Britain’s online retailers score big as customers stay away from the high street

The fact that 90% of UK households now have access to the Internet has changed the way consumers interact with brands and purchase goods. If ten years ago the high street was UK’s top shopping destination, land-based retailers are now struggling to keep up with online stores, which are causing a massive commerce shift. According to the Office of National Statistics, 77% of British adults have bought goods and services online and 56% have used the Internet to purchase clothing. If it was previously believed that this trend is mostly followed by young people, the latest studies reveal that people of all ages are more open towards this form of commerce, putting brick-and-mortar high street stores at a disadvantage, even during Boxing Day or summer sales.  Apart from food sales, where land-based retailers are still king, it seems that the Internet dominates the British retail industry and leads to the creation of new business models and forces traditional retailers to innovate in order to make ends meet.

Between 2015 and 2017, online stores grew by 27pc, while land-based stores reported fewer sales. While esteemed chains like Toys R Us, Maplin, New Look and Debenhams are struggling, online stores are holding 20% of the market and keep up with customers’ changing tastes by implementing innovative technologies and offering an improved shopping experience.

New technologies propel UK’s rising retail success stories

Due to the wide accessibility of e-commerce tools, launching a user-friendly online store has few implementation barriers. Combined with low set-up and maintenance costs, this enables online retailers to innovate and implement state-of-the-art shopping and payment features:

• ASOS, one the UK’s biggest e-commerce success story, has reported record profits since its launch in 2000, when most people were sceptical of online clothes purchases. Adopting new technologies and simplifying user experience, they are now a business model that many retailers aspire to. Personalised clothing recommendations, dynamic product viewing, easy returns, communication with clients across all social media channels are just some of the things that convinced British shoppers and helped the company get £1.8 billion in sales and a profit of almost 150%.
• Farfetch, one of the youngest retailers in the UK, founded in 2007, is also one of the fastest growing online businesses. Boasting more than 21 million monthly visitors, the company managed to attract users not only through the wide variety of clothing items (it sources products from more than 1,000 brands), but also through the way it uses tech to enhance the shoppers’ experience. For example, Farfetch invested in a logistics network to provide same-day delivery in 10 cities and implemented a superior tracking technology to prevent shoppers from adding sold-out items to their carts. At present, the company is rumoured to be getting ready for an Initial Public Offering and could be valued at $6 billion.
• Misguided, another UK online fashion retailer, has reported £118.3 million in sales last year and is also rumoured to be on the stock market. This online shop is particularly praised for the way it uses social media to promote an inclusive brand image and reject unrealistic beauty standards.

Fintech is one of the financial revolutions that help online retail thrive. Focusing on streamlined user experience and multiple payment gateways, innovations such as PayPal, Apple Pay or Contis’ whitebanking platform make shopping hassle-free for both buyers and sellers.

High street retailers have to adopt an innovation-driven mindset

The high street crisis, or the high street blues, as it was dubbed by economists, seems to paint a bleak picture for aspiring entrepreneurs. Caused by a combination of factors, including weak wage growth, inflation, competition and debt, the crisis is shaking up the retail market and dethroning large retailers such as M&S, House of Fraser, Prezzo and Carpetright. But does this mean that launching a brick-and-mortar store is a financial faux-pas? According to retail experts, this decision is risky, but not an automatic death sentence.

By maintaining an innovation-driven mindset, taking advantage of Fintech innovations and listening to customer demands, UK retailers can thrive, as proven by these examples:

• Primark has outshone its competitor New Look and, despite not having an online store, it owns 16.5% of the UK clothing market and opens new selling points throughout the UK. By offering shoppers trending items at a low price and drawing in foreign customers, Primark reports £735 million annual profits.
• JD Sports has taken advantage of the athleisure trend and now has an annual revenue of £1.8 billion. Apart from the latest sportswear collections and celebrity collaboration from Nike and Adidas, the retailer also stands out through the way they use POS systems to get customer feedback: when a client uses their credit or debit card to pay, they are a prompted a question regarding their shopping experience.
• Hardware retailer ScrewFix has been open to digital trends and the rise of mobile technologies and this can be seen in their strategy. Their “click & collect” strategy was particularly popular and helped them stand out from competitors.
• Fashion retailer Matchesfashion, which also has an online store, has managed to keep their offline store afloat by incorporating technology into brick-and-mortal shopping: mobile POS and tablets that allow shoppers to view complete fashion collections.

Embracing new technologies while listening to the customer’s voice and staying authentic to the company’s core values can help retailers grow both online and offline. Instead of lagging behind during the high street crisis, retailers can learn to use modern tech to their advantage and find a niche they can thrive in.