Are Online Retailers Really Killing the High Street?

6 Minutes
Mark Gregory

I’m a man – perhaps a typical one. My Christmas shopping is often quite last minute so it was no surprise to me that I was out on the high street last Saturday (19th December) doing a bit of present buying. I wandered into Waterstones in Harrogate for a bit of inspiration and came across two books that were perfect gifts.

Standing there, in the warmth paid for by Waterstones, flicking through their books, I took out my iPhone and within seconds was on Amazon’s website. Two quick searches later I’d found both books, with the total cost becoming several pounds cheaper. When I initially went onto the website, I actually thought I’d have missed the boat for a pre-Christmas delivery, how wrong I was. Just beneath the add to basket button on both products it explained I could use my Amazon Prime account for next day delivery – “Want this delivered for FREE on 20th December, order in the next 18 minutes”. The 20th December was also a Sunday…. I was mightily impressed.

I bought the items – my Amazon account is already hooked up to my card details so there was no messing around, no need to get my wallet out, done, sold. I placed the books back on the Waterstones shelf and walked out of the shop. I genuinely felt for Waterstones however the staff in the store were none-the wiser. Not that I know what it feels like to shoplift, but the feeling I had as I left the store felt, in a strange way, like dishonesty? I’d done nothing wrong at all of course, but I had used them to research products and then I’d bought from a competitor, whilst standing inside their well-presented shop. This highlights what the high street retailers are up against. Smart Phones and responsive, mobile-friendly websites are paving the way for a new kind of blow for retailers as I’ve described here.

It is also perhaps at Christmas that we are most aware of the ease of shopping on eCommerce websites, when we can shop online from the comfort of our own home, often receiving items the very next day. Free delivery and returns, make shopping online even more appealing and when the weather is poor – let’s be honest that’s a lot of the time – the thought of trekking out to the high street, trying to find (and paying for) parking, is just not an option!

So how is the high street coping with the rise in online shopping, how big is the threat and how is it affecting our local high street.

The UKs online retail market is large, as one would imagine, and it is growing. According to Euromonitor, its value increased to £42bn in 2014, an increase of 17 percent. And as Superfast Broadband spreads out across the country’s homes and businesses these figures can only increase. But as it grows, competition increases and there are more online outlets vying for the same business, trying to outdo each other on price. With such a competitive environment stripping prices and the necessity to offer deals or free postage, it is not an easy market place in which to do business.

Add to this the increase in our aging population who are still out of their comfort zone when it comes to online shopping, preferring to see, touch and check items before buying and online outlets may not be as close to takeover as it seems. The idea of wanting to physically see the product goes for other generations of shoppers too but they are more likely to be tech savvy, checking items in the shops before searching online and ordering for less elsewhere.

Ask yourself how many times you have visited a store, seen something you liked but then ordered it online. With the increase in phone apps, shopping can be done on the go, instantly in fact by scanning an item you see, selecting the best priced option and purchasing all whilst standing in-front of the chosen item.

A report published recently by PwC showed that in the UK in 2014 there were 5,839 store closures compared to 4,852 openings, an average of 16 shops a day closing down. The report surveyed 500 UK town and city centres, and findings showed that high streets were at threat in every region. Greater London had the most closures, 1,386, but also the highest number of shop openings. The highest regional difference was in the West Midlands, where 524 stores closed while only 371 opened.

And its not just the pound shops, mobile phone shops and smaller independents that have been hit. Last year saw the loss of La Senza and Comet and most recently Jaeger announced the closure of its Regent Street flagship store.

Some businesses are however on the increase and many of our high streets are seeing an influx of coffee shops, restaurants and fast-food outlets as well as charity shops. “Our town centres continue to evolve away from traditional shops and services to leisure – food and beverage and entertainment, ” observes The Local Data Company’s Director Matthew Hopkinson. “This is reflected by American and British restaurants featuring in the top 10 risers along with the impact of click and collect services showing 20% growth in 2014.”

However, familiar high street names are not just sitting back. Major retailers are taking action to win back customers and working to mix both “bricks and clicks” in the consumer purchase pattern. Retailers are mixing channels, working to build up their online purchases via database collection so as to make up for lost in-store sales due to customers ordering online. Ipads in-store and a firm policy to encourage on-line orders for items not available at that time in-store, are helping fight the battle. Many customers may research in-store but pay at home. Offering free delivery for items collected in-store also helps boost sales at both ends of the purchase journey.

Loyalty cards and clever sales tactics such as matching the Black Friday deals, going into sale early, period spot sales on selected ranges and clever digital marketing campaigns, all help win and retain customers. Online operators can argue that they are more able to be flexible with price changes implementing them much faster and with greater reach. It would be fair to say that retail chains are having to put in more effort with pricing, having to be more flexible with regular mark downs and more imaginative offers but they are meeting the challenge.

Retail outlets such as Boots do really well with 3 for 2 offers, mixing and matching product ranges to compete with online beauty outlets. They also have short-term offers, different items each week during the Christmas period, which makes it well worth making the effort to visit in-store. And there are of course the social and cultural benefits of browsing the high street, the power of this national weekend pastime, meeting friends and family, should not be overlooked.

As a website development agency, specialising in ecommerce, this changing landscape is of great interest. With a changing high street, a changing demographic and increased technology, it will be interesting to see how retail, both on-line and off, meet the challenges over the coming years and whether we will approach our Christmas shopping in quite the same way by the end of the decade.

So thank you Waterstones, for the inspiration, sorry I didn’t buy from you (still feeling guilty). As Amazon had confirmed, my two books turned up later the next morning – incredibly though I still haven’t finished my Christmas shopping!