The battle is on between bricks-and-mortar retailers and their increasingly potent Internet adversaries.
Frustrated by once-loyal customers who have been wooed away by online merchants, retailers are gearing up with new weapons to stop the continuous flow of shoppers from stores to computers and smartphones.
With the holiday season approaching, some chains are vowing to match prices with their biggest online rivals. Others are offering free layaway and expanding their assortment of unique products or adding Wi-Fi and other digital upgrades inside stores to entice tech-savvy shoppers. There's even increasing talk about same-day deliveries.
In California, traditional retailers are happily anticipating picking up more shoppers after online retailers started collecting sales taxes in September, losing a crucial advantage when consumers comparison shop. Virginia, New Jersey and several other states will begin collecting sales tax in the coming years.
"We think we have a huge advantage over Internet-only companies," Toys R Us Inc. Chief Executive Jerry Storch said in an interview. "Every possible way the customer wants to use the Internet — or their neighborhood store — to interact with Toys R Us is available. The customer can choose how to do business with us."
Online merchants say they are ready to fight. Nearly a quarter of shoppers say they'll go online to do most of their holiday shopping this year, according to a survey from consulting firm Deloitte, and 75% said they expect to buy at least one item online this season. But Web retailers said they sense the competition with traditional retailers and are busy as well, kicking off their holiday ads before Halloween and expanding free shipping and other promotions.
Amazon.com, the nation's largest online retailer and responsible for about half of all Internet retail purchases in California, has geared up.
"Every year we want to offer great deals," spokeswoman Pia Arthur said. "We will have fun types of things going on for the holidays."
It's always a high-stakes competition for the retail dollar, and experts say this year it's more intense than ever. And no wonder: Merchants rake in an estimated 25% to 40% of their annual sales in the last two months of the year. Shoppers this year will drop an estimated $586.1 billion during the holidays, according to the National Retail Federation.
"If the stores don't do more, then they are going to become antiquated," said Marshal Cohen, chief industry analyst at NPD Group. "But that is why they are doing so many things right now to test what works, and to tell shoppers that they are in the game to play."
Traditional retailers will have to work hard to win back long-lost customers such as Paul Johnson, once a regular at malls but who now buys "almost everything" online.
"It's such a hassle running around to stores trying to find anything you want," said Johnson, a 30-year-old fashion model from Los Angeles, who prowls the Internet for items on his wish list — including kitchen supplies, DVDs and cotton T-shirts.
Best Buy Co. and Target Corp. are taking direct aim at Web merchants with online price matching, partly to grab customers who now use their stores as showrooms — to check out items and then go buy them more cheaply on the Internet.
"We are taking on showrooming," said Amy von Walter, a spokeswoman at Best Buy, which has granted salesclerks the ability to match online prices for appliances and hardware including tablet computers and cameras during this holiday season. "It's really about empowering employees to be able to match the price when it makes sense and make the sale."
Target vows to match prices with Amazon and the Web stores of Wal-Mart Stores Inc., Best Buy and Toys R Us.
"It's instant gratification for guests," said Dustin Hamilton, Los Angeles district manager for Target. "Instead of waiting one day or four or five days for something to come in the mail, you get it right away for the same price."
The discounter has also added free Wi-Fi to its stores and placed QR bar codes — which can be scanned by smartphones to bring up product information — on ads so shoppers can buy the items directly from their phones.
Toys R Us has extended free layaway until Dec. 16 and rolled out a reservation service so parents can nab popular playthings early and avoid frantic last-minute searching during the holidays.
"You can go order online and pick it up immediately at your neighborhood store," said Storch, the CEO. "You don't have to wait around home for FedEx to arrive or come home to the little sticky note on the door."