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New retail patterns (IRUK 2016)

The influence of marketplaces is growing, and will continue to grow. What might this mean for both traditional and pureplay retailers?

If it initially seems counter-intuitive that we haven’t chosen to class marketplaces as retailers, it’s because so many are, in key respects, akin to shopping centres. While you head to Bluewater as a retail destination, it’s not a retailer in itself.

That said, we will study marketplaces in more detail in the years ahead because they clearly exert a huge influence on the wider retail sector. Consider Sainsbury’s bid for Home Retail, the owners of Argos , in November 2015. One side effect of such a deal, were it to be concluded, would be a collision of retail models and cultures. Not only (presumably) would Argos branches open in the supermarket’s retail spaces, but customers would be able to take advantage of the drop-off and offers a similar service, but is more UK-focused. iOffer , which “allows buyers and sellers to negotiate to buy and sell items in an interactive and open format”, also has a significant influence on the UK market.

It follows that anyone trying to plot how the retail sector might develop needs to be aware of such companies and, our research has revealed, less familiar names too. One phenomenon we’ve noticed is UK-based customers using foreign marketplaces. The Polish language marketplace Allegro sees a high amount of web traffic of UK origin and would have been in the IRUK 500 had it been eligible. In addition, it’s worth noting that IREU 500 research already reveals Allegro is the third-largest ecommerce retailer in the EEA, after eBay and Amazon, by web traffic.

Similarly, Indian retailer Flipkart also commands a large amount of traffic from the UK. Presumably, this is down to expats and those with strong connections abroad shopping for delivery to family and friends, but we need to do further research to say this definitively.

But whatever’s happening, and we will be doing further research here, it’s a phenomenon that throws up some potential challenges for UK retailers. How does it affect plans for expansion abroad? From another angle, could an English-language Allegro or a revamped Flipkart with free delivery to the UK pose a challenge to British retailers?

What Sainsbury’s sees in Argos:

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