The Impact of On-line Purchasing

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Retail sales via mobile devices increased by 138% in 2014
In December 2014, 27% of all online sales were from a mobile device

Not so many years ago, a few what we could call “traditional” bricks & mortar retailers like Dixon’s, Argos and Curry’s were pretty much written off as being too behind the times, even prehistoric, in order to thrive and prosper in the New Austerity Economy.

But in recent weeks, Argos has announced that sales at its stores that have been open for more than a year rose by 3.8% to £1.8bn whilst Dixon’s, in the Boxing Day sales, were taking up to £100,000 a minute, according to their chief executive Seb James.

So what is going on?  Are we all not quite as poor as we are making out?  Or are we once again embarking on the folly of a credit-fuelled boom that will have the politicians and bankers lauding their own success amidst figures of record “growth”?

Personally, I don’t think that it is either of the above, although it does concern me that that the latter could quite easily happen again if we as the great British public lapse back into our old habits of loading up and paying later.  But no, we are surely not as daft as that, so I like to think that this is a more realistic trend that is being driven by pragmatism and realism after the harsh lessons that we have learned over the last 20 years about the foolishness of borrowing more than we can afford.

For me it is pragmatism because it is exemplified by the way we are flocking to new retailers such as Aldi and a shop I found on Maidstone High Street last week called “Savers”, which have simply exposed the extent to which supermarkets and probably most retailers had been gilding the lily in terms of the margin they make on stuff that we need to buy week in and week out.

But moreover, in our now insatiable search for value, we will even hold back from buying excessively in the run-up to Christmas, and leave our higher ticket value purchases until we know that the new telly that we “need” will surely be available far cheaper in the sales after Christmas. Hence Dixon’s bagging up to 100 grand a minute on boxing day.

I believe that we as consumers are becoming far more savvy, and in this quest for value, we continually revert to the internet to make sure that we are getting absolutely the best value for whatever item it might be that we need, from a set of AAA batteries for our latest electronic gadget to a new bike.  Yes even Halfords is benefiting from our new-found wisdom, with on-line sales growing 13.8%, and total online sales representing a record 11.7% of their total retail sales.

So although Halfords, Dixons and Argos are now showing encouraging signs of recovery, what has largely driven this is the boom in on-line retailing.  No longer are we content to drive miles out of town to retail parks and pay top dollar for goods that have clearly been marked up in excess of 100%, instead we would rather shop around, using the immensely powerful tool that is the internet, and make sure that we are getting absolutely the best deal. Even if it means waiting until after Christmas. And now, we are prepared to enter our card details into a web-browser and pay for stuff, knowing that it is every bit as safe and secure as if we were to do it on the High Street.

So where does this leave our traditional High Street, or the more recent phenomenon of the retail park? What is without doubt is that human beings are sociable creatures, and we will always feel the need to leave our dens and mix and mingle with our fellow animals, whether we are shopping, eating, drinking or working out our ancestry… so traditional retail is not dead.  But it is perhaps about to experience the kind of change that the communications industry went through when the mobile phone first appeared 20 or so years ago.

I am far from an expert on retailing, but I have made myself familiar with the thoughts of Mary Portas on this subject, and it seems to me that making high streets more pleasant environments where we will wish to congregate, socialise, eat, drink and therefore spend our hard-earned cash makes a lot of sense. The problem however, comes when you talk to retailers themselves.  Who is going to pay for that luxury? Its all very well having lavishly created environments for us to “hang-out” in, but if all we do is spend a few quid on an expensive coffee and a sandwich, and then go home to buy that new pair of shoes that we need, how are retailers going to be able to afford to create that environment?

Well as always in business, it will come down to value. There are undoubtedly things that can only happen in a retail environment that I cannot do on-line, such as try on a pair of shoes and just see how they feel when I walk in them. Or smell a bottle of fabric conditioner. Or just be made to feel special, as a human being, so that I am inclined to buy from you.  But will that be enough in these times of genuine hardship and austerity? Only time will tell, but what is clear is that retailers, councils, governments and policy makers will have to work hard, and collaboratively, if our High Streets are not to become soulless drags of charity shops and greasy spoons. Because on-line retailing is here, and is here to stay.