Consumer 2.0: Fighting the online retail revolution
Online retailers already have the edge on entertainment purchases but are they catching up with the highstreet elsewhere, asks Jamie Matthews, CEO, Initials Marketing.
Marks & Spencer: The second most popular offline store
This month, high street stalwart Marks & Spencer reported its worst first-quarter results in three years, with general merchandise sales down 6.8%.
On the same day that M&S announced these disappointing figures, online-only store Asos revealed total sales growth of a massive 49%.
While speculators attributed blame for M&S’s performance at anything from the bad weather to badly designed collections, it’s also true that more and more people are spending online.
And if giants like M&S are struggling to compete with the continued growth of online, is there any hope for the high street?
Research from Initials Marketing, carried out by YouGov Sixth Sense, which compared and contrasted the online and in-store shopping habits of 350,000 people in the UK, found that it was very much a case of bad news and not so bad news for the in-store retailer.
When it comes to entertainment items such as DVDs, video games, CDs and books, online already has the edge - just - with 85% of consumers buying online, compared to 84% in-store.
And now, the gap is also closing with respect to clothing, shoes, and fashion accessories, as the success of Asos proves.
Our research showed that over two-thirds (67%) of shoppers are now buying clothing online - while this is still significantly less than the 90% buying in store, according to YouGov figures, the margin is getting smaller over time.
The not-so-bad news is that groceries and furniture are significantly less likely to be bought online than in-store, and for logical reasons, which will be difficult for the online retailer to overcome.
Take furniture and soft furnishings - 27% of people are purchasing these categories online, compared to 81% and 80% respectively in-store.
Here, consumers like to try before they buy in order to assess size and comfort, colours and fabrics and of course, there is the issue of hassle with returns if the products are unsuitable.
With respect to food, where 92% buy in-store compared to 43% online, consumers do not trust the scope of use-by dates and they like to pick and choose items themselves so they know they are getting good quality products.
And despite its growing popularity, it’s fair to say that customers shopping online do have concerns, the main ones being:
- A significant 41% said that they like to see or touch a product before paying for it - this can be seen in the clothing category, where shoppers have reservations about buying clothes and shoes online due to issues concerned with sizes and returns.
- Trust issues over online payments are an issue for 18%.
- 18% of people state that they like the in-store shopping ‘experience’.
But for every point in favour of in-store shopping, online seems to come back with a couple of its own:
- The most appealing quality of shopping online for 83% of customers is the ability browse at their leisure, at a time which most suits them - whether it’s 9-5.30pm or out of hours.
- Then there’s the 81% of people who enjoy the ease of being able to compare products and prices. Online giants like Amazon, the most popular online store, are winning points due to ease of navigation, competitive prices and fast delivery times.
- Over half (55%) of people enjoy that they don’t need to battle through crowds, while 54% like not having to haul around shopping bags.
In fact, if internet retailers want to attract those wary of online shopping, it could be as easy as guaranteeing a hassle free returns service - 37% of those who have never shopped online state that this would persuade them to do so.
However, it’s not all bad news for M&S. Our research found that it was the second most popular offline store, after John Lewis, with respondents citing good quality goods, affordable prices and good lay out and presentation as factors in its favour.
And the brand has an online presence, which will certainly help it compete with its internet-only rivals. What is clear is that competition within retail is stronger than ever - not only do stores have to contend with their next door neighbour, they now have their online cousins to deal with too.
The ball is most certainly in the consumer’s court, and retailers need to keep well ahead of the game if they want to survive the online revolution.
Jamie Matthews, CEO, Initials Marketing
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