Industry

Retailers facing decline in in-store sales, while ecommerce continues to grow

Retailers are facing a continuing decline in high street visits and spending, while ecommerce continues to take off, figures out this week suggest.

The latest Visa consumer spending index showed a 6.5% increase in online spending in August, while face-to-face in-store spending declined by 2.6%. This adds up to a marginal increase in spending in August, but Kevin Jenkins, UK and Ireland managing director at Visa, said that UK consumer spending was on course for its weakest year since 2013. Jenkins said of August’s uptick that: “We are wary about taking this as a sign that the household squeeze is easing given the clear slowdown in spending during the preceding three months.”

He added: “Worth noting is that the story is very different when you look at ecommerce in isolation. This continues the trend of ecommerce spending growing at a much faster rate than face-to-face spending which has been evident in virtually every month since the beginning of 2013.”

But while ecommerce spending has grown faster in recent years, August’s figures show a significant decline in in-store transactions. That’s reflected in BRC-Springboard footfall figures, also out this week, that show a 1.2% decline in footfall in August, with visitor numbers on the high street down by 2.6%. Shopping centre footfall was down by 0.8%, and only retail parks (+1.6%) showed signs of growth. Helen Dickinson, chief executive of the British Retail Consortium [IRDX VBRC], said this was down to shoppers being “attracted by the convenience of a one-stop shop for purchases, services and leisure activities”.

She said that it was “crucial” to encourage shoppers back to town centres and so reduce the number of empty shops. She pointed to an increasing gap between “the vibrant and in-demand areas and those at the much more economically fragile end of the spectrum,” and said that more and more locations were falling further and further behind.

For Dickinson the answer to doing that lies in public policy, bringing shoppers back through planning policy that promotes retail alongside leisure and other facilities, while also enabling parking and easy access. She also pointed to the importance of business rates in this.

“A far more concerted and urgent effort is required from policymakers to stem and ultimately reduce the cost of doing business, particularly in our more economically-fragile communities. Not applying the planned inflationary increase to business rates next April would be a place to start.”

Technology companies say retailers must also keep pace with the way that shoppers want to buy. Heather Barson, director of retail and hospitality, at Fujitsu UK said: “As the UK continues its journey towards a digital future, technology has a crucial part to play in transforming the way retailers differentiate their online and in-shop experiences from their competitors. And in times of ever-increasing customer expectations and desire for instant gratification, if retailers want to really stand out, it’ll be more important than ever to make the in-store experience as seamless as shopping online. This is where smart use of in-store technology can come into its own.”

Meanwhile, WWT Asynchrony Labs, the mobile arm of World Wide Technology, says new indoor maps functionality available in the new iOS 11 update could be a useful tool. The company says mapping will enable users to navigaten of complex indoor spaces such as airports and shopping malls floor-by-floor, with searchable on-map information about stores and facilities. This gives customers a new ability to pinpoint their location within stores and complexes that it believes will have great benefits for retailers.

Kelly White, London general manager of WWT Asynchrony Labs, said: “The recent footfall figures reflect the impact that the advance of online retail is making on brick-and-mortar stores. But being offline doesn’t mean physical stores can’t take advantage of data technology. Developments in IoT devices, increasingly supported by smartphone operating systems, mean that conventional retailers can still catch up with their online competitors.”

“Retailers can install IoT sensors into their stores that, using bluetooth beacons, can pinpoint a wireless device to a much more specific location for the benefit of customer and seller. Just as in shopping complexes and malls, large and complex warehouse stores can use this innovation to help customers find their way around to different products, and floor staff to find customers potentially in need of assistance.”

This can be used to update marketing strategies, to send special offers to a customer’s phone, and to map customer traffic more precisely, enabling the to adapt store layouts to what they know of customer behaviour.

Mentioned in this piece…

British Retail Consortium

British Retail Consortium

IRDX: VBRC

The British Retail Consortium (BRC) is the lead trade association representing the whole range of retailers, from the large multiples and department stores through to independents, selling a wide selection of products through centre of town, out of town, rural and virtual stores. (more…)

Image credits:
  • Anya Berkut , https://en.fotolia.com/p/202392224

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