Last week in retail was bookended with headline-grabbing news about a record fall in high street sales and encouragingly strong online trading, once again highlighting the differing fortunes of bricks and mortar stores and UK e-tailers. CEO of online health & beauty retailer Feelunique.com, Aaron Chatterley, tells Retail Gazette that the e-commerce revolution should be embraced.
There is blood on the high street. Last month, according to the British Retail Consortium, the value of retail sales was 3.5 per cent lower than a year earlier on a like-for-like basis.
HMV is now worth almost as little as a copy of the new Adele album and not a single retailer is predicting that matters will improve in the near future.
Just in the last month, John Lewis, Dunelm Group, WHSmith, Halfords, Carpetright and Mothercare have all seen sales fall in the UK and Dixons, HMV and Clinton Cards are among the companies to post profits warnings.
Hardly surprising is it? Unemployment is high, tax is rising, most folk who have a job are squirreling away every penny for fear of what might be lurking just around the corner and filling the car with petrol feels like being mugged.
We are clearly all doomed. But hang on one little smidgen.
Last Wednesday, Asos.com, the online fashion retailer, reported booming sales growth with pre-tax profits of for the year to the end of March estimated to come in at between £26 million and £29 million. Sales are up 70 per cent year-on-year. The results were seen as particularly strong by analysts.
Then on Friday the latest IMRG-Capgemini e-Retail Sales Index revealed that online retail sales grew by 18 per cent over the first three months of the year. The research showed that e-tail trading in the UK grew at the fastest rate for the first quarter since 2008, with spending in March alone totalling £5.1 billion.
On the same day, Mintel waded in with news that sales of online fashion in the UK totalled £4.3 billion in 2010, an increase of 152 per cent over the last five years.
Mintel estimates this market is set to grow by a further 45 per cent by 2015 reaching £6.9 billion, and online trading in fashion items is expected to total £4.8 billion this year.
In my own little corner of the e-commerce universe, Feelunique.com has just released its annual results showing turnover up 50 per cent to £16.1 million and profits up 64 per cent to just under £1 million.
If you are an online retailer, it is hard not to feel a little bit smug at the moment. I don’t want to sound overly confident and clearly the wider economic conditions has an impact on online spending.
But there is a massive disconnect between the fortunes of high street retailers and e-tailers.
We have seen a huge volume of commentary on the impact of the economy on consumer spending and the knock-on effect on the retail sector. Indeed, the health of the UK economy is largely built on consumers’ willingness to part with their cash in our shops.
But I have not seen any real analysis that takes into account the success of the e-tail sector in addressing the overall health of the market.
Of course, we all accept that internet commerce impacts high street sales, but to my mind, it has now reached a maturity and scale that is arguably having as big an impact on the high street as wider macroeconomic conditions.
This is just my personal hunch, but I wonder whether low consumer confidence is actually boosting the fortunes of the e-tail sector. If you are a consumer who knows that it is prudent not to spend disposable income right now, then there is a real disincentive to spend an irresponsible Saturday afternoon meandering along the high street.
But the ease of shopping online perhaps overcomes the imperative to behave prudently in the light of the economic downturn. It is very easy to spend five minutes at your desk at lunchtime to do some shopping. Much harder to commit to a day on the high street when you are supposed to be watching the pennies.
But I am an entrepreneur, not a psychologist, so I am sure somebody will tell me if I am mistaken.
The argument that “it’s the economy, stupid” seems to be a one dimensional and flawed approach to addressing the question of the strength of the consumer sector.
Just remember for every HMV out there, there is an Asos.
Let’s not let all this high street doom and gloom obscure the fact that the e-commerce revolution, predicted in the late 1999s, has arrived and is here to stay.
Note: The views expressed here are those of Aaron Chatterley and do not necessarily represent the views of Retail Gazette.