Retailers struggle to make profits from soaring online sales

Fewer than one in five retail chief executives believe that online sales can be profitable

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The Independent Online

Shopping habits are shifting so quickly that the amount spent through smartphone and tablet purchases is expected to soar nearly five-fold within a decade, according to experts.

#Currently, we spend around £9.7bn on mobile devices, according to Barclays, but that is set to jump to £53.6bn by 2024. However, it comes as a survey of retail chief executives found that fewer than one in five believes that online sales can be profitable.

Most high-street retailers have seen a huge boost in the use of online sales, with purchases on tablets and smartphones having jumped further than most, and some have already predicted that it will overtake sales made through a traditional desktop or laptop computer.

Richard Lowe, managing director and head of retail and wholesale at Barclays, said: “The size of the retail opportunity is clear for all to see.

“The question every retailer should be asking themselves is what they are doing about it to not only satisfy today’s consumer, but also tomorrow’s.”

The number of tablet users has doubled in each of the past two years, with almost half of adults now owning one, while smartphones are now owned by 61 per cent of the population, expected to rise to 75 per cent by 2019.

Barclays also predicts that around 42 per cent of all retail sales will involve a mobile device.

Retailers have reported customers scanning items in stores with their phones to compare prices, and Currys PC World has even launched an app for customers to use to compare prices directly with Amazon.

Customers are particularly fond of browsing their tablets while watching television, and making purchases through their phones on their journey into work, according to retailers.

However, the boost in online and mobile sales could come at a cost. A report by PwC and the supply chain firm JDA found that only one in five of the top 250 retailers around the world said they can fulfil omni-channel demand profitably.

Bosses also revealed that the biggest challenge was meeting customer expectations online, especially with retailers now expected to offer next-day delivery as standard.

Supermarkets have been particularly vocal about the expense of picking goods and delivering them to customers, generating a loss once the extra costs are taken into consideration.