Retail: High Street versus the Internet

 

The debate about the supremacy of the Internet over the high street as our preferred shopping destination continues. This, at first glance, is surprising as the Internet offers so many advantages, for retailers as well as customers, but maybe the need to touch the product we wish to buy, and interactions with an actual salesperson are still vital components in the equation.

 

As customers we have embraced the convenience of the Internet; the ‘anywhere, anytime’ accessibility and the ability to shop around from the comfort of our sofa makes it easy, and our desire for instant gratification is sated by the live streaming of films, music and books. In the UK, 75% of us shop online, and in 2014 we spent an impressive £91 billion.

 

Retailers can benefit too, with lower overheads, reduced property and staffing costs and the potential for international expansion. The Internet’s flexibility allows for product lines to be changed quickly to drive or react to customer demand, a variable now better understood thanks to the generation of very valuable customer data. There are, of course, merits and financial implications for both types of retail. Internet retailers may not have high street shops to maintain, but they do have web hosting, distribution networks and search engine marketing to support and the fickle customer will not give a slow or difficult-to-navigate website a second chance.

 

However, as the Internet becomes more crowded, retailers have to be tough to survive, especially when competing against the undisputed Internet king; Amazon, which sells 120 million different products on its UK site, from which it generates annual sales of £4.3 billion. In the UK it has eight distribution centres, known as ‘fulfilment centres‘, the largest of which, situated in Dunfermline, is the size of 14 football pitches or 1,000,000 square feet. Amazon Prime Now is pushing the Internet’s levels of convenience even further, with a delivery option of ‘under one hour’ already available in parts of London, Birmingham and Newcastle.

 

Nevertheless, despite the obvious benefits of Internet shopping and Amazon’s relentless expansion, recent trends have shown that the high street is fighting back. Early last year, the online clothing store Boohoo, warned on profits following a disappointing pre-Christmas Black Friday performance. In contrast, John Lewis experienced its biggest sales day in its 150-year history on Black Friday 2014 and hoped to build on that success again last year. It increased the capacity of its website by a third to meet the expected demand, and its Magna Park distribution centre has the capacity to process up to 7,000 items an hour. However, it’s not just its website that is fuelling this success; with its ‘bricks and clicks’ approach, John Lewis is satisfying every aspect of its customers’ needs.

 

UK customers undoubtedly enjoy Internet shopping, but the high street still has a place, even for the younger generation, who despite predictions to the contrary are not doing all their shopping online. High street stores are seen as showrooms, which if staffed by approachable and knowledgeable salespeople will maximise their appeal and boost sales. For big high street names, these two retail platforms should not be seen as an ‘either/or’ option, but be promoted as a joined-up shopping experience; it’s what the customer expects and wants.

 

 

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