Retail Roundtable: Regionals Have Their Say
Perlman: In 2014 we improved our website dramatically. We switched programming and hosting. We now use Oracle for hosting and it has made a big difference in terms of speed. Our online business is growing 30 to 40 percent a year, so we’re happy with it. I don’t know the percentage but I wouldn’t be surprised if 50 to 70 percent of customers check online prior to visiting a store location. There’s nobody left who’s not online. Everybody has to have a presence. The biggest challenge to the industry as a whole that I see is, frankly, the inability to reach consumers economically in terms of advertising costs. And we all face this. It used to be that you could cover four TV stations and reach everyone who’s watching television. The one newspaper went to 70 percent of the people in a localized area. The cost of advertising for customer acquisition has escalated dramatically in our industry. This has occurred while our industry margins have gone down. I would say that’s the Number One problem in the industry. It’s not just our industry. I don’t see anybody happy with their newspaper advertising or their TV advertising compared to years ago. You have to produce 30 different types of advertising to reach the same number of people as you did years ago for three times the cost.
McMaster: [Wilshire doesn’t offer e-commerce at its website yet.] I just think it’s very competitive and it’s really price-driven, and we always look towards higher-margin type of solutions. I do believe there’s a segment of products that I can sell my existing customer base [online] that I can’t afford to sell them out of a showroom -– sub-$500 products, etc. But I think you have to have resources behind e-commerce and people, and we just haven’t explored that as a business model. We just think that there’s so many people in that business, I think it would be hard for us to differentiate other than with our local customers. [Examples of sub-$500 products that might make sense to sell online include] small desktop systems or iPod docks and headphones. Our vendors sell those. We have them on display. Our customers don’t really gravitate to a store like ours for those products. They would be better, I think, marketed to a different demographic or a different customer. And some people do a great job in the headphone business, but I think you’ve got to really know what you’re doing and merchandise properly online to do that—some products that are more shippable, online-type products, not large furniture or televisions. You can’t really afford to pay a salesperson profitably to sell a $300 product with $50 gross profit. It just takes too much time. [There are no immediate plans to sell sub-$500 products online.] Possibly [they will be added down the road]. I have considered it.