Many commentators have been quick to blame this year’s poor Christmas high street sales on a shift to online shopping, but the picture isn’t necessarily so clear cut.
It is absolutely the case that consumers are increasingly moving online to shop, however, offline retail still very much has the lead.
According to the latest ONS figures, in November 2018, online sales as a proportion of all retailing exceeded 20% for the first time, with online retailing accounting for 21.5% of total retailing on a non-seasonally adjusted basis. This means approximately 80% of all purchases were still made offline in November 2018.
We also have to take into account that Christmas trading may have been affected by an ever-popular Black Friday, which continues to shift consumer spending to earlier in the year.
According to the ONS, retailers reported strong growth on the month due to Black Friday promotions in November; the non-seasonally adjusted growth rate in November 2018 was 13.2% in comparison with 8.7% in November 2013.
The high street wasn’t the only place that sales suffered too; ASOS announced an unscheduled profit warning in December following poor November sales, which saw their, and others’, share price fall. And whilst overall online Christmas sales seem to have been resilient, the impact of a weaker than expected Black Friday sale period will see online retailers struggling to gain momentum as we move into the first few months of the year.
Alongside these figures, it’s important to remember that consumer confidence is currently extremely low with faltering demand in November for consumer credit and mortgages, which is likely to continue into early 2019 without a resolution for Brexit, as consumers spend less and businesses pause activity or stockpile resources to protect against a no deal.
With a rise in business rates and increasing wages, as well as Brexit looming; it’ll be a tough first few months for offline retailers especially, but by keeping the focus on ever-changing consumer behaviour, there are ways for them to thrive.
So, why do customers turn to online shopping? For convenience. They want to be able to quickly find out whether the product they’re looking for is in stock or available for same day delivery with minimal effort, and the retailers who can provide this will be the ones who come out on top.
Nearly a third of all Google searches relate to location, so in a bid to help high street retailers, particularly the smaller, independent retailers, Google is working with NearSt so that local search results will display stock in local shops, showing both the distance to the shop and the price of the goods they’re looking for. For the retailers geared up for this information to show, it’ll enable them to compete with online stores.
The high street stores which thrive will be the ones who look to offer an experience for their visitors. What can you offer to your customers that would make them want to come in-store rather than buying online?
Retailers such as Sweaty Betty have embraced this and transformed their in-store experience. The brand’s London store includes a cafe, beauty area and even a small exercise studio which offers a variety of workout classes throughout the week; they’ve delved deep into the lives of their customers and offered an experience which aligns with their wants and needs.
Whilst we can’t get away from the impact of economic and political instability on consumer confidence; the high-street retailers which weather the storm and thrive beyond Brexit will be the ones which are willing to create customer experiences that deliver something beyond just sales.
Tom Salmon is managing director at Epiphany