Bleak Friday

http://www.economist.com/businessfinance/PrinterFriendly.cfm?story_id=14973087
Summary

The article is about how normally Black Friday (the Friday after American Thanksgiving) is the period when companies start making money -being in the black- but this year, because of the recession, consumers have become more value conscious and are abandoning normal stores in favor of online retailers. It also talks about how growth in retail sales is slow and contrasts that with the quick and rapid growth of online retailing. Finally, it talks about how brick and mortar retailers plan on responding to online retailing. Some examples are bundling things unsellable online such as music lessons in Best Buy's case or yoga classes with Lululemon.

Connections

Firstly, there is a section in chapter one that lists the channels of distribution for products. One of those channels is the integrated channel. The article says that companies that produce products but don't have stores can sell their products online now because of online retailing, thus making an integrated channel of distribution. Another connection would be the online retailer's lack of a location. Online retailers don't need to worry about whether their store too close to an overpass or not far enough from the industrial parks. Their lack of a need to choose a good location also helps them cut costs and possibly transfer the savings onto customers.

Reflections

I think that it's interesting that even though there's so much hype about online retailing in the article, it only accounts for 6% of all sales in the United States and will only be at 8% by 2013. The article states that Amazon's sales reached 5.5 billion dollars in the third quarter of the year. It really makes me wonder about how large the sales money is altogether, if you include brick and mortar retailers, online retailers, and itinerant retailers. I think that retailers are learning their lesson too late. Black Friday is an important time for retailers and you would think that they learned a lesson last year on Black Friday that online retailing is growing fast and might be a large threat to business.