For the past few years, the growing e-commerce market has developed at an alarming rate, with the sector of digital retailing attracting the most focus.
Growth in digital retailing needs no introduction. It’s been hard not to notice figures of £97bn in online sales alone throughout 2013, and industry analysts are predicting 2014 to come in at £107bn.
The figures show online retail revenue is growing very quickly, and more and more original brick-and-mortar retailers are seeing the importance of having a transactional website presence: multi-channel retailing.
In July this year, the Interactive Media in Retail Group, revealed the top 50 online retailers in the UK. They ranked Amazon 1st followed by Argos at 2nd place and Apple at 3rd. As the voice of the online retail industry the IMRG is the UK’s intelligence in market tracking and can identity all online retail associations, changes and current trends in the industry.
In recent years, the IMRG has identified increasing sales in the growth of multi-channel retailers, as it seizes the opportunity to connect to customers through a variety of channels, with most already making the transition.
There are various forms of multi-channel retailing representing wide options for businesses to engage in. Currently, retailers can interact through stores, call centres, catalogues, marketplaces and television, with the main channels being mobile and website.
But the question is, for how many of these retailers is the transition proving successful, and in what area is this profitability?
The challenge for retailers is to keep up in finding new ways to connect to customers and where the focus is to provide the customers with the best experience possible, there is no doubt that multi-channel retailing presents a wide range of choice for both the consumer and retailer.
Retailers have jumped on the bandwagon in their attempts to find the most appropriate channels for their interactions with customers to increase sales. The most notable advances are in the efficiency of click and collect services and real time stock availability. This is where stores are able to see the status of every order and unit of stock in every location, and that includes 3rd party suppliers. At present only 27% of retailers are providing this information as a service to their customers.
The pressure was on retailers to engage in the most recent advancements, which for many retailers meant introducing multi channelling. The challenge is to deliver multi-channel retailing but with an avid growth in profitability and success, not lose money through augmented developments in bigger and better delivery options.
The emphasis was on incorporating new systems of multi-channelling, but not at loss to profitability. The existence of this small priority forms the basis of the levels of service provided by each retailer that sets them apart. Eventually this can lead to strategic developments and new industry advancements.
Despite the high figures in digital retail consumer spending, there is still a demand for store bought products, of which many multi-channel retailers are aware. Stores still form a critical part of the retail industry and make up the bulk of the profit in retail at 75%, meaning the traditional high street is still the most preferred shopping channel for customers.
Interestingly, John Lewis partnership stated it was necessary to sell £2 online to make the same profit at £1 in store, highlighting the intensity in store revenues and the strength in comparison to its online counterpart.
As a result, some major physical retailers blend their channels together to achieve overall revenue and maintain consistent profitability across all channels.
In this profit driven industry, it’s arguably a better idea for retailers to split trading results so that companies have an accurate measurement of success, otherwise their investments to improve how the average customer shops in areas of the integration of multi-channel will be worthless.