The first three months of 2011 have been very difficult for retail with falling sales reported across the board. All sectors from lingerie to light bulbs have experienced a tough quarter. What’s more, a sense of impending doom has engulfed the high street with stories of a meltdown in consumer demand appearing almost daily.
However, online retail has continued to buck these trends with sales continuing to grow by double-digit levels. Our High Street Sales Tracker survey shows that during the first three months of 2011 online sales increased by over 40% year-on-year compared to negative growth across store-based channels.
This huge rise in online sales and how this trend is drawing shoppers away from traditional high streets has major implications for retailers. From being viewed as a defensive move to protect market share online is now being perceived as the main engine of growth.
Furthermore, as technology and distribution platforms improve, making delivery options more flexible and affordable, online is set to grow in importance. Forecasts indicate that 90% of all retail sales will be either online or influenced by the internet by 2020.
This means as retailers look to rationalise their store portfolios they will increasingly make use of online channels in order to obtain a national store footprint. The old model of needing one store in every town is pretty much dead. Instead retailers are focusing on major national hubs – be they large shopping centres or out-of-town parks – and covering everywhere else through effective online channels.
Click-and-collect formats are also becoming popular. Reports suggest that House of Fraser is looking to open smaller stores which can be used to fulfil online orders in locations where it is unfeasible to open full scale department stores. Online clothing retailer Asos are also interested in click-and collect. Reports suggest they are in talks with Boots about a click-and-collect tie-up.
Seeing through the current gloom I believe the long-term pattern will be for retailers to build sales density by making the existing store portfolios work harder rather than by needing to expand all the time. The growth element will increasingly come through online, and in that sense the internet can help save the high street.