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2015 TRENDS Growth strategies: from technology investment to marketplaces

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Leading retailers will spend more on technology in 2015, while smaller traders will direct their energies towards marketplaces, new studies have found.

Some 57% of the leading retailers questioned by law firm TLT for its Retail Growth Strategies Report 2015, published today, said technology was a key driver for growth and sales. Websites and mobile apps were named by 69% of respondents, while 61% cited improving IT systems.

Other important investment areas included replacing old systems (51%) and ensuing that different systems talk to each other (44%). Creating a better website presence is also a priority, reflecting that retailers are trying to satisfy customer demands in an increasingly global marketplace.

‘Personalising’ interactions with customers will dominate investment in 2015 for more than half, the study found, while click and collect will also be a priority. Of those questioned, a third of retailers already offered click and collect for products purchased from their own website, while almost a quarter planned to add this in 2015.

Perran Jervis, partner and head of retail and consumer goods at TLT, said: “Retailers are continuing to look to technology as the main driver of growth of the sector. Choosing the right technology partner and managing the relationships that deliver these technologies will need to be constantly reviewed.

“Our survey revealed that almost half of retailers rarely or never negotiating contracts for new technology. This may in part explain the high level of serious disputes with technology providers, more than two on average for each retailer last year. So while retailers understand that investment in technology is a priority to deliver sales as well as reducing costs, it also may be their biggest challenge over the next 12 months.”

Meanwhile, a Royal Mail study found the UK’s SME online retailers were planning to increase their use of online marketplace sites, such as eBay and Amazon Marketplace, as their favoured route to growth in 2015.

Royal Mail’s annual tracker study into the expectations and challenges facing UK SME online retailers found seven in 10 businesses expected sales to increase. That’s nine percentage points ahead of last year, despite 76% of SME online retailers saying competition is more intense than a year ago.

The study found that 63% of UK SME online retailers are planning to increase the number of channels they trade through in 2015 to grow sales. One in four (24%) e-retailers plan to start using online marketplaces to increase sales. Interestingly, a further 21% plan to open a shop and one in six (16%) are planning to take space in a store to sell their goods.

Six in ten (58%) of UK SME online retailers surveyed reported an increase in sales in 2014, up from the 49% who reported growth in 2013.

Delivery when expected jumped to top of the rankings for factors driving customer satisfaction last year, followed by the price of goods in second place and quality of the product, which was ranked third.

UK SME online retailers are increasingly recognising the importance of providing a good returns process for online shoppers, the study found. Three in ten (27%) UK SME online retailers will be simplifying the returns process in 2015 to increase customer satisfaction. The top initiative will be increasing the range of goods but pricing more competitively dropped down the rankings to third place.

Nick Landon, managing director of Royal Mail Parcels , said: “Royal Mail’s annual tracker study of UK SME online retailers shows that there is strong optimism for growth despite increasing competition.

“UK SME online retailers are thinking carefully about how they can develop their businesses during 2015, with one in four looking to expand to online marketplaces, such as eBay and Amazon Marketplace. Simplifying the returns process for customers is also a key area of focus for many online retailers in the year ahead.”

TLT produced a video to explain its Retail Growth Strategies Report in more depth. See it here.

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