Perhaps the biggest danger facing retail companies is new technology, as consumers find ways (not least by using using�Amazon (AMZN)) to meet their shopping needs that don’t involve going to their nearest Wal-Mart Stores (WMT) or Nordstrom (JWN) location.
So for fans of retail stocks, today’s Wall Street Journal story by Shelly Banjo brings some welcome news, suggesting the industry is alive to the change and won’t go down without fight:
Retailers have cut way back on opening new stores, and in some cases they have been closing locations. That frees up money for technology and other projects that aim to capture consumers’ online spending.
“Gone are the days where we’re building 50 to 200 stores a year,” says Hal Lawton, a senior vice president at Home Depot. “We’re shifting that capital to technology that can help us advance our business at a much faster pace.”
U.S. retailers spent $58.6 billion on technology in 2012, up 9% from the year before, according to Forrester Research. Online sales rose to $225.5 billion in 2012, up 15.8% from 2011, according to the U.S. Commerce Department.
It’s not just about launching online retail outlets, but simply seeing where the technology goes — @Walmart Labs being an example of the free-thinking approach many retailers are taking.
But as Banjo cautions, many of the strategies have yet to reap big rewards, and some simply haven’t worked out:
Evidence is mixed on whether these investments are paying off.�Best Buy
(BBY)�launched its venture-capital arm in 2008, but it has yet to see big payoffs from stakes in companies that make items ranging from electric motorcycles to in-home sleep-tracking devices, analysts say.
Nevertheless, you’d like to think that with enough time and investment a few of these bets will pay off. And if nothing else, it’s heartening to know that many of retail’s big beasts aren’t simply hunkering down and acting as if the old ways of doing business are all that matters.
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