Online Merges With Offline In The Retail Market

Internet has transformed many facets of our lives, especially in the retail space. It is without question that the online market has changed the role of physical storefronts, but offline retailers still play an important part in the way consumers shop. In fact, physical stores have an increased importance in the supply chain. Managers must learn that combining online and offline platforms are a powerful strategy in building competitive advantages for their market.

According to Cushman and Wakefield Research, the UK has the most developed online retail market in the world today. The British are closely followed by the U.S., Germany, France, the Netherlands, South Korea, Japan, Switzerland and the Nordic countries. PYMNTS.com takes a closer look into this study to find out how businesses in these regions are responding to the changes in the retail market and what the future holds.

Expanding Consumer Channels

Businesses are continuously seeking new strategies to increase their market share, and for many this includes opening new channels. It has become the norm that companies must operate on a multi-channel network to sustain their places in the market.

Since the rise of the Internet, an obvious choice has been to expand online channels. The report shows that online retail has been increasing about 18 percent per year on average over the last three years, while other sales channels have only grown by a mere 1.3 percent each year during the same period.

The online channel has become pervasive, but as it continues to expand, some retailers have realized another channel exists: merging both offline and online platforms. Merchants in the UK have demonstrated this effectively, as the study reports that UK merchants have the greatest growth in the “click and collect” services. Click and collect is the option consumers are given when shopping online, and lets them purchase or reserve an item online and then visit a physical store to collect the item. Stores in the UK, such as the popular retailer Argos, offer these services, and it is one that most of its consumers prefer. This underscores the importance that physical stores still carry in present day retail despite digital advances.

How Retailers Are Affected

In the past, merchants and businesses found growth opportunities in new product launches or through expanding geographically. Product development is a time-consuming and expensive process, as is opening new storefronts. Opening online channels offered a new way to increase sales, grow the brand and expand into overseas markets at a comparitively low cost.

Thinking from a consumer’s perspective, merchants must acknowledge that as markets mature, shoppers expect to have equal experience across all channels. This means they are offered the same service in store, on the Internet, on the telephone, on their mobile website and even on social media. In order to provide streamlined services, merchants are integrating these channels, also referred to as an “omnichannel” approach.

The emergence of omnichannel means managers are reassessing their physical property. Some are downgrading and only keeping large stories in highly populated centers. Others are trying to accommodate click and collect services by opening more, yet smaller locations for customer pickups near areas that consumers live and work.

Mobile Commerce

Cushman and Wakefield report that the growing adoption of smartphones and mobile devices has directly impacted the retail market and consumer tendencies. The future of both online and offline markets will be highly influenced by the burgeoning smartphone use. Both consumers and retailers are learning to understand the mobile channel and finding new ways in which it can benefit them. Research suggests the it will be the mobile device that further molds the relationship between offline and online interaction.

More companies are creating a separate interface for the mobile channel, and how they do so will have a large affect on the consumer. Consumers want additional channels that are simple and convenient, but are still expecting the same quality of service they find online and in the store. It is integral for retailers to carefully deploy mobile websites to match these needs.