Physical stores remain key to retail success around the world, despite the growth of online, according to a new report. The UK, it found, has the highest proportion of traders both with online catalogues and selling through ecommerce – but multichannel capabilities were still essential for growth.
How Global is the Business of Retail?, produced by property consultants CB Richard Ellis, found 82% of the 320 retailers it studied in 15 countries were at least operating a browsable online catalogue. In the UK that was true for 90% of retailers. However, only 26% of the retailers analysed could offer ecommerce, with the highest proportion (44%) in the UK. That was followed by Germany at 41% and the US at 39%.
Traders with bricks and mortar stores were most likely to trade online as well. While most retailers opened stores first and added online later, an increasing proportion are now testing new markets with online operations, opening stores later. Of those retailers with physical stores, 40% were able to deliver online goods in that market, compared to 26% of all retailers.
Peter Gold, head of EMEA cross border retail at CB Richard Ellis, said: “The presence of a physical store makes it easier for a retailer to operate an online platform. Not only is the store a place for buying or viewing a product, it is also the location where consumers go to pick up goods that have been bought online. “
In addition, found the report, the ability to return goods bought online to the store “provided more flexibility for consumers and was cost-effective for retailers.” However, landlords operating leases based not only had to contend with more sales going online, but also saw goods returned through stores hitting the turnover of their stores.
Gold added: ““There is no doubt that e-commerce presents an important sales channel for retailers as it hugely increases a consumer’s awareness of brands and the choice of products available to them; however, retailers are still concerned about how to capture the essence of their brand and whether the internet represents incremental or cannibalised sales. The effective distribution of goods bought online also remains a key challenge; therefore, the extent to which e-commerce will change the fundamentals of retailing remain to be seen.”
Our view: It’s no big surprise that property experts argue that stores remain crucial to retailing. But retailers shouldn’t assume either that the future is purely online. Again and again the figures show that multichannel retailers do better, both for convenience and in terms of sales. Does this govern the future development of the industry though? As this report says, that still ‘remains to be seen’.
