Retailers must grasp the virtual world

Technology has helped resolve the misgivings consumers had about buying online and the figures show this is how the public now prefer to shop.

A long time ago, when I wanted to buy a pair of trainers or a washing machine I had a fraught but well-trodden journey. Usually, I would react to an advertisement, research the item by asking family or friends their opinions, then make a visit to the high street. Once in store, I’d ask the Saturday shop assistant, in an ill-fitting uniform, what he or she thought about a particular model or brand, then hand over some cash in return for a carrier bag or distant delivery date.

Times have changed thanks to the internet, and with talk of a retail sales slump, store closures and redundancies, one could imagine that the average high street or shopping centre could soon be a ghost town. But is it all doom for retailers? Perhaps. Certainly, it’s true that in May retail sales were down 2.4 per cent and the overall forecasts are “poor to dismal” for the rest of the year. But when you look at the e-tail sector, it’s quite the reverse. In May, online retail sales reached &£1.5bn, which represents a year-on-year increase of 30 per cent and a 13 per cent increase on April. Put simply, the barriers to buying online have disappeared. Online consumers can find anything they want on the internet: broadband makes it spontaneous and fast to research and buy; the best sites are easy to use, while enhanced three-dimensional images and close-ups make the experience semi-realistic and fun. It’s easier than ever to find the best prices, there are fewer security issues and consumer trust has grown because of speedy service, e-mail confirmation and prompt home delivery.

Sadly, the majority of retailers have been caught in the headlights by this dramatic shift in consumer behaviour, but it’s not too late. There is much that can be done to maximise online sales and build a brand. Some bricks-and-mortar chains are waking up to this: recent figures from the Internet Advertising Bureau show that retailers are set to double their online advertising spend to &£65m next year and could spend &£120m a year online by 2010. Last year the retail sector accounted for only 4.77 per cent of total online ad spend – or &£31.13m.

Stellar growth categories include electrical goods, alcohol and, more surprisingly, fashion. This is interesting as it’s a sign the internet is really growing up. Thanks to broadband, online fashion sales are rising exponentially as shoppers can now see and virtually feel the goods. One-time catalogue shoppers of the Grattan, GUS and Freemans generation are moving online to watch models demonstrating the latest gear in an entertaining and realistic manner.

Some of this surge can be put down to the “Ebay effect”. The Ebay experience is empowering and rewarding; it’s fun and easy to use, it’s secure and keeps you informed about transactions. It also builds online buying skills and is a great model for traditional retailers to examine and tailor to their own needs. Is this teaching granny to suck a free-range egg? Maybe, but if you are a retailer can you honestly say you are doing your best for your brand online?

The message is clear; retailers must build their online brand or get out of the game. Research proves that if shoppers enjoy an online experience and trust a retailer that stocks a recognised brand, then 92 per cent will buy that brand instantly. Enough said?

Guy Phillipson is chief executive officer of the Internet Advertising Bureau


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