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Multichannel makes ‘sales per sq ft’ metric obsolete says Deloitte

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Almost a quarter (21% ) of all internet transactions involve some research in store according to new research from business consultancy Deloitte. In many cases, customers are researching in store with one retailer before purchasing online at a cheaper price with another. Deloitte predicts a trend for retailers to use retail space as showrooms for a much wider range of products available online, and suggests this will make the traditional ‘sales per sq ft’ metric obsolete.

Richard Hyman, strategic retail adviser to Deloitte, said: “As a higher proportion of sales are driven online and connected consumers take advantage of technology to shop around, the traditional ‘sales per square foot’ metric may provide an inaccurate view of the true contribution of the store to the retailers revenue.”

Hyman said that a contraction in floor space in recent years has ensured that ‘sales per square foot’ have remained steady. But while total floor space decreased by around 12m square feet between 2008 and 2010, internet retail has added the equivalent of 25m square feet. “This suggests that either sales per square foot will start to fall or we will see a further contraction in total floor space,” said Hyman. “Alternatively, landlords and retailers will need to agree a method of calculating the impact of multi-channel. With in-store research, click-and-collect and the in-store return of internet purchases this is a complex challenge but one which is rapidly rising up the agenda of the property industry.”

Ian Geddes, UK head of retail at Deloitte, said: “The size of the multi-channel opportunity is clear. By value, 44% of non-food transactions were digitally influenced between September and November last year, of which 24% were direct only and 20% multichannel. Electricals remains the most multichannel sector with 62% of transactions by value being digitally influenced.

“Multi-channel consumers are also likely to spend more per transaction (£130) than store (£67) or direct-only (£113) shoppers. Furthermore, it is taking root across society with wide take-up across most social classes and in all corners of the country, with the highest proportion of multi-channel consumers coming from Yorkshire, the East Midlands and Wales.”

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