Stuck in the middle ground

Online sales have been the one success story for high street retailers in the past 12 months, but brands at both the highest and lowest ends of the market have so far failed to join the party

The upward rise in ecommerce sales has been one of the few bright points for Britain’s besieged high street chains over the past year. The most recent figures from Interactive Media in Retail Group revealed a 13% annual sales increase in February 2009.

And with online sales still only about 20% of all retail sales in the UK, there is clearly great potential that remains unexploited. This view is reinforced by fresh consumer research conducted by YouGov on behalf of GSI commerce for its 2009 eTail Attitudes report.

The report reveals major gaps in online retail offerings at both the value and luxury end of the fashion market. When consumers were asked which fashion retailers they would most like to see establish or improve their online offering, value retailers Primark (25%), Matalan (21%), TK Maxx (16%) and H&M (14%) top the table.

Given this consumer demand, it’s surprising that successful offline retailers like Primark and H&M have not yet found a profitable way of developing a transactional web presence.

The accepted wisdom has been that it is not worth selling items that cost less than 4 online as the revenue from the sale cannot offset the marketing, operations, fulfillment and packaging costs. But while a single item sale may not yield a profit, several items purchased and shipped in the same package certainly can.

Many retailers across the board have not made this job any easier for themselves by only placing a tiny proportion of their product range online.

Findings from the report reveal almost eight out of ten consumers (78%) claim that they would be more likely to purchase from a favoured brand’s website, if its entire product line was available to browse and buy.

Sophisticated ecommerce websites, particularly for fashion brands, are using the latest online tools to encourage cross and up-selling. There is no reason to automatically assume that impulse-led customers cannot be encouraged into similarly profitable shopping habits online.

More fundamentally, even if retailers mistakenly believe that they cannot trade online profitably, a lack of a proper web presence inhibits the potential of their high street sales.

It is estimated that up to 60% of high street sales are researched online before purchases are made in-store. If a website fails to display a full product assortment, consumers have no way of exploring these items.

The research also highlights how luxury brand owners and retailers may be basing their web strategy on outdated conventional wisdom. The high margins on individual luxury items makes them particularly well suited to online sales, but many retailers continue to believe that consumers wanting to spend significant sums of money will want to do so “in person”.

However, this assumption is rarely tested. The research discovered that consumers have become much more confident in their online spending habits. Of those surveyed, 54% asserted their willingness to spend as much as 250, 38% said they would spend 500 and nearly one in four (22%) claimed they would be happy to spend as much as 1,000 on a single item online.

The research also shows less, but not insignificant, demand from consumers for luxury brands such as D&G, Prada, Gucci and Ralph Lauren to make more of their products available online.

Those luxury brands that have a notional online retail presence need to be doing more. Only 5% of respondents chose higher end “luxury brands”, when asked which websites they believe provide the best ecommerce experience. This was despite the fact that consumer electronics (37%) and entertainment (38%) websites, which consistently offer highly priced goods, were well up in the rankings.

A significant proportion of consumers are willing to spend significant sums of money online and are no longer hampered by increasingly outmoded notions of having to see and feel the product before they buy.

While many mid-priced retailers have embraced the ecommerce revolution, the message of this research is that significant sections of the retail industry at both the value and luxury end of the spectrum have a real opportunity to follow suit.

Consumer habits and attitudes have certainly shifted. And few retailers can afford not to take advantage of the significant opportunities to develop online revenue streams by strengthening their relation-ships with consumers in both the online and offline world through an effective transactional web presence.

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here