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Online retail is booming. How can other retailers react?

21st February 2017


New research from RBC indicates that one of the key trends for 2017 is going to be an explosion in growth of online retail. Analysts say that this is great news for online-only retailers such as Asos and BooHoo.

Other important trends for 2017 include a shift to value retailers and a decline in the popularity of department stores – this last trend being a problem for brands that rely entirely on department store concessions.

I agree with the trends identified, in particular, it is clear that some brands like Asos will continue to do well. The clothing market is difficult right now, there is a general decline in sales in this sector however Asos grew by over 30% last year. Clearly they are doing something right.

Contrast the typical experience you get when shopping for clothes in-store and online with brands such as Asos and BooHoo. In the store, you can see and touch the clothes. You can try them on before buying. There is a visceral experience that is difficult to recreate online, but there is also a sense of anonymity. The retailer doesn’t really know anything about you when you walk into the store.

The feeling I get when I look at online stores is focussed on discovery. I’m not just going to a store, but I’m getting valuable fashion advice and news before my friends do. Offers and flash sales are highly personalised and based on my shopping history. Unlimited free shipping for a small annual fee ties me into a community where I can go online, buy more than I need, try the items, and then return what I don’t want.

The real question for most retailers is how they can take this “community” approach of the online-only retailers and apply it across all channels. Omni-channel strategy demands that customers have a great experience however they interact with your brand so retailers really need to start creating a sense of inclusivity. I need to feel a part of “something” when I walk into a store and browse.

In China, there is a strong online-to-offline retail trend taking place where online brands launch physical stores and create an omni-channel offer that aims to take innovative retailers in the opposite direction to what we commonly see – traditional retailers going online. This could be explored by some of the brands that are popular in the UK, but I think traditional retailers with branch networks will react faster than an online brand creating a national network of stores.

If they don’t learn these lessons, the online brands will capture their market. Online, and eventually on the high street too. Let me know what you think of these trends in retail by leaving a comment below or get in touch on LinkedIn.

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Helen Murray
Article by: Helen Murray

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