It was 21 years ago that the first ‘secure online purchase’ was made – Sting’s fourth album, Ten Summoner’s Tales on CD for £7.74 plus postage. Fast forward to today and Office for National Statistics figures put the average weekly spending online for last year in the UK at an astonishing £718.7 million. Move Commercial explores how this ever growing market is now looking to the high street.
Industry experts have long forecast that the increasing move to online retail would slowly kill off the high street as we know it. However, over the past
few years we have seen a fascinating paradox appear as high street stores continue to grow their online product whilst more formerly online-only businesses have begun to increase their ‘real world’ presence.
In fact, here in the North West, previously online-only luxury furniture retailer Made.com, has recently opened its third UK showroom in Liverpool’s Metquarter. This may be a sign that it is no longer a battle between online and high street and that the two mediums can complement each other well. A high street presence for an online business can help develop its brand awareness with consumers. Similarly, an online shop for a high street brand offers customers an easier and more convenient way to order its products.
“Retailers want to reach customers at every touch point whether that’s offline or online, so it’s important for pure plays to have a presence on the high street,” says Annabel Kilner, country manager UK at Made.com.
“Having an offline presence helps customers to have a deeper emotional connection with a brand. As consumers have more and more choice these days, that connection is increasingly important. Customers will buy from brands they like, not only those with great products.”
“Over 80% of the major transactions in the NW have been internet related, in floor area terms this equates to over 1.5m sq ft in the last 12 months.”
Kilner agrees that the opening of more online-only firms on the high street highlights how there is less of a battle between the two mediums.
“There is an opportunity for both pure plays and traditional bricks and mortars. Connecting the two, along with all the other marketing channels, is now the key battle,” she adds.
Earlier this month, online giant Amazon opened its first bookstore in Seattle. Prices in-store will be the same as those offered online and it will stock the most popular titles from the website. Back in March, tech-giant Google opened its first physical store in London selling its Android phones, Chromebook laptops, and Chromecast TV service. The store offers consumers the change to interact and learn more about the firm’s products. UK supermarkets have also this year begun stocking products from Graze, a previously online-only food company.
These events are backed up by research conducted by retail expert Harper Dennis Hobbs in 2014, which suggests that online pure play retailers, more than ever before, need a physical store presence in order to maintain market share and sales in an increasingly crowded market.
The report profiles a number of previously online-only retailers who have seen increased sales after developing a physical presence. One of these retailers is Oak Furniture Land, which now makes most of its sales through its high street stores. A physical store not only increases sales in its own right but helps to grow the brand and encourages customers to seek them out online.
“It’s not quite a reversal of retailing but retailers have seen a benefit from trading online and they have been established high street retailers;” says John Barker, partner at Hitchcock Wright and Partners. “John Lewis is one of the market leaders; a strong department store with a very strong internet business. They find that a lot of their internet customers also shop in store.
“Having an offline presence helps customers to have a deeper emotional connection with a brand. As consumers have more and more choice these days, that connection is increasingly important.” – Annabel Kilner, head of Made.com
”I’m finding that young businesses that start off online trade quite well then they hit a ceiling and with some products people actually want to see it, feel it and they need to trust it. With the bigger retailers, they’ve got a brand and people trust the brand and they are happy to buy something online but where you’ve got ‘flipflopsrus.co.uk’ nobody’s ever heard of them.
“If they can get out onto the high street then people can see the quality – that is where it’s coming back to the more traditional store offering.” Barker agrees that with more online companies looking to move onto the high street it could be a chance to fill some empty spaces in town centres.
“There is a good chance that the internet-based retailer is not necessarily taking advantage of the situation [empty retail spaces] but can open a pop-up shop for very little cost, very little rent, not committing to a long lease, or any lease in some cases,” he adds.
“So, it’s a sensible way of filling some of these empty shops in struggling locations with a quality product.”
Although Barker is not currently seeing a significant increase in the number of online-only companies taking up retail space on a long-term basis, he admits there has been a “greater demand for pop-up shops.”
“That is something that I think will continue,” he says. “It seems to be sound retailers that are experimenting with a physical store and offering quality products.”
“The high street plays an important role in retailers’ brand identity and customer service, we are seeing online-only firms strategically establishing a physical presence.” – Richard Padley, director of retail at Bilfinger GVA
It’s clear the advent of online shopping has changed the retail landscape irreversibly but what is also becoming clear is that this move to online retail does not have to necessarily mean the end of the high street.
“As far as the major retailer occupiers are concerned, online shopping was never going to replace the high street,” says Richard Padley, director of retail at Bilfinger GVA.
“The reality is, online and high street complement each other and retailers that have already recognised the evolution of shopping habits and requirements are at an advantage, providing the entire customer service, be it in a store or online.
“The high street plays an important role in retailers’ brand identity and customer service, we are seeing online-only firms strategically establishing a physical presence. We’ve recently seen Jacamo open stores and now even Amazon is trialing an actual physical bookstore in Seattle.
“Shopping revolves around the entire service offered and is very often linked to ease and convenience. We are seeing the successful retailer using both online and the physical store along with other tools such as social media and quick free delivery options to optimise their service to fulfil the customers’ needs.”
Creating a physical presence on the high street allows a previously online-only company to attract more customers, especially the type who tend not to use the internet for their shopping. With this presence on the high street, a company can significantly develop its brand awareness and increase sales both in-store and on the web.
Although the overall outlook for the high street still points to a gradual decline in retail space up-take, companies are beginning to become more aware of the benefits of constructing an omni-channel offering and this can only be good news for the future.