Brick-and-mortar stores and Amazon go head-to-head

By Mae Anderson

Associated Press

Published: Friday, Nov. 29 2013 11:33 a.m. MST

In this Oct. 18, 2010 file photo, United Parcel Service (UPS) driver Paul Musial lifts an Amazon.com box in Palo Alto, Calif.

Paul Sakuma, File, Associated Press

Enlarge photo»

NEW YORK — This holiday season, it's Amazon vs. everyone else.

The online giant has attracted customers from big store chains like Wal-Mart and Best Buy with low prices and convenient shipping. Now, stores are fighting back and going head-to-head with Amazon as the contest for customers heats up during the busiest shopping period of the year.

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

The two sides are dueling 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, 31, who lives in Washington, D.C. "I don't think so."

There's 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. Both online and brick-and-mortar retailers can make up to 40 percent of their annual revenue in November and December. And this year, they're competing for the growing number of shoppers who're as comfortable buying online as in stores.

Holiday sales are expected to rise 3.9 percent to $602.1 billion, according to The National Retail Federation. Of that, about $78.7 billion is expected to be online, up 15 percent from last year, according to Forrester Research.

Here's how the fight is playing out:

PRICE WAR

One of Amazon's biggest advantages is its low prices. It can charge less for everything from TVs to T-shirts because it doesn't 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. Best Buy even is offering to refund the difference if a customer finds a lower price after they purchase something up until Christmas Eve. The strategy could eat into profits, but retailers hope sales will increase.

Staples is among retailers also offering the same discounts online and in stores during big shopping days like the day after Thanksgiving known also Black Friday. "We want customers to be able to shop however they want and whenever they want," said Alison Corcoran, Staples senior vice president.

SPEEDY DELIVERY

Stores had long seen their physical locations as an albatross, but now, a they're using them to their advantage.

"Everybody was telling me ... 'These stores, that's really a liability that you have,'" said Hubert Joly, Best Buy's CEO. "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. Wal-Mart, for one, said items ordered online and shipped from stores usually are delivered in two days or less — quicker than having items shipped from warehouses across the country.

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