Online rules but retailers urged not to put the closed signs up yet
The disruptive force of online retail continues to grow. The UK’s largest players in the market saw a 23% rise in sales last year, according to recent figures.
And with savvy shoppers increasingly turning to their tablet and smartphone, it’s a trend that doesn’t look like slowing any time yet. But online retailers feel there is still a place on the high street for their wares.
Online and catalogue retailer Joe Browns, which has its headquartered in Leeds, opened up its very first high street store in Meadowhall, Sheffield, in November. Its principal activities remain with online and catalogue sales of clothing and accessories and its pre-tax profits reached £5.3m on a £32m turnover in 2017. Its mail order sales rose £4m during the year, reflecting a good retail model in the challenging environment.
Founder and managing director, Simon Brown, said that the firm continually invested in its brand and people in order to gain good market share and healthy results. The brand, which has more than a million customers across the UK and Europe, chose Sheffield to open its first store in order to keep the store within its Yorkshire border.
Brown added: “Despite online retail booming and many high streets unfortunately struggling, the time is right for us now to take this new opportunity.
“We believe the brand will bring a point of difference to the UK High Street for free-thinking, spontaneous individuals who want their fashion choices to match their lust for life.”
Tom Marley, founder and managing director of e-retailer The Car Buying Group, based in Wakefield, sums up the online landscape. He said: “Without doubt, the online marketplace is becoming more and more crowded and I don’t see that changing in the future.
“Given the rise in e-commerce many businesses that would traditionally conduct business physically are now moving online.
“As this happens, the user base continues to rise too which means that there is an increasing amount of people looking to make purchases online. So while it is becoming more crowded and more competitive, there’s an ever growing user base which businesses are able to provide a service to.
“In order for a business to differentiate themselves I’d say that service is the key thing. People have a lot of choice about where they buy from and who they deal with. That said, people are prepared to pay a premium for an increased level of service.”
Meanwhile, Asos – which has a large distribution base in Barnsley – has committed to spending up to £250m to boost its infrastructure to accommodate rising sales. The online fashion retailer last week reported soaring profit and revenue for the first six months of its current financial year.
The online fashion retailer’s pre-tax profit lifted 10% to £29.9m, while group revenues rose by 27 % to £1.16bn in the six months to February. UK retail sales rose 22% to £414.5m, while total retail sales climbed 27% to£1.13bn.
Briony Garbett, customer director at national fashion brand Oasis, said the demands of the online consumer continue to change and with it the channels used by retailers. She said: “Customer expectations are ever evolving. I feel like expectations are getting greater which brings a degree of complexity.
“As we begin to offer more services and functionality, naturally that requires either the use of additional systems or enhancement of existing platforms.
“The most challenging part is making sure all of the systems are well integrated to ensure a smooth customer journey that is easier said than done.
“Also where pure plays and new entries to the market have more agile systems and lack legacy architecture, they have the advantage.”
Stephen Robertson is chairman of independent economics research consultancy Retail Economics and a non-executive director at Leeds-headquartered Clipper Logistics.
Though the online industry is growing he still sees a need for retailers to have a physical presence – and points to the fact that e-retail giant Amazon is also looking to develop traditional bricks and mortar.
He says: “Online retailers becoming omni-channel operations. Finding that sweet spot seems to be the future.
“Growth over the last few years has come from ‘click and collect’. Companies that have developed click and collect in-store have found that the customer not only picks up the delivery but makes another purchase.
“It is that rapid evolution of omni- channel retail that is bringing the next generation forward.”
Squire Patton Boggs’ recent retail report also spoke of the growing ‘experience economy’ and its future importance. It concluded that retailers need to offer a more multifunctional, ‘experience-based’ environment in order to inspire, win and retain the loyalty of customers.
Matthew Lewis, the law firm’s head of retail, based in Leeds, said: “The question for e-retailers is can they continue to drive growth simply through online or do they need some physical presence?
“Click and collect will have its say, though it maybe through smaller and different types of stores.”
Sue Richardson KPMG North head of retail, also based in Leeds, added: “There are lots of conversations going on around the high street. The fact is people still like to touch and look and see, and get that shop experience.
“Stores are becoming more of a showroom and not necessarily the main place where you go and buy a product.
“Customers are also prepared to pay a decent amount of money to get a really good fulfilment service, delivering to a specific place at a specific time. That is something that retailers need to be really aware of.
“It’s a service element to customers that is actually dependent on logistics firms rather than retailers themselves. How do they ensure that the customers’ relationship is with the retail brand not with the delivery firm?”
Read more in the State of the Region series.