and bargain-hunters will still enjoy rummaging in discount stores like Dollar General. But to attract everyone in between, retailers will have to build a strong online offering while making their shops nicer, more conveniently located and, in the case of many big-box retailers, smaller. Otherwise they are likely to go under, as United Retail Group, an American clothing chain, did this month.