High street retailers face 'online hybrid' future

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By: Wise Marketer Staff |

Posted on May 20, 2011

High street retailers face 'online hybrid' future

The UK's online retail market is growing six times faster than high street sales, now being predicted to exceed £37 billion in 2014 according to a report by Webloyalty and Verdict Research, which foresees significant changes coming in the traditional retail environment.

The report found that e-retail spending will grow by some £14 billion (an increase of 61%) from 2010 to 2014. Webloyalty argues that this rapid growth is being driven by shoppers shifting their spending online for the sake of convenience, and coincides with the expected boom in the role of mobile phones and smart phones in the shopping experience.

The report maps the future of the UK's high street retailers, suggesting that mobile retail will drive many dramatic changes. More consumer spending will continue to migrate online, and the report predicts that physical retailers' online sales will grow by 69.8% compared to only 7.3% for sales in their bricks-and-mortar stores between 2010 and 2014.

The company reports that at least 40,000 retail outlets have left the high street during the past decade, and that this trend is likely to continue with many familiar brands disappearing completely from town centres as they focus instead on web-based and mobile-based retail operations.

"We estimate that online retail will increase by 61% from 2010 to 2014. As a result, shoppers will need to prepare for a radical change in their local high street, which will become less about shopping and more about the experience," said Neil Saunders of Verdict Research. "Apple is clearly ahead of the game, as their stores have already become a 'destination' rather than just 'a shop'. You can look at, touch, and even try out the products, talk to real experts, and make your decision but then buy online."

The role of mobile phones in the way we shop is expected to alter significantly. More than half (52%) of UK consumers currently use their mobiles during the purchasing process, but in the next five years this is expected to hit 80%. The next step, Saunders suggested, will be the use of mobile phones as part of the shopping experience: "Soon, consumers won't think about hitting the high street without their smart phone. It will be absolutely essential, not only to browse, but for how they pay, find products, and get the best deals and discounts."

According to the report, the high street shopping experience of the future will look and feel very different from today's experience. For example:

  1. Shoppers will use their mobiles to both compare brands and prices, and buy. High street stores will need to become connected, with free WiFi services helping shoppers connect with and compare brands. Retailers will need to offer location based discounts to smartphones and the ability to purchase on the spot 'online' via a mobile after comparing prices.  
  2. Staff should be able to roam the store with mobile point of sale technology - meaning the end of lining up in front of a till.  
  3. High street stores will need to compete to become a destination. As larger retailers move out of town or online, the high street will be populated with boutique 'experience' stores, coffee shops and restaurants.  
  4. As high-street retail space shrinks, 'click and collect' will become more popular, as retailers want to use their floor-space more efficiently and cut overheads.  
  5. The high street's demise requires flexibility in formats. Retailers with a physical store presence will need to adapt formats regionally and locally to cater for consumers' changing shopping patterns.  
  6. Retailers need to ensure the messages sent through various channels are consistent. A clear brand image should be portrayed across all communications.  
  7. It becomes vital to add value to the shopping experience to remain relevant in a multichannel world. Retailers will need to turn them into brand destinations, which offer a highly immersive and interactive shopping experience. Focus on customer service to disseminate information and provide collection points for customers' convenience.  
  8. Retailers need to ensure they offer multiple fulfilment options. Retailers can no longer run their physical stores and online operations as separate functions. Consumers will expect a fully integrated service from retailers with the ability to order online and pick up in store or order in store for home delivery.  
  9. Don't miss the link. Mobile will be the channel that links all parts of a retailer's multichannel operation. Retailers will have to work hard to make sure their 'online shopping carts' function across multiple channels allowing customers to for example add to 'wish lists' or order items through scanning bar codes when in stores.

The full report has been made available for free download from Webloyalty's web site - click here (PDF document; no registration needed).

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