Slowly and tentatively, computer shopping is inching its way into the American retail scene.
Although electronic shopping for goods and services is proving to be more complex and its acceptance slower than earlier predictions, it is beginning to appear in a wide variety of forms in department stores, auto dealerships, banks, grocery stores and even hotels.
Electronic retailing covers a gamut of different marketing and selling techniques, all of which rely on video machines and/or computers. It can refer to something as simple as video cassette recorders placed strategically in department stores or shopping malls playing messages over and over to promote special merchandise.
More complex systems -- where consumers actually buy goods or services merely by touching a television screen and punching a keyboard -- are just beginning to be used.
In Sheraton Hotels, for example, guests soon will be able to check out in their rooms just by pushing some buttons attached to their televisions. After copies of their bills appear on the screen, guests can punch a button and automatically have their charges placed on a credit card.
Meanwhile, at a handful of Florsheim shoe stores, customers who can't find what they want in stock can go to a nearby television screen and browse through an electronic catalogue to order what they want.
Even more sophisticated computer shopping systems are in place for computer buffs who want to shop at home with their personal computers. By telephoning special computer-shopping services, they can scan printed lists of merchandise (no pictures) and then punch in codes to make an order. The goods will be charged to their credit cards and be sent promptly to the shoppers via the mail.
Despite the increasing opportunities to shop electronically, consumers appear very reluctant to do so. In 1985, Americans purchased $50 million of goods and services through all of the 15,000 different electronic shopping systems available in the country, according to the accounting firm of Touche Ross, whose consulting division specializes in electronic retailing.
For 1986, Touche Ross predicts such sales will quadruple to $200 million, with 30,000 systems in place. Even so, that dollar figure is still a tiny fraction of total retail sales in the United States. Last year, U.S. retail sales totaled $1.4 trillion.
What's more, the $200 million estimate is far below predictions made several years ago when some industry officials said that sales made through home computers alone would total as much as $9 billion by 1985.
Industry officials unanimously say the problem lies not with the technology -- simplistic though it may be compared with the machines envisioned for the future.
"The technology is ahead of the consumer right now," said Conrad Jutson, vice president of marketing for ByVideo Inc., a California company that has installed a number of electronic shopping systems in stores around the country -- some successful, many not.
"We have to let the consumer catch up," Jutson told technology vendors in a recent conference on electronic retailing sponsored by Touche Ross.
Many consumers remain uncomfortable about buying goods through a computer. Although they are growing more accustomed to such transactions, thanks to the pervasive automated teller machines (ATMs) offered by banks, a similar procedure at a department store -- where there are usually options and questions -- seems cumbersome and very time-consuming.
But even more significant, retailers say, is the failure of the electronic shopping systems to consider consumers' needs. As Phyllis Sewell, a senior vice president of Federated Department Stores, bluntly told technology vendors at the conference, so far, electronic shopping systems "do not answer a customer's need. There is no compelling reason why a customer should shop with these devices instead of other devices," she added.
In the case of automatic teller machines, consumers "didn't use them because they liked to interact with interactive machines -- they used them because the bank was closed or the lines were too long," noted Thomas Rauh, national services director for retail consulting for Touche Ross.
"We've seen a number of market failures simply because nobody asked the question: 'Does it really serve the customer?' " said Lili Mahlab, director of sales and marketing for Intermark Corp., another firm that is actively engaged in developing computerized shopping systems.
The market failures have been significant, particularly within the past year.
Last March, after investing millions of dollars and years of research, Knight-Ridder Newspapers Inc. and Times Mirror Co. decided to abandon their videotex experiments that used television sets and special keyboards to bring banking and shopping, news services and stock quotations into the home. Both companies cited lack of consumer interest for their decisions.
Meanwhile, another firm considered a leader in the field, CompuSave Corp., went under. CompuSave provided grocery and convenience stores with special electronic kiosks, offering consumers the opportunity to buy consumer electronics such as televisions or video cassette recorders at large discounts, without having to go into a store that sold these goods. Under the CompuSave system, a television screen would display the goods requested by a consumer when he or she touched the right spot on the screen. A special scanner would read the customer's credit-card information and print a receipt. Meanwhile, a computer would notify the appropriate manufacturer of the purchase so the goods could be shipped immediately to the shopper's home.
Industry officials say that one reason CompuSave failed was the poor choice of location for its terminals -- consumers are not used to buying electronics in a grocery store.
Despite these setbacks, the fledgling industry is pressing ahead, convinced that its future is not only promising but also near.
"Electronic retailing will be a vital part of retailing to come," said Harold M. Kester, president of the California Del Mar Group Inc. which has developed a computerized "Book Seller's Assistant," to give consumers advice on what books they should buy, merely by answering some questions about themselves (such as favorite books and movies).
Kester bases his optimism on the past. "In 1969, no one had electronic check-out systems. Today, there is not a department store in the country that doesn't have one," he said.
"We need more consumer education," added Rauh. "This is a new way of buying. It will take a natural period of time before people learn to use it. Look at the ATM market. It took more than 10 years to get over 25 percent penetration" in the banking industry, he said.
"Changing consumer demographics favor the increased use of electronic retailing," said Michael Mascioni in his book "Electronic Retailing." According to Mascioni, "Increased consumer interest in electronic shopping has been partially fueled by the rising number of dual-income households with members having less time available for shopping in stores. Also, the increasing percentage of college-educated consumers has placed a greater premium on more detailed product information. This group is likely to take a greater interest in the kind of product information that electronic retailing systems offer."
It is precisely in providing information -- rather than in making and closing sales -- where Rauh and other industry officials see the industry taking off in the near future. Systems that can provide information on a store location, current sales, nearby restaurants or out-of-stock but easily available goods will fare the best in the near term, Rauh said. So, too, are kiosks that provide information such as how to insulate a house or install electrical wires. Together, these should account for about 70 percent of the electronic retail market by 1990.
On the other hand, transactional systems, where consumers touch the television screen or attached keyboard to complete a sale, will do less well, Rauh said, capturing only 30 percent of the electronic retailing market by 1990. That represents a change in his prediction of a year ago that such systems could capture half of the market.
As for home computer shopping, "It is not going to take off in the near future," commented Richard O. White, who works with Rauh at Touche Ross. "It is not an economically viable market, and it won't be so unless two things happen: Personal computers need to be more widely available and cheaper, and video on demand has to be available at home. The Egyptian-looking graphics are not what people want to see on their screen when they want to buy something. They want to see what a product actually looks like."
For the time being, the driving force for electronic retailing will come not from retailers themselves but rather from the technology firms and manufacturers looking for ways to increase sales of their goods.
"Retailers are not visionaries," commented Perry Odek, ByVideo chairman. "They are more preoccupied with the day-to-day results."
Sewell of Federated noted, "We looked at the tide of developing software, but we were turned off by the cost. . . . That has encouraged us to wait a while. We'd like to have other people take the leading edge. We'll then be a fast second."