Surveys show an upward trend in online retailing as more and more time-poor consumers forgo a trip to the shops in favour of ‘quicker’ and ‘easier’ internet shopping

WITH AN INCREASING number of us getting our shopping fix online, retailers should probably think long and hard before their next investment in bricks and mortar.

Figures from the Central Statistics Office show that in 2011, 43 per cent of Irish adults shopped online in the previous 12 months. That’s up a massive 7 per cent on the previous year. So while sales and footfall in conventional retail stores have dwindled in the same period, traffic through the online marketplace is on the up.

A September 2011 survey from PricewaterhouseCoopers of 7,000 shoppers across eight markets including the UK, Germany, the US and China gives us some insight into where retailing in Ireland might be headed.

The figures show that while online shopping is now mainstream, many online shoppers are relatively new to it. Some 14 per cent of online shoppers in the UK had only made their first online purchase in 2011. This fast-growing adoption rate indicates an upward trend in online retailing as more and more consumers get connected.

With the Chinese now the biggest online shoppers in the world – citizens make 60 per cent of their clothing and footwear purchases online – nowhere is the impact of online shopping on the traditional retail property model more stark, according to PwC Ireland’s retail spokesman David McGee.

“The data from China shows us the shape of things to come,” says McGee. “They are now more likely to be buying via mobile [devices] than in other markets. The implications of this is that China may not develop the retail landscape we see in the West – large national store chains operating in malls and high streets – but may “leapfrog” us, going straight to a model with fewer stores that are used more as showrooms or collection points for online shoppers.”

If trends in China don’t provide food for thought for those investing in retail property, the reasons consumers prefer shopping online should.

The top factor cited by respondents across the globe was 24/7 access to shopping. While low prices came in at number two, “quicker than visiting shops” and “easier than visiting shops” rounded out the top four.

With expensive parking, indifferent shop assistants, queues for the dressing room, closing times and pricey coffees, it’s easy to see how for time-poor consumers, a trip to the shops is becoming less of a leisure activity and more of a chore.

This growing swing towards online should make retailers question whether a physical store will continue to be valued by customers in 10 years’ time and if so, what it should look like.

“We’re seeing a blend of online and traditional shopping emerging,” says Neil Bannon, a retail asset manager with Bannon Property Consultants, which oversees Dundrum Town Centre, Whitewater Shopping Centre in Newbridge and Athlone Town Centre.

“We’re seeing click and collect as a big trend where people buy online but collect in store.” He cites Ikea and fashion retailers Next and John Lewis as examples.

“People can get a sense of what’s available online and then they can come in and try it on before they take it home.”

He says with data from the US showing return levels in online fashion shopping as high as 45 per cent, with the retailer often footing the cost of post and packaging, providing a store where those who have done their research online can try before they buy makes business sense.

The PwC research backs up Bannon’s observations. It predicts that the stores of the future will serve two distinct purposes. The first is as a convenient transaction and collection point where customers come to complete a journey started on the web – they enter the store knowing what they want. The second is as a showroom where customers can come for inspiration, to browse and to physically interact with products.

PwC says recognition of these distinct roles may cause retailers to segment their estates with flagship stores focused on the showroom function and a larger number of strategically placed smaller outlets for collection.

Whether this trend is better news for the high street or the suburban mall is hard to say. Speaking to The Irish Times about online shopping trends earlier this year, CBRE’s Michael Harrington predicted the high street is where premium brands will increasingly want to be.

“An awful lot of retailers are taking flagship stores on Oxford Street, Bond Street and New Bond Street, for example, which are no more than showcases,” he says.

He cites lingerie retailer Victoria’s Secret as a case in point. Taking 30,000sq ft of retail space on New Bond Street – that’s three-quarters of an acre of knickers and bras – Harrington says it’s mostly a branding exercise.

“That’s a phenomenal size for a lingerie retailer and yes they will do retail there, but they have taken such a prominent location to create a showcase to drive their catalogue and internet business.”

Whether their shop is on the high street or in a suburban mall, Neil Bannon says online shopping will put increasing pressure on retailers to provide “an experience”.

“If you’re not providing an experience that is a pleasant one, then you’re not adding value to the visit and shoppers may as well buy online.”

Brands such as Apple and Abercrombie have long been on the case. They operate a small number of flagship stores, beautifully designed and with great staff where shoppers can touch, see and feel the brand. While shoppers can purchase in store, most purchases happen online.

Brands wanting to flourish into the future might want to take note. The impact that online shopping is having on retail property strategy is hard to ignore.