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Retailers review the role of stores as multi-channel booms

Stores are becoming a billboard for the brand, showroom for products, high service location and collection/drop-off points for online orders.


Retailers review the role of stores as multi-channel booms

Stores are becoming a billboard for the brand, showroom for products, high service location and collection/drop-off points for online orders.

An increasing number of consumers are researching products in bricks-and-mortar retail stores before purchasing online.  21% of all internet transactions involve some research in-store according to new research by Deloitte.  In many cases, customers are researching in-store with one retailer before purchasing online at a cheaper price with another.

The research also found that online only retailers are benefiting from their customers using other retailer’s stores as showrooms before completing their purchases online.
These changes in consumer behaviour are forcing retailers to assess the future role of their store portfolio and how their in-store product and services offer forms part of a co-ordinated multi-channel strategy.

Ian Geddes, UK Head of Retail at Deloitte, said: “In these challenging markets, multi-channel is going to be the big driver of growth for UK retailers over the next few years.  Whilst the impressive growth of internet retailing has diverted sales from bricks-and-mortar, we believe that online can be a vehicle for growth across all channels.

“We see a trend for retailers to use some of their retail footage as showrooms or display areas for a much wider range of products available online.  This allows customers the chance to research and test products before completing the transaction at home or through a mobile device.  A store portfolio also gives multi-channel retailers an advantage over internet-only by giving them the capacity to fulfil same-day orders. There is also evidence to suggest that retailers enjoy higher online sales in areas where they have a physical presence.”

Richard Hyman, Strategic Retail Adviser to Deloitte, added: “As a higher proportion of sales are driven online and connected consumers take advantage of technology to shop around, the traditional ‘sales per square foot’ metric may provide an inaccurate view of the true contribution of the store to the retailers revenue. 

“In recent years, we have seen a contraction in floor space which has ensured that ‘sales per square foot’ have remained steady.  However, whilst total floor space decreased by around 12m square feet between 2008 and 2010, internet retail has added the equivalent of 25m square feet. 
“This suggests that either sales per square foot will start to fall or we will see a further contraction in total floor space.  Alternatively, landlords and retailers will need to agree a method of calculating the impact of multi-channel.  With in-store research, click-and-collect and the in-store return of internet purchases this is a complex challenge but one which is rapidly rising up the agenda of the property industry.”

Geddes concluded: “The size of the multi-channel opportunity is clear.  By value, 44% of non-food transactions were digitally influenced between September and November last year, of which 24% were direct only and 20% multi-channel.  Electricals remains the most multi-channel sector with 62% of transactions by value being digitally influenced.

“Multi-channel consumers are also likely to spend more per transaction (£130) than store (£67) or direct-only (£113) shoppers.  Furthermore, it is taking root across society with wide take-up across most social classes and in all corners of the country, with the highest proportion of multi-channel consumers coming from Yorkshire, the East Midlands and Wales.”

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