Retailers prep for a holiday season in the 'now' economy

PHOENIX -- Mike Auger is preparing for a holiday season in the now economy.

Shoppers are turning to the Internet in record numbers. They are crossing off items on their holiday lists one tap or mouse-click at a time. They don't want to wait 48 hours, 24 hours or 12 hours for orders to arrive. They want them now.

Auger's job is to deliver, usually within an hour.

"Our customers are thinking buy-it-now," said Auger, owner of PikFly.com, a Web-based delivery service in Phoenix. "They want Domino's delivery. They want it now."

Auger described PikFly as the Uberization of  the shopping experience. Through its website, customers can order products from about 100 local merchants and get same-day deliveries without putting down their phones.

He said PikFly fills a local hole left open by online retail giants such as Amazon and shipping companies such as Federal Express. That is the ability to quickly connect customers and retailers separated by a few miles or zip codes.

"Foot traffic to brick-and-mortar stores is falling," he said. "We're no longer accepting long delivery times. Customers are saying, 'Amazon is telling me I can get it now, too.'"

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The National Retail Federation’s annual Holiday Consumer Spending Survey reported that consumers said nearly half of all their shopping this year would be done online, more than at any other time since the group started tracking online shopping trends in 2006. The survey reported online holiday shopping will be up to 46.1 percent, compared with 44.4 percent of all shopping in last year's survey.

Millennials are driving the get-it-now trend. The Federation's survey found 18- to 34-year-old shoppers are the most likely to take advantage of the option for same-day deliveries.

The explosion of the now economy is changing the retail experience for both sellers and buyers. Online shopping and expedited delivery could allow some retailers to extend the holiday shopping season by several days.

Not so many years ago, if you wanted a package delivered by Christmas it would have to be shipped no later than Dec. 19, and even then it might not get there. In the now economy, local shoppers could order packages on Christmas Eve and still get them wrapped and under the tree by the next morning.

Elliot Rabinovich, professor of supply-chain management at Arizona State University's W.P. Carey School of Business, said brick-and-mortar stores large and small have been forced to refocus their brands by offering niche products or turning shopping spaces into showrooms where shoppers can check out the products.

"People still go to brick-and-mortar stores to buy gifts, or to shop for products they go home and buy online," said Rabinovich, who co-directs of the school's Internet Edge Supply Chain Management Lab. "That's where retail stores will find a great deal of purpose."

Rabinovich said local stores using local delivery services can compete in the "instant fulfillment" market. But he said most retailers will do better offering "white-glove delivery" based on convenience. Customers might not be able to get the product on the day of purchase, but they will get it at a time and date that fits their schedule.

Despite Amazon's promise of low prices, variety and convenience, it is not going to replace holiday shopping. Rabinovich said other retailers are successfully competing with Amazon because they offer an experience rather than just a product.

He singled out booksellers as an example. Barnes & Noble has become a destination "offering all kinds of things besides books," Rabinovich said. Specialty bookstores in the Phoenix area such Changing Hands and The Poisoned Pen also fill a specialty niche.

Barbara Peters, owner of The Poisoned Pen in Scottsdale, said a large part of managing holiday demand is about managing customer expectations while giving them something unique. Even so, there is no way to ignore the now economy.

"Phoenix is at the far end of publishers' warehouse locations, which are mostly located in the East," Peters said. "Major publishers put accelerated free shipping into play in mid-November, so what would normally take  five to seven business days to ship to us now takes two to three . At their end they have presumably beefed up inventory to meet demand, but it's better to order in quantity than rely on the last-minute (deliveries)."

Peters said it's better to be realistic about deliveries than disappoint fans.

"We generally establish a cut-off date for online orders needed for Christmas delivery," she said. "We have a major signing for (author) James Rollins Dec. 15 and we are advertising it to his fans as a New Year's book."

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In addition to the book, a global adventure featuring a special operations team called Sigma Force, the Poisoned Pen has created a Happy-New-Year from Sigma Force insert for the packages being shipped.

"We do a tremendous gift card business for the holidays, which can be e-mailed anywhere," Peters said. "And we can send a card in lieu of the actual book or other merchandise ... until the designated merchandise arrives."

The Poisoned Pen is "the home bookstore," for several high-demand authors, such as Diana Gabaldon, Clive Cussler and Sue Gradfton — and that requires available inventory.

"We have increased to two offsite storage facilities and have upped our inventory of signed books to meet demand by fans," Peters said. "In the case of Diana Gabaldon, by some thousands of books, toys and Outlander merchandise."

Not many buyers are realistic about how the supply and delivery side of the business works, Peters said.

"People like last-minute shopping," she said. "But we've learned over the past 10 years that even those who pay for special or express shipping can be disappointed when weather... or mistakes or trainee drivers or almost any wrinkle delays delivery."

Meanwhile, at PikFly, last minute is the nature of the business.

Auger said many retailers make about 70 percent of their annual sales during the holidays. He said last-minute deliveries can translate to 10 percent more business for some retailers who in years past have had to cut off shipping days before Christmas.

"One really big problem for local vendors was getting products to local customers," he said. "We do that."

Particularly when it comes to food and booze, Auger said.

About 80 percent of PikFly's business is grocery and alcohol sales. Two of PikFly's biggest vendors are Liquor Express in Tempe and Von Hanson's Meats and Spirits in Chandler. Another is Maryland Deli and Liquor in Phoenix.

Customers can order everything from banana chips to sparkling wine, along with 94 other pages of grocery items available at Maryland Deli, on PikFly's website.

Once an order comes in, drivers, who are called PikFly navigators and work mostly part-time, are dispatched via apps to pick up the delivery. Auger often does double duty as a driver.

He said the now economy means the holiday shopping and shipping season doesn't end until Dec. 25.

"I really think the concept of ordering by the 19th is gone," he said.