Online sales by pureplay retailers will for the first time overtake those made by multichannel retailers in 2015, a new study predicts.
Mintel’s Online Retailing UK 2015 report suggests that store-based retailers will make online sales worth £21.5bn in 2015, while those without stores will sell goods worth £21.8bn. In 2014, it says, multichannel retailers sold goods worth £19.4bn online, while pureplays sold goods worth £18.4bn.
Looking further ahead, Mintel forecasts that by 2020 store-based retailers will account for 48% of all online sales, down from 51% in 2014.
Nonetheless, pureplay retail sales will still only account for 6% of total retail sales in 2015, and, says Mintel, the sector faces an uphill challenge of competing against those traders who offer customers a store experience that connects seamlessly with the online.
“For online pureplays the challenge will be to provide the levels of service that store-based retailers are able to offer,” said Richard Perks, director of retail research at Mintel. “We are starting to see some of them open physical outlets but this is likely to increase their costs and further erode the price difference between in-store and online. It could also play into the hands of store-based retailers which already have the multichannel experience to effectively edit an online range for displaying in-store.
“For store based retailers the distinction between selling online and in-store is becoming increasingly academic as shoppers use them interchangeably. The key for retailers in the future will be to offer as good a service as possible through whichever channel customers want to use at the time.”
The study predicts that online UK retail sales will reach £43.3bn in 2015, making up 12.7% of all retail sales. By 2020, total annual online sales are expected to rise by 64% to £71.2 billion, and to account for 18% of total retail sales.
And it estimates that sales of electrical and electronic goods will account for 29% of online sales in 2015, worth £12.6bn during the year. That’s up from £10.7bn in 2014. The change will mean that the category overtakes fashion, where sales of clothing and footwear hit £10.7 billion in 2014 and are expected to rise to £12.4bn in 2015.
Perks said: “Online is best at selling goods which are bought on specification or where a wide range is demanded – so books, music and electronics. Stores are best for goods where seeing the product is more important or where customers are going to need help in making their choice. One of the great strengths of a store based retailer is that it makes the selection for the customer. Online retailers generally leave the selection to the customer who can then be confronted with a huge choice.”
Commenting on the study, Daniel Todaro, managing director at field marketing agency Gekko, said: “Shopping online may be easier and quicker for many consumers, but the benefit of being able to touch, experience and ask for advice on the product from a staff member should not be overlooked. According to recent research, 95% of shoppers ‘frequently or occasionally shop’ on a retailer’s website and in-store. To appeal to shoppers, brands need a consistent approach to their branding, ensuring product recall and a consistent brand experience from the tablet at home to the shop floor.”