The Future of Shopping Series: Online Shopping, Bricks vs Clicks
Each blog will focus on an a different aspect of retail and will consider the implications on both retailers and consumers. Now we look to the ever challenging world of online shopping.
Consumers expect the same level of service from small independent retailers to large international brands. Everything from free shipping to next day delivery, and these expectations are forcing retailers out of the running for customers sales.
Future of Online Shopping: Bricks vs Clicks
2016 was the year of retail bankruptcy, from BHS to Austin Reed, retailers didn’t seem to be doing well and 2017 doesn’t seem to hold much promise for things to change. In April 2017, several retail stocks hit new lows, including Urban Outfitters and American Eagle. Ralph Lauren has recently announced the closure of its flagship US store on Fifth Avenue. The future of the bricks and mortar store is looking precarious.
It’s not that people aren’t buying from these brands anymore, it’s just that customers prefer to buy online instead of instore. The US will see online sales reach around $394 billion in 2017 alone. Retailers are seeing their traditional structure being greatly impacted by the internet and online shopping.
But it’s not only traditional retailers seeing the impact of the world wide web, Blockbuster shirked its online lending library to focus on a traditional library model, and were made obsolete by online streaming services such as Netflix, Amazon Video and Hulu.
But it’s not all plain sailing for online shopping. While online retailers aren’t concerned with costly overheads such as prime retail space in busy shopping centres, they instead have new concerns brought about by shipping costs.
Whilst brick retailers were safe in the knowledge that when shoppers want an item now, they were the best bet, as the downside to online shopping was the time from click to delivery, but with the rise of next day or even same day delivery, consumers don’t need to leave their house to go shopping.
Free Shipping: The Bane of Retailers
Amazon, Target and other large corporations can afford to offer free shipping, and absorb the cost of delivery, smaller retailers struggle to do the same.
Customers have come to expect free shipping even when there are apparent costs such as “Spend over £20” to achieve this. They expect the services that they receive from behemoths such as, Amazon, from all online stores.
However, even some large retailers such as Saks Fifth Avenue, say it’s more expensive for them to do home delivery than to have them shop in store. Direct to home supply chain cost is three times higher than a bricks and mortar model. And our environmental impact of ordering one off items or even returning them undercuts any environmental savings made by ordering online.
Bringing Online Back Instore
Bricks and mortar sales are seeing web-influenced sales instore. Consumers are utilising their smartphones to research a product which they then proceed to buy in store. This method of shopping is expected to reach $1.3 trillion, around 38% of all retail sales.
Retailers can embrace these web-influenced sales by creating an omnichannel strategy which will complement the physical and digital, instead of pitching the two against each other, thereby lowering costs and increasing sales.
Whilst retailers are seeing new technologies greatly impacting their traditional model, technology if implemented well can greatly increase sales. Self-service POS terminals can save costs of cashiers, creating staff available to help customers increase their purchases before reaching the exit point.
The retail experience is changing. No longer do consumers wander around shopping centres buying on impulse. Now we shop with knowledge of what we are looking for and are unlikely to shop on a whim. The face of retail is changing, but the stores need to change as well to adapt to the new shopper. The savvy shopper with a large social following who is looking to turn their purchase into an experience. No industry is moving so quickly and fluidly as retail, but retailers need to move as well to meet their clients expectations.
The next in the Future of Shopping blog will conclude the series, looking at the number of technologies which impact the retail industry.
Retail Business Technology Expo is being held at the London Olympia on the 8th and 9th May 2017. If you would like to visit imageHOLDERS exhibit, please click here to sign up for your ticket.
imageHOLDERS specialise in tablet kiosks and device integration, ideal for retailers and self-service industries. For more information call +44 (0)1202 892863 (UK) or +1 877 450 2172 (US) or email [email protected].
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