Is the future of retail online?
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Is the future of retail online?

During the UK’s lockdown period, non-essential retailers were forced to close their doors for a total of 12 weeks, and as a result, our shopping behaviours changed almost overnight.

With no other option, shoppers moved online and during the months of April, May and June of this year, retailers reported a significant surge in e-commerce sales. In fact, retailer giant Amazon stated that their sales soared by a huge 40%.

However, whilst it’s fair to say that the coronavirus pandemic accelerated our online purchases, the shift to virtual shopping was happening far before the impacts of 2020 took hold.

The evolution of the internet has made it easier and more convenient for shoppers to browse and purchase goods than ever before. Whether that’s from a laptop, tablet or mobile phone – people can purchase almost anything from anywhere with just the click of a few buttons.

As a result, we’re seeing more brands close their physical premises, instead choosing to invest in technology in order to compete in the online world and reduce the overheads that come with a bricks and mortar approach.

How the internet has influenced the way we shop

The Office of National Statistics (ONS) published a report in the final quarter of 2019 that proved how the internet really influences our shopping habits. By comparing trends and emerging patterns between retail sales data and internet access, they were able to establish just how much the retail sector had evolved.

The report found that consumers are spending more online than ever before, with the proportion of online spending increasing from 4.9% in 2008 to 17.9% in 2018.

With more of us shopping online, it’s no surprise that over the past ten years consumer behaviour has seen a huge shift. Gone are the days of flicking through catalogues or asking friends for recommendations. Even Argos has stopped printing its famous catalogue after almost 50 years.

Now, consumers have a world of information at their fingertips and the buying decision process is no longer linear.

We’ve entered an age of empowered consumers who, before making a purchase, will spend time online researching and comparing products or brands. In fact, in 2018 a poll of 2,000 adults found that it takes on average an hour and 20 minutes from when a consumer sees a product online, to when they buy it.

It’s clear that if your brand isn’t visible online, then you’re already at a disadvantage.

The high street crisis

2019 was a challenging year for high street retailers, with major brands such as Debenhams, Mothercare, Topshop and Marks & Spencer all closing stores across the UK. With the cost of rent, rates and employment continuing to rise and more shoppers choosing to purchase online, traditional retailers have been put under huge amounts of pressure.

However, whilst brands are closing their physical stores, many are instead investing in their online presence. Take Marks & Spencer as an example. The retailer has closed more than 50 stores since 2016 but its online marketing spend has continued to increase.

In 2018, the company announced a radical plan to become a ‘digital first retailer’ and its goal was to achieve 33% of clothing & home sales through online channels. This plan included website optimisation, a clear multichannel focus and developing technology partnerships to access innovation.

The decline in the UK high street is just more proof that it pays to be online.

The impact of COVID-19 on retailers

For what was already a struggling industry, traditional retailers have been amongst the worst hit by the coronavirus pandemic. In March, the Government put measures in place that forced non-essential retailers to close their doors, and for those that didn’t have an online presence, this meant a complete halt in trading.

With many SME retailers also operating with limited cashflow, the impact of having no revenue for several months has forced many to close their doors permanently.

Although the government brought in a number of measures, such as reduced business rates, the furlough scheme, and different grants, the impact on the high street continues to be significant and we haven’t yet seen the full repercussion.

Even as stores began to reopen in June, retail experts Springboard reported a 56.6% drop in overall footfall across UK shopping destinations compared to the previous year.

However, the same can’t be said for the online retailers. According to the Online Retail Index IMRG, in June this year, online sales skyrocketed by 41.3% year-on-year (YOY), the highest annual result since March 2008.

COVID-19 has without a doubt impacted all aspects of our lives, and we’ve all had to think differently about the way we shop. It’s yet to be seen whether the trend for online shopping will continue to rise in a post-COVID world, but there’s no doubt that in order for retailers to compete in today’s market, they must have strong visibility online and make it as easy as possible for customers to buy their products.

If you’re a retailer or an e-commerce business looking for funding to boost your online visibility, create a new website or market your business, a Capify business loan could help – find out more here.