To find the true "softer side of Sears," visit the offices of Sears Online, tucked away in a corner of the retail giant's sprawling headquarters outside Chicago. In what employees call "the great room," there's a basketball hoop, a Styrofoam putting green and a foosball table, all meant to evoke the studied irreverence of a dot-com playpen. But the effort seems strained, since no one is playing the games or relaxing in the plush sofas and chairs. Instead, they're all off in their cubicles, frantically preparing for the site's first major holiday season.
Last year capital-rich start-ups fell all over each other shelling out ad dollars to lure new customers. Today many of those e-commerce companies like Pets.com and Furniture.com are strumming harps in dot-com afterlife. Now the big boys are hungry to take a bite out of e-tail's growing share of the retail pie. Research firm Jupiter Media Metrix forecasts that online holiday sales will jump to $12 billion this December, from $7 billion last year. After they sat out the start of the e-tail revolution worrying that a Web presence could destroy their core business, traditional retailers including Wal-Mart, Kmart, Nordstrom and Sears are finally online with major sites, often with a full complement of merchandise from their stores. Thus lucky online shoppers can acquire Kathie Lee Control Top Pantyhose from Walmart.com, or a Michael Graves-designed chess set from Target.com. The major retailers are betting shoppers will feel more comfortable at their sites, which don't threaten to vanish tomorrow in a splash of red ink. Still, as their first big holiday approaches, the old guys are biting their nails, worrying about technical snafus and unsatisfied customers that could besmirch their storied brands. "The risk of failure and the visibility of what this means for Sears's future is extremely high," says one Sears exec.
Fending off the new players, of course, is e-commerce heavyweight Amazon.com. Jeff Bezos, the CEO of the Seattle-based e-tailer, invited journalists to tour a super-automated distribution facility outside Reno last week. The message: shipping directly to customers is a tough, specialized business that the offline retailers are not familiar with. "Those are not e-commerce companies," he says of his new competition. "It's not that they can't do it or won't do it, but it's not easy."
But traditional retailers talk up the rewards of leveraging their massive networks of stores and distribution centers to gain the upper hand online. For example, if the Gap navy plaid boxers you ordered don't fit, you can return them at the nearest store. The same applies with other major retailers' sites. Richmond, Va.-based Circuit City is pioneering another front by allowing customers to conveniently shop online, check the inventory of the store closest to them, then pick up the purchase in person to avoid a shipping charge. Most striking is the aggressive new attitude of the traditional merchants. There's no longer any worry in corporate boardrooms about "cannibalization"--one division of the company stealing sales from another. "They realize that if they don't eat their young, someone else will," says Mark Goldstein, CEO of Kmart's BlueLight.com.
The only thing that's puncturing the high spirits of retailers these days is the burden of making it all work. In an infamous misstep last year, orders placed with Toysrus.com after Dec. 9 didn't arrive in time for Christmas. Toys "R" Us quickly allied itself with Amazon as a result, a move that many retailers may be considering if their holidays turn out to be less than merry. To be safe, this year nearly every traditional retailer will be on high alert. Sears, for instance, plans staff meetings seven days a week over the next month to review each order and monitor the site's "vital signs" for potential problems. Each major retailer is also desperately trying to lower short-term expectations. Jeanne Jackson, CEO of Walmart.com, says she has no plans to beat out Amazon.com this holiday season: "We just want a good foundation." Still, she adds, "if anyone is going to create a defining technology for e-commerce, it will be Wal-Mart." To Jeff Bezos, them's fighting words.