Oh yes! We all know about the casualties of online versus online, the brands like Borders who fell foul of Amazon’s ability to trade out of football pitch sized sheds and cut costs across the board, but some products will never totally ‘fly’ in the purely online world.
Take clothes for example and shoes, people prefer to try something on in a shop, to know if those shoes are going to pinch without the hassle of having to return them if things don’t work out. Currently, 25-40% of all clothes bought over the internet are returned. Many shoppers order multiple sizes with a view to returning say 2 out of 3 items. It’s treating your living room like the old fashioned changing room in a store, with the added hassle of posting the stuff that is unwanted back to the supplier.
Some traders offer free returns, whilst others pass the cost on to the buyer. Whichever way, it’s a cost and hassle for retailer or consumer. The same applies to childrens’ clothes and accessories. If there’s a choice of being able to eyeball something, feel the quality, assess the safety, then parents will take it. This is probably why Kiddicare has taken over 10 ‘superstores’ from Best Buy (a victim of the clicks bricks struggle, a kettle is a kettle right? Do we need to touch it before we buy it?).
Kiddicare’s reason for leaving the sanctuary of the net for the choppy waters of the high street? To offer customers “A true multichannel experience” claims the retailer. In other words letting their customers shop with smartphones, tablets, laptops and even in stores as if waited upon by a single salesman, with an unfailing memory and uncanny intuition about their preferences.
Owned by Morrisons, Kiddicare is not the only retailer to take this step. Screwfix, the Mecca of plumbers and electricians, has opened no less than 270 shops since 2005. They realised that customers wanted both on and offline service when they spotted tradesmen sitting in the car park of their first store ordering online and then dashing in-store to pick up their purchases! Apparently, the queue for online orders was shorter than the other one! There’s an old maxim in retail, “Want to know know to do the right the thing? Ask the customer,” and in this instance they screamed “MULTICHANNEL.”
Even the mighty Amazon has cracked (just a little bit) under the pressure and is tip-toeing into the real world by installing lockers in shopping malls where customers can pick up deliveries. They also have a partner program where customers can return unwanted items to local shops across the UK, where they will be picked up by Amazon couriers, first steps towards bricks-and-mortardom? Let’s wait and see.
Matt Truman of True Capital, a fund that invests in consumer companies believes that all this suggests that online and traditional retailers are eventually “migrating to a middle ground.” Certainly John Lewis, which posts very healthy profits in a recessionary market has pioneered a hybrid trading paradigm that works for both company and customers. JLP claims that on and offline shopping spur each other on and that when a new shop opens, online sales in the vicinity jump by 20-40% “overnight”. Plus, nearly a third of all people who order online prefer to pick up their purchases in store and apparently 40% of those make an extra purchase when they pop in. The secret to online/offline trading? You do the maths!
The question for envious e-tailers is how to pluck the benefits of physical stores without incurring the costs. Most proceed gingerly, armed with high-tech weaponry. “Pop-up shops” generate buzz and then vanish. Ebay has tried them, and Winser London, a fashion website, plans to. Amazon’s ghostly high-street presence helps make delivery cheaper and more convenient, but so far it offers nothing more. Kiddicare plans 15 stores at most in Britain, a fraction of the number operated by its struggling competitor, Mothercare. They will be nimbler than traditional stores. Prices will appear on electronic labels and change with the push of a button.
Bricks-and-mortar merchants are likewise paring space and bulking up on technology. In Britain the number of outlets a retail chain needs to have national coverage has dropped from 200 in the pre-online era to 50-80, says Adrian D’Enrico of AXA Real Estate, an investment manager. House of Fraser is experimenting with shops that are little more than a changing room and rows of screens to order clothes. Hointer, a Seattle start-up, provides just enough space to display a sample of each type of jeans it sells; robots fetch the right size from the stockroom. On today’s high street, shopkeepers who stand still are unlikely to survive.