Author: Melanie Marriott, 15 August 2016

The growth of online shopping is well documented, in June 2016 online spending amounted to £944.3m an increase of 14.1% vs 2015*. It’s rapid acceleration daunts landlords and is a difficult operational challenge for retailers to navigate. So who’s doing it well? What lessons can be learnt? What are the keys to online success and integrating ‘Bricks and Clicks’? 

To help understand answers to these questions, FSP attended sister company Pragma’s recently held a Multichannel Breakfast for clients.  The findings most pertinent for asset managers, investors and retailers alike, are summarised below. 

Growth of online shopping
  • Buying can be complicated

The road to purchase is not always a straightforward one, with reviews, opinions and price comparisons mere clicks away. On average, shoppers now use 3.25 channels before making a purchase; in 2010 the figure was just 1.25. Shoppers favour online in the ‘research’ phase, but begin to favour physical stores the nearer they get to purchasing. Physical stores will always win vs online for a more straightforward returns process, the experience of touching, seeing and trying a product ‘in real life’ is something that just cannot be replicated

  • There is no one rule that fits all

How we buy is entirely dependent on the individual and their purpose. A female clothing buyers’ road to purchase will look a lot different to a male electronics buyer, for example. Whilst a female clothes buyer will research the product on line, generally they sway towards a store to try the item on before purchasing. Male electronics buyers meanwhile, are likely to research and buy online

  • Buying online can be frustrating

Long delivery times and a poor returns policy is a sure fire way to prevent repeat custom. Earlier this year, after visiting their store near St Pauls, I was surprised to find that Joy does not accept returns in store; everything has to be done by post and receiving a refund can take two weeks from receipt of the parcel. In this day and age, when millennials need everything to happen NOW, only a physical store can deliver the immediacy required to satisfy shoppers when it comes to returns– the online arm must be an extension of bricks and mortar body to ensure a seamless experience for customers. Online and physical should complement and enhance the other,  not be a separate entity – this was also a key conclusion in Pragma’s Multichannel survey

  • Physical stores are upping their game

Stores do have their drawbacks, restricted product ranges and staff who cannot rival Google are obstacles that are being addressed by some market leaders. Increasingly retailers are installing tablets in store to enable staff to research items and order in products, Carphone Warehouse is a good example. Made’s showroom on Tottenham Court Road allows customers to project furniture onto blank walls to envisage items. Technology can address weaknesses in physical stores, but these devices need to be used and it must complement the physical store

  • So who’s getting it right?
  1. Online – Amazon – The online giant continues to innovate and expand products/service to keep users engaged and coming back for more. It’s Prime services lock people in for a year, the incentive of “free” next day delivery persuades shoppers to stay loyal. They use data and recent orders to tailor marketing activity as well, maximising effectiveness
  2. Instore – Waterstones – the combination of a new, more user friendly  website, investment in store fit out and the increased autonomy for store managers to influence stock helped Waterstones achieve its first sales increase since 2012 last year

Whether online or instore, the key message remains the same, brands need to know their customers and ensure their strategy reflects this. Online and physical stores need to work well together to deliver a seamless experience for customers; the two should not be seen as competing with each other, but rather should be viewed as complementary opportunities to enhance the customer journey and experience. 

FSP predict that as online shopping continues to grow, we will see more concept stores using technology to enhance their offer; landlords need to ensure their assets and tenants have the right facilities to enable this (centre wifi, fast internet, collection lockers, extended trading hours etc.). Online operations will be made more immediate – quicker delivery and speedy returns will be the main evolutions in this field. Although aps are viewed as the way forward by many, their uptake has been lower than anticipated. On average people download just 2.6 onto their smartphone, with Amazon and eBay dominating this field. FSP predict this will remain a relatively niche market – suggesting the focus for retailers/shopping centre should be designing websites with mobile use in mind.

If you are interested in how online shopping and click & collect is affecting your retail asset, FSP has a wide range of techniques and services which can quantify activity levels, identify opportunities and threats and help you to benefit from emerging trends.

Contact Melanie if you would like any additional information on the above.

Findings are based on interviews with CEO’s and business leaders, plus 2,000 nationally representative surveys, and a combination of Pragma/FSP data and desk research.
*Office of National Statistics (Retail Sales Enquiry) 

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