Physical stores suffering but still have crucial role to play
Retailers with physical stores might be suffering but these outlets will still play a vital role, particularly if they form part of a cohesive multi-channel strategy, according to a White Paper from Experian.
By Glynn Davis
Experian has found that in 2008 at total of 51 per cent of online purchases were from pure-play online retailers whereas this has dropped to 41 per cent today, while the proportion of online sales to multi-channel retailers has risen from 49 per cent to 59 per cent.
This starkly highlights that the winners are those merchants with physical stores but the challenge is how high street units fit into a retailer’s overall strategy whereby they do not simply represent a drain on profitability. Consider the Paper’s prediction that retail sales are expected to grow 1.5 per cent in 2011 but that only 0.5 per cent of this will be in stores.
Mark Zablan, managing director of marketing services at Experian, says: “Multi-channel retailing could save the high street. Experian’s own research shows that people still want to shop in stores, but that the way they want to shop is changing. They still like the experience of visiting the store, but will tend to walk through its doors better educated about what they might find there, having already used websites to research the products and services on offer.”
Experian believes that retailers which harness multi-channel activity and use technology to enhance the in-store experience can improve profitability. This will be vital, judging by some of the Experian findings, which includes the statistic that 10 per cent of consumers use their mobile phone in-store to check prices of goods elsewhere before purchasing.
And five per cent of people have sought feedback from Twitter or Facebook on a purchase they have made in-store. Clearly the impact of online and social media is having a massive impact on in-store activity and sales in these outlets.
As much as 60 per cent of food sales are influenced by online activity and for categories such as electricals and white goods the level of influence rises to between 80 and 90 per cent. These categories are also affected by the trend for shoppers to use price comparison sites – with 40 per cent using them on purchases.
Debbie Oates, consultant at Experian, says: “Electronic and white goods are predominantly researched online by the majority of respondents (to the survey) with many switching back to stores to make the final purchase. This practicality of being able to see and try products is seen as the major benefit of store visits.”
But with more sales going online the pressure is on retailers to rationalise their store estates and Experian suggests that of the 20,000 places with shops in the UK there are only about 1,100 of “any consequence” – including a smaller group of big out-of-town malls, regional or sub-regional centres.
Richard Jenkins, retail consultant at Experian marketing services, says: “As time passes people will visit shops less often, but spend more when they do, in the more prominent locations.”
With 90 per cent of sales still attributed to physical stores, they are still massively important but retailers must work hard to ensure they still earn a worthwhile percentage through the channel as its contribution to total retail sales declines over future years.
