The future of shopping: from the screen to the high street?

Online retailers including the internet giant Amazon are setting their sights on traditional shops, as they become aware of the importance of a physical interaction between the customer and the product

The high street may be crumbling before us as we become a nation of technophiles, preferring to pore over our phones and do anything to avoid making face-to-face contact as we turn to a plethora of online outlets.

And anyone who takes a cursory glance at sales figures from the UK’s leading retailers will see that online sales continue to grow at a pace of which traditional shops can only dream.

So with that in mind, why would any online player want to start opening physical shops, with the huge overheads, long leases, ruinous business rates and endless, extortionate upward-only rent reviews?

Sofa specialists Made.com and Sofa.com have both opened physical “showrooms” to offer customers the chance to check out their stock before buying. Online womenswear retailer Finery is launching six concessions in John Lewis, while rival Missguided has opened a concession in Selfridges.

Overseas, Amazon has been making waves as it opened physical bookshops for the first time, and much excitement was generated over the idea that it wanted to set up even more, possibly in the UK.

It seems the high street still has a sense of theatre and service that the internet has not been able to reproduce – and that goes some way to explaining it.

Richard Hyman, a veteran retail analyst, said: “Online retailers are realising that they miss something if there isn’t a physical interaction between the customer and the product.

“Online retailing is about ‘buying’ rather than ‘shopping’. The latter denotes something much larger than buying, because you can go shopping and not buy anything but brands will impact on the customer in a way that online has been unable to do.”

Ning Li, co-founder and chief executive of Made.com, which recently opened its first showrooms, explained why his business has taken this step: “There was always a segment of the customers who were asking us where they can touch and feel the products, and as we grew the business we felt we would be leaving those customers behind.

“It’s not about online or offline – it’s about how do we leverage the offline presence to offer a better experience to our online customers? We look at our showrooms as an extension of our website. People come to our showroom after they saw something on the website, or had something in mind when they come to the store. It’s a conversion tool, rather than the typical way of selling to customers.”

That is not to say opening stores is an easy process, and Mr Li readily admits physical retail is less agile than online – a view shared by the boss of Hotel Chocolat, which started life as one of the first online-only retailers in 1997.

Angus Thirlwell, its co-founder and chief executive, explained: “It took us seven years to open our first store and we felt a certain degree of pressure. You have to impress people and it has to be better than people expect, which is hard when people already have high expectations.

“But by 2001-02 we got to a point where we were aware our customers could never talk to us, try the chocolate or interact. That’s when we started talking about creating a physical space.”

It now means the 100-odd stores Hotel Chocolat has in the UK are meticulously planned with thousands spent on designers and materials to portray an upmarket chocolatier.

No wonder Amazon is planning carefully. A single bookshop in Seattle now exists, a second is on its way, and if rumours are to be believed, every city could soon have one.

James Daunt, managing director of Waterstones, explained why Amazon might be looking at physical stores, bearing in mind his own business has turned a profit after years of analysts predicting its demise. He said: “Online only takes you so far, and it’s not the same experience as a store. If you want to dominate the bookselling space you definitely want to do both.

“Why Amazon has chosen to focus on books, when they have many other things to sell, is perhaps because of the physical interaction with books, which is a key part of the experience. The vast majority of our customers come into our shops not knowing what they are going to buy.”

So it seems the future of online may well lie in the high street; but with the costs more prohibitive that ever, could there be a stepping stone for etailers before an all-out physical assault?

One way could be the pop-up route – particularly with department stores keen for more customers. Another could be via click and collect, with eBay teaming up with Argos and Asos offering collection services at Boots.

Neil Ashworth, the boss of CollectPlus, which offers collection and return points at about 6,000 convenience stores and newsagents, reckons it could be: “The movement of online-only to high street offerings is almost inevitable. Sales from online-only is still small compared with the overall market and multichannel is the most important piece.

“But we know that 50 per cent of customers who order online for next day delivery are not going to be home, so online retailers are keener than ever to have an alternative, which is where click and collect comes in.” 

No doubt the evolution will continue and the high street cannot live without the internet. Or should that be the other way round? 

Comments