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The gifts of site

By: Jeff James

Listed Under: Feature

Published: Friday, July 17, 2009

Is high street retail set to become a thing of the past? Will online shopping be the new, all-encompassing retail experience of the future? John Bensalhia looks at the case for and against

Back in 1969 you’d never have thought that it was possible. But 40 years later it’s happened: the dawn of the online shop is threatening to eclipse its high street rivals. So, no doubt, in another 40 years we’ll finally be able to transport from A to B in an instant teleport system without having to endure the perils of public transport.

So what are the implications of shopping online, and how do they affect high street shops? Is it possible that, in 40 years time, the high street shop will have died a natural death? Will it become an outdated curiosity like the vinyl record, the video recorder or the personal stereo?

ADVANTAGES
What are the advantages of shopping online? With an ever-growing population, the first thing that springs to mind for the consumer is the lack of crowds, traffic and parking problems. Online, customers have none of these hassles. They can get instant, easy service, and more often than not will receive better customer service than they would receive in a shop. That is because it is arguably easier to deal with people on a one-to-one basis rather than having to deal with several customers at once.

Shop owners can benefit from the online customer store too. For one thing, the overheads are greatly reduced. The amount of employees can be greatly reduced, and in theory, only one person would be required to man the shop. There is the added bonus of not having to shell out money for premises and the associated costs that go with it, including utility bills and council tax. A big factor of this is that shops have to hike up prices in order to meet these overhead requirements. Online it is cheaper, and this will be the place to secure more customers who are after a bargain.

With shops, vendors also have the disadvantage of having to tailor their stock in order to maximise returns with only limited shelf space available. But with internet shops, there is no such problem - there is unlimited shelf space. Some companies are also in a position to simply sell the product rather than deliver it too. All they need to do is liaise with their delivery companies, who will do the rest.

But what of the competition? Both high street shops and online retailers need to be in tune with the competition. An advantage of being online could also be a downfall in some ways. It is easier to monitor the competition - all that needs to be done is to logon to rival websites in order to see what sort of prices they charge. However, the danger is that there may be other companies that have slashed their prices: so much so that if you were to slash your prices to that extreme, you may end up losing out on good profits. It’s a question of quantity vs quality. And that’s not to mention the big guns like Amazon or eBay, which are, more often than not, the first ports of call for online customers.

Some customers just don’t trust and/or like using the internet. Either they don’t know how to or they are afraid of fraud. What with the advances in technology, and the greater amounts of people using computers to order products, this is now more of an easy target. Indeed, a recent survey conducted by the Office of Fair Trading found that 30 per cent of internet users did not shop online because they were afraid of becoming victims of online fraud. That said, a greater amount of users feel it is safer than three years ago, when 26 per cent felt confident with this manner of trading, as compared to a newer, more positive figure of 54 per cent.

GOODWILL
There’s also another potential problem for the customer in that they do not get to see the product that they are taking home. There’s a certain element of goodwill required here. What if the product is damaged in any way? What if the product does not arrive on time? What if the product isn’t in the correct size or is tailored to exact requirements? All of these questions are important issues for buyers and could potentially be obstacles among those who are not quite sure what they will get.

While online shopping is undoubtedly more of a convenience, what about the good old days of actually going into a shop and browsing at your leisure? Remember the feel of going into a bookshop and smelling the pages of brand-new books. Remember the excitement of going into the local record store and spending your pocket money on your favourite album or single of that week. Remember the thrill of going into the local sports shop and picking up your first football or bike. All of those feelings cannot be experienced when buying online. Convenient yes, but totally impersonal.

Still, it’s predicted that online shopping is going to increase. The figure is set to rise to more than £31billion by 2013, even with the increasing competition. The figures were culled from Verdict Research. Its senior retail analyst, Malcolm Pinkerton, said that: “The key for individual retailers is to formulate two clear strategies. One for succeeding through the recession and one targeting growth beyond this as the online channel begins to approach maturity.”

Pinkerton also argued that online shopping was of great benefit to both those who could afford to buy and those who were seeking bargains. Those with less money to spend had more opportunity to find good deals online due to the amount of choice, while the more affluent groups could carry on spending their money on the items that they wanted.

However, Pinkerton also argued that online retailers must work harder to attract potential customers: “Success will depend on a company’s ability to create ‘retail theatre’ and a consistent shopping experience across all channels with highly differentiated, targeted propositions heightening the consumer experience.”

So those are the figures. But who can say whether online shopping will consign the high street shop to the past? While there are those who use this method of shopping for convenience, there are still those who will prefer the rush of going to their nearest store to pick up the product that they want.

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