Industry

Online shopping helping the high street fight back

High_Street

High_StreetOnline shopping is helping the high street to fight back despite a flood of retailer administrations since Christmas, new figures suggest.

For while companies such as Jessops, HMV and more recently Republic have gone into administration, prompting forecasts of the death of the high street, the overall shop vacancy rate has fallen, according to a new report. The Local Data Company’s (LDC) latest report found that the shop vacancy rate fell to 14.2% in 2012 from 14.3% in 2011. That reverses a trend that had previously seen vacancies increase for three years.

That’s down to online shopping, says Matthew Hopkinson, LDC director. He said: “Online is driving growth for a majority of retailers and so 2013 is all about the supporting roles that shops will have as ‘customer experience’ centres and showrooms, as much as transactions through their till.”

He said this would “inevitably” mean fewer shops are needed. He added: “The pressure between online and rising costs of running a shop on the High Street due to rents, rates and parking charges is likely to become an increasingly hot topic.”

The report comes after a year in which a number of retailers, from Carpetright to Arcadia, have moved to ‘right size’ their retail estates in view of both the growing proportion of sales made online, and the influence of the internet on shopper research. In September Deloitte argued that retailers must rethink their retail store networks as the nature of the high street changes. The move to do so recognises the continuing importance to shoppers of maintaining high street stores in convenient locations.

Retail marketing expert Dr Scott Dacow says shops must offer customers something unique if they are to survive the ongoing radical transformation of the UK high street.

His comments came in the wake of BRC figures that show retail sales fell by 0.6% in January, while online sales grew by more than 8%.

Dr Dacko, asssociate professor of marketing and strategic management at Warwick Business School, believes the high street will ultimately survive.

He said: “There is so much online competition that stores need to differentiate themselves to survive.

“On the one hand they need to be seamlessly integrated with their online offerings. And at the same time they need to offer something different in their stores.

“It is too easy for consumers to make price comparisons these days, so it makes sense that stores look to make themselves different.

“They can do that by emphasising local needs, which could be the bakery or butchers using locally-sourced food. Or they can offer a unique ambience, a unique shopping experience, Wi-Fi, high quality products or service. They could offer exceptional value like the 99p stores or click and collect.”

Dr Dacko also believes the UK high street will see more and more shops become depots, where they become places for shoppers to collect items they have bought online.

“Over the very long term a number of shops will increasingly become like hubs or depots where it is convenient for people to pick up orders placed online,” said Dr Dacko. “Clearly we are seeing that ‘click and collect’ is growing in use as we have seen with the recent success Argos has had.”

Dr Dacko believes retailers have to be smart to make sure their shops not only offer something unique but dovetails with their online presence.

“These companies that have gone to the wall recently have not been sufficiently adept with their marketing strategies,” said Dr Dacko. “For one thing, many have not had a sufficient online impact, which is increasingly vital.

“HMV tried to diversify into live music and electronics, but such actions tried to compensate for rather than address the core problem of lost sales to online retailers. There will be others, too, who, similarly will not get their combined brick-and-mortar and online retail marketing strategy right.”

7 comments on “Online shopping helping the high street fight back

  1. Devika said:

    Great post Online Shopping . Enjoyed reading on this new trend people are following and loving to Shop Online as they get many benefits and also websites keep offering discounts and deals. Thanks for sharing.

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  4. Eptica Blog said:

    Very true – retailers need to adapt (as they have in the past). Essentially they need to make their flagship stores destinations that people want to travel to because they know they’ll get something extra than simply ordering online. The success of the Apple Store typifies this – despite being in an incredibly competitive market consumers want the complete experience and are willing to pay for it. More on how retailers can improve the in-store customer experience at http://eptica.wordpress.com/2013/02/21/lifting-the-gloom-on-the-high-street/

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  6. Phil Darby said:

    This is one of the most sensible articles I’ve read on this subject in a while. There are a number of important points well-made here.

    There is no indication that on-line will devastate the high street. It will undoubtedly force retailers to reconsider their business, and I’m sure that we’ll see a few go down. However, retailers are traders. They’ve adapted their model for centuries, it’s what they do and the good ones will respond to this challenge as they always have and emerge from this phase in their evolution stronger and more relevant.

    Retailers need to focus on their role in the community and their position of authority in their chosen field. We shouldn’t forget that shopping is entertainment for consumers in most countries and stores all over the world fulfill the role of community centre (not just their own brand community, but the community in which they reside).

    I’ve been talking about brand communities and how to leverage them for years and I’ve introduced retailers to new types of store format that exploit their position in the local community. Right now I’m helping a major retailer launch a new, state-of-thinking e-commerce portal and open fifty new stores this year. I don’t recognise a conflict of interest and I’m confident it will enhance their overall business. I know that great retailers can make this work for them and Britain, as Napoleon told us, is a nation of shopkeepers, so I’ve no worries that our high streets and our big stores will survive alongside on-line.

  7. Retail defined as the exchange of goods for payment might be faced with extinction. But bricks and mortar retailers has 2 fundamental advantages to the on-line retailers. The store retailer can stimulate all our senses to create a buying impulse – think A&F. Professional staff mastering intuition, interaction and product knowledge, will take us through the sales process – just like Apple. Retailers who turn shopping into an experience will always survive.

    But they will only survive if they realize that e-commerce is the best friend of the store – not its enemy.

    Best regards
    Carsten Wulff
    LS Retail

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