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Beauty and homewares ‘most likely to move online’

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Consumers are moving fast to buy online, putting sectors from cosmetics and beauty to household goods at a crossroads between online and in-store shopping, a new study suggests.

Of tortoises and hares: retail segments in Europe have divergent online growth rates, a study from Scope Ratings looks at the gap between European consumers’ preference to buy online and the extent to which they are already doing so. “The gap between the two factors,” said Scope Ratings analyst Adrien Guerin, “indicates how much more potential development there is for ecommerce in each segment. In other words, we can see the growth potential for online sales – and downside risk for bricks-and-mortar retailers.”

The study found high potential for digital disruption in cosmetics and personal care. It determined a 40% preference from consumers to buy beauty items online, contrasting with an actual 22% of goods in this sector that are currently bought online. Currently, suggests the Scope report, cosmetics customers often go to the store to test and choose products. But, it says, this sector is “ripe for further change, partly because its high profit margins would allow speciality online suppliers to undercut incumbent retailers, offering attractive prices to consumers and still turn a profit.”

Consumers have a 40% preference to buy furniture and home appliances online, says the study, contrasted with 13% of goods in this sector that are currently bought online. It says technological innovations such as augmented reality apps that enable shoppers to see how an item would look in their home, could boost online sales in an omnichannel context. 

Fashion has a more than 40% consumer preference to buy online, with 26% currently bought online. “While clothing and apparel shopping appears more suited to traditional in-store formats – the need to see, touch, and try on the products – specialist online fashion companies such as Asos and Zalando have broken the mould,” said the Scope report. 

The preference rate to buy consumer electronics online stands at more than 50%, according to Scope – but since 38% of products in this sector are already bought online, there is limited scope for further growth.

Food, however, is still sold largely through stores, with just 4% of sales currently made online. The Scope Ratings report suggests that there are two clear UK internet food champions – Tesco and Ocado, while in France, click and collect services have proved particularly popular for food. “Nevertheless, the overall currently low preference of consumers to buy online reinforces Scope’s view that there is limited potential for near-term growth in this segment without a radical change in the commercial offerings consumers can choose from.”

Image courtesy of Asos.

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