Return on investment for UK retailers experimenting with interactive TV (ITV) is only “a distant prospect” as long as dozens of retailers chase tiny revenues, says a new report from Forrester Research.
Focusing on what it calls “tRetail”, the report warns that UK retailers face some difficult decisions. Forrester says that rather than struggle on, retailers must reassess their opportunities now and the majority should abandon their standalone walled-garden presence in favour of a shared-cost infrastructure.
“British retailers’ dissatisfaction with current tRetail revenues is wholly justified,” says Forrester director of research Fraser Pearce. “Platform operators have created an impossible scenario for tRetail, attacking thin margins with large revenue shares and high fixed costs. This means that over the year retailers will spend £47m chasing just £12m in net revenues.”
Pearce concludes: “While retailers have pressured platform providers into reducing tenancy fees and commissions, these costs don’t attack the real cause of the problem: an excess of tRetail supply.”
Forrester asserts that today’s overcrowded walled gardens help no one. They waste the resources of retailers with the least potential while snatching revenues from those with the most. As a result, retailers must take stock of their opportunity and take one of the following paths: renegotiate, reinforce and reinvest to stay on the platform; move into aggregated retail presences; or retreat altogether from the platform.
For the report, “Resuscitating interactive TV retail”, Forrester spoke to 35 leading retailers selling on interactive TV.