Physical stores remain essential to UK retail according to new research from Verdict Retail and British Land.
Despite the rapid growth of online shopping in recent years, in 2015 89 per cent (£278 billion) of all UK retail sales touched a store, through physical sales, click & collect and online sales browsed in-store. This boosts physical retail by 5 per cent and demonstrates how physical and online complement each other, say the authors.
The research, based on 30,000 consumers, measures the role of the physical store in an omnichannel age, identifying factors that influence online shoppers and how they buy across channels.
Quantifying the share of online sales that touch physical space – because shoppers have visited a store to collect an item, or to browse before purchasing – the research demonstrates how the internet is boosting store sales for retailers that have embraced omnichannel to deliver a seamless customer experience.
With few online sales touching the store, the food & grocery sector distorts the average, as it accounts for half of all retail sales. Excluding food & grocery, the boost rises to 9 per cent.
Brick-and-mortar retailers account for two thirds (66 per cent) of the £34 billion of online sales, with the remainder purchased via online pure-play retailers. Looking at those brick-and-mortar retailers, the research finds that 53 per cent of their online sales have directly touched a store.
Women use click & collect more than men, and engage more with stores overall as part of their shopper journeys. Similarly, Londoners are more likely to touch a store when they shop compared with the rest of the UK.
The age groups most attached to stores are 16-24 and 25-34 year olds. Their use of online pure-play retailers is also notably low. This not only reinforces the importance of physical stores today, but also indicates their likely future importance. Far from showing a pure-play generation of young shoppers, the research reaffirms physical shopping’s role as a recreational and social activity that is here to stay.
While half of all electrical purchases are made in store, 65 per cent of sales rely on a store to occur. For this reason, electricals shows the highest boost at 32 per cent, followed by sports & toys (25 per cent) and department stores (20 per cent).
At the other end of the spectrum, the home sectors (homewares, furniture & floorcoverings, DIY & gardening) and health & beauty have a low boost, mostly due to limited online penetration. In the home sectors, shoppers want to see and feel products before buying, particularly for more expensive items, where delivery can be costly and returns not permitted. In health & beauty, shoppers rely on stores for discovery and impulse buying, and cannot wait for delivery for needs-based products.
Patrick O’Brien, content director for Verdict Retail, says electricals is one of the most mature online markets, with customers using a variety of channels in their shopper journey.
“The prevalence of showrooming is resulting in a number of retailers repurposing their physical stores, utilising them to display products and promote online sales rather than just to fulfil immediate sales. We expect this trend to grow as stores continue to migrate to the showcase model.”
Ben Dimson, head of retail business development for British Land, one of Europe’s largest publicly-listed real estate companies, said the True Value of Stores research reveals a number of thought-provoking insights, such as the importance of stores for under 35s, and the varied role of the store across sectors.
“We expect to see continued demand for physical stores from a variety of operators, and this research helps to cement their place within retailers’ plans in an omnichannel age. Even online pure-plays are dipping their toe into the world of physical, taking pop-up space or temporary units. In doing so, they benefit from the ‘halo effect’ that stores offer – generating online sales and strengthening customer relationships.”
Verdict Retail conducts regular surveys of UK online shoppers to gauge their interaction and spending across a variety of retail sectors, channels and fulfilment methods. Each March and October, a sample of 10,000 consumers representative of the UK online shopping population are asked about their shopping habits over the previous 12 months. This research is based on the March 2015, October 2015 and March 2016 surveys. Participants were asked about how their order was delivered or collected, and how they interacted with the retailer’s store prior to making the online purchase.