This week’s retail industry report from Deloitte stated that as shoppers increasingly prefer to buy online, some retailers’ attachment to top line volume growth rather than the quality of income generated (dubbed ‘the barnacle effect’) could put their survival at risk. Adam Stewart, Marketing Director at Rakuten’s Play.com argues why online and offline work best in collaboration…
I hope that Deloitte’s research announced today sparks a debate in the British retail industry about the importance of online versus offline retailing. Until recent years, e-commerce has been a nice income-generator, but not the main focus of most retail businesses. Rather than debating whether shops should sell online or offline, in our experience of working with retailers both small and large, the answer is almost always both.
What is interesting however, is the split between the two. While some companies will always sell more from physical stores, many retailers could actually make more money through selling online, for very little extra investment comparatively. Ideally, online and offline retailing should support each other, rather than competing between each other for the same sale.
Deloitte estimates that online sales account for the equivalent of more than 60m square feet of retail space. When you consider how much investment and resources go into running 60m square feet of bricks-and-mortar shops, compared to the investment needed to sell online, the difference is significant.
Bricks-and-mortar stores require staff, incur large rental costs, and have to operate reduced opening hours on Sundays. In comparison, online has far fewer overhead costs and shoppers can browse at any time of the day or night. The high street will always have a part to play in the British retail industry, however this report indicates that e-commerce should no longer be playing second-fiddle to physical retail outlets.
By Adam Stewart
Marketing Director
Rakuten’s Play.com
You can access the full Deliotte report here.