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How Apple and Amazon are Growing but Best Buy, J.C. Penney, and K-Mart are not

Chinese customers at the newly inaugurated Apple Store in Wangfujing shopping district on Oct. 20 in Beijing, China.
Chinese customers at the newly inaugurated Apple Store in Wangfujing shopping district on Oct. 20 in Beijing, China.
Retail can be an industry in decline-but limited to traditional retailers. For firms that have become successful doing something different, opening a chain of stores brings countless clients as well as the profits which are using them.

This paradox in the retail companies are evident in a few of the largest names in the mall. Traditional retailers like Biggest score, J.C. Penney, Sears, and Kmart are struggling to reverse losses, turn themselves around and present shoppers new why you should think they're relevant. The recently announced merger of Office Max and Office Depot is the latest illustration of a retail glut which has already sunk Borders, CompUSA, Circuit City, and many others.

Yet Apple, a technology company and newcomer for the retail scene, operates a network of greater than 200 U.S. stores who have developed a new paradigm for brick-and-mortar success. Microsoft, a software company, runs about 60 U.S. stores, with plans to open more. Even Google, an information company, is rumored to get retail ambitions.

At first glance, the key to retail success today seems to be a tech tie-in or possibly a hip brand. But one other factor increasingly differentiates winning stores from losing ones: trust. "Many with the retailers have gotten away from sync with consumers," says analyst Bob Hetu of research firm Gartner. "They're violating trust making use of their customers."

Having the best price, obviously, is one of the main things shoppers value, in case they just don't trust the retailer they could still placed their business elsewhere, set up costs are right. Best to buy, for instance, recently offered to match any price shoppers could find for a product online, to fight back against "showrooming," in which consumers search for a retail store to check out the merchandise, then order it from a web site for example Amazon utilizing their smartphones.

But a recently available Gartner survey learned that many shoppers who practice showrooming would still would rather buy online, even when the retailer proposes to match the purchase price. In reality, shoppers may view price-matching policies and also other types of ad-hoc deals as gimmicks, which degrades trust rather than enhances it.

J.C. Penney is another struggling retailer that suffers from price-policy confusion. Under a turnaround effort supposed to move the chain upscale, Penney's swore off of the heavy discounting that trashed its profitability and contributed to a down-market image. But when that alienated many traditional customers, Penney's returned to discounting, leaving many shoppers wondering what sort of store it can be, anyway.

Data on corporate reputations shows how trust pertains to success in the current marketplace. In the latest survey of corporate reputations by Harris Interactive, Amazon, clearly probably the most successful online retailer, arrived first. Apple-which runs essentially the most profitable stores, with regards to sales per square foot-came in second.

Struggling retailers, meanwhile, have been falling within the Harris ratings. Biggest score fell from 27th in 2011 to 41st this season. J.C. Penney dropped three spots to 37th. Sears, which lacked the visibility to generate this list next year, made the rankings in 2013-but were only available in 46th having a score indicating its reputation is "poor."

Google, meanwhile, ranked fourth in the Harris survey, with a score indicating an "excellent" reputation, while Microsoft came in 15th having a score within the "very good" range. That positions both companies for retail success, if they execute well.

In spite of the shift to shopping on the web, physical stores still account for most purchases. Gartner estimates that 80 % of retail sales will still take place at brick-and-mortar outlets in 2016. The outlook for dominant big-box retailers such as Wal-Mart and Target is secure, if not bright.

So Biggest score, J.C. Penney, and other struggling retailers can't blame their woes purely on online competitors which don't must finance expensive real estate. In reality, some retail experts debate that the showrooming trend gives retailers a great (yet often missed) possiblity to make an impression on new clients once they've found its way to a store to look into the goods.

The retail landscape will continue to quake, however, with chains that don't get caught up with rapidly changing consumer tastes facing even tougher times. Showrooming, for example, is spreading beyond gadgets to home-improvement goods, baby gear and many items that are expensive enough to bother looking around for. Amazon and also other online stores, meanwhile, still enter awesome lines and expand their competitive focus. The list of bygone retailers probably will get longer.

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