While Sears Holding and JC Penney have suffered from the free market, the feature of augmented reality through Google’s glasses will be a real challenge for retailers. This is also true for American Eagle, Bon-Ton Stores and Abercrombie & Fitch, among others.
Google Glasses, pricey now, are eventually expected to be as common as smartphones. According to Wakefield Research, more than 90% of Americans are looking forward to using wearable tech devices like Google Glasses. It is impossible to project when that will happen. But it is not difficult to foresee the damage that will be inflicted on retailers by Google Glasses’ augmented-reality shopping features.
Here’s why retailers should be worried about Google Glasses:
1. Augmented reality, which enhances the real world view through computer inputs, brings far more choices to shoppers.
The demand for what Sears, JP Penney, Bon-Ton Stores, American Eagle and Abercrombie & Fitch have to offer is trending lower, as manifested by the declining sales. Now they have to compete with customers who use an augmented reality. That will increase the choices available. With declining sales already, it will be even worse for those already suffering due to more competition. Now factor in Crystal Shopper, an app that allows people to scan barcodes to compare prices and Amazon ratings.
2. This takes online shopping to a whole new level, so there may be even less motivation to go to the mall.
Google Glasses will allow shoppers to try on clothes from a wide variety of companies at home. As reported, foot traffic at malls took a ding due to the ease of ordering online through Amazon and eBay. It will decline even more with Google Glasses delivering more choices to the consumer without having to spend the time, energy and money it takes to go to the store. For mall denizens such as Sears and JP Penney, this is another blow.
3. The clothiers have too many shorts.
If Charles Darwin was still around and investing based on his “survival of the fittest” theory, it would seem natural that he would have a large short position on these retailers. He would not be alone: A short position of 5% is considered to be troubling. According to FinViz, it is 36.90% for Bon-Ton Stores, 30.03% for JC Penney, 21.37% for Abercrombie & Fitch, 21.15% for Sears and 12.67% for American Eagle Outfitters. Evolution in technology and consumer trends has not been kind to these companies; and it should not be kind in the future, as seen by the high short floats for each.
There is certainly no reason to expect Google Glasses to improve the performances of these chains — the Internet, smartphone, town center shopping arrangements, and other developments in retail, have not!
Source: TheStreet