Are we facing into a retail apocalypse?
What will happen to our high streets if everyone goes online to shop?
Are we facing into a retail apocalypse? The US certainly seems to be; over the past 15 years, close to half a million jobs have been lost in department stores there, while the next five years will see 25 per cent of the malls of America disappear as more and more shoppers embrace the allure of the online world.
Last week the toy store giant Toys R Us hired a team of restructuring lawyers to help it tackle roughly $400 million in debt as it struggles to compete with Amazon. The news prompted ecommerce delivery company ParcelHero to say the toy giant’s problems “reflect the overall collapse of high street toy shops as online toy sales take a monopoly of the market”.
Obviously ParcelHero has skin in the game and its response has a a touch of the “well, it would say that, wouldn’t it” about it, but the reality is that real retailers are struggling like never before.
Irish people say they prefer the physical act of shopping
But will what has happened in the US happen here? And if our main streets become minor will we be better off or worse off?
Certainly some of the figures aren’t promising for traditional retailers. According to a consumer spending index published by Visa last week Irish household spending climbed 2.5 per cent in August compared with a year earlier. The increase was driven by ecommerce, which jumped 11.5 per cent year-on-year. Face-to-face expenditure declined for the 11th successive month.
A separate survey published by Bank of Ireland found that Irish people spent approximately €9 billion online in 2016, with the spending set to grow to €14 billion by 2021, but the same survey found that while online spending is climbing dramatically, Irish people say they prefer the physical act of shopping, with 53 per cent of consumers telling the bank’s researchers that they prefer shopping in person while 21 per cent said they preferred the virtual shopping experience.
A third study – published last Wednesday – from Retail Excellence, one of the main representative bodies for the sector in the Republic, reported a 27 per cent year-on-year increase in online sales through desktop and mobile devices when compared with July 2016.
And a final study, to be published on Monday by Barclays Bank Ireland, joins more of the dots. It suggests that the rise in the popularity of online shopping is leading to a significant shift in Irish spending habits.
According to the survey, the average online shopper in Ireland spends 130 minutes browsing and buying from online retailers each week, with a customer’s “online shopping journey” evolving “to create a marketplace somewhat unrecognisable to the behaviours of Irish high street trading many brands are seasoned to”.
Our peak time for online shopping is between 5pm and 9pm, when 31 per cent of us do our shopping. Although, in a piece of bad news for employers everywhere, people who use work computers for online shopping spend more than two hours a week browsing at their desks.
The survey also says 92 per cent of online shoppers keep wanted items on a wish list or in shopping baskets. The average number of items in a shopping basket at any given time is four, and the average value of our aspiration shopping basket is €118.20.
The bad news for online retailers, however, is that just because we add something to our basket or our wish list it does not mean we are going to buy it. In fact, we are only likely to buy one in every three items we place in virtual baskets.
Nearly half of us shop around online before making the final decision to buy a product, while about 40 per cent of people look for discount codes or compare products with similar items online before taking the plunge.
When it comes to encouraging us to buy, the big incentives include free delivery (66 per cent), free returns (38 per cent) and loyalty schemes (30 per cent).
And when it comes to converting browsing into actual buying, Irish shoppers said some of the most effective sales prompts were reminder emails or notifications and dedicated retailer apps, while technologies such as chatbots and augmented reality were not considered influential in the online sales process.
Barclays also looked at what we buy. Fashion tops the list, at 59 per cent, followed by electrical goods on 39 per cent and books and stationery at 38 per cent.
Meanwhile, geographical differences in online shopping exist most in the grocery category. Dublin has the highest rate of shoppers buying groceries online. All told, 34 per cent of those polled in the capital said they shopped for groceries online sometimes compared with only 17 per cent for the rest of Leinster, 18 per cent for Connacht, 20 per cent for Munster, and 19 per cent for Ulster.
“This research highlights the highly evolved and sophisticated ways in which today’s consumers navigate online shops, find bargains, and complete purchases,” says Helen Kelly, head of client coverage at Barclays Bank Ireland.
“These shifts in online consumer spending habits present exciting opportunities for retailers operating in the omni-channel and e-commerce space, particularly by focusing on how they can target peak browsing times, new technology enablers, and effective promotional activity.”
She says the key for Irish retailers is the development of “workable e-commerce solutions which allow them to attract customers and compete with international retailers who are becoming increasingly accessible and popular amongst Irish consumers.”
But what will become of us if we move all our shopping online? Will our cities wither and die as we hunt for better value from Shanghai to San Francisco?
The online convert: ‘People talk about the online space making people more impulsive shoppers but I find it quite the opposite’
We asked for people’s shopping preferences on Twitter and many of the responses were ambivalent. There was no doubt in the mind of Rachel Ray, a Dublin-based digital marketing expert and – unsurprisingly, perhaps – a keen online shopper.
She said shopping in bricks and mortar shops led to “ill-considered impulse buys” and added that she now buys everything direct from small companies or from China. Not only that, but her “most unique, favourite, and best-value buys that have received the most compliments were all online purchases”.
She was so insistent that we thought we’d probe a little deeper and found out she has turned online shopping into quite the art.
In the two weeks leading up to payday she will often fill shopping carts on various websites with potential purchases and return often to take things out and put other things in their place. “People talk about the online space making people more impulsive shoppers but I find it quite the opposite; it is a far more deliberative process,” she says.
She also says a lot of the sites she visits are getting “clever at encouraging people who have filled shopping trolleys to complete their purchases and might offer a discount if I have abandoned my shopping cart for 24 hours.”
So sometimes she will deliberately pause before completing her purchases to see just how much a particular website wants her business.
In recent times she has been using the little-known-here-but-massive-in-China shopping platform Alibaba. The stuff there is cheaper than you might find it on better-known sites closer to home and once you don’t mind waiting for deliveries you can make real savings.
She says that the site has also developed a much better way of showcasing clothes. To minimise returns and instil trust, it gives shoppers loyalty points when they upload pictures of themselves wearing the clothes they have bought so other shoppers can see how the items they are considering buying look on real people as imposed to on possibly airbrushed models.
When we ask if there’s anything she doesn’t buy online, surprisingly she says books, and declares loyalty to Hodges Figgis and the Gutter Bookshop.
“The reality is if retailers are going to survive they have to change the experience people have of shopping. Just look at the hideousness of sale time in Irish shops,” she says. “It is awful. And I am wary of thinking of shopping as an essential part of our society. Honestly, most of the time I would rather be anywhere else than in a shop.”
She expresses the hope that if shops do try to stop the online tide they will do so by becoming more community-focused. “Look at the likes of Hodges Figgis, the Gutter Bookshop and the Flea Market in Dublin; the spaces they have are not actually that special but it is what they are doing with them and how they are using them that makes the difference. They are using these places to bring people together and I don’t think many retailers are doing that. Certainly the big retail chains are not designed to bring people together; they are about maximising profit and driving footfall.”
Shopping in the online or
the real world – what do you reckon?
For stuff like clothes and food I prefer a physical shop. Small electronic items, online for better choice.
– Proinsias Ó Foghlú
Shops. Online shopping can’t match the tactile experience.
– Julie Kelleher
I like wandering around the supermarket for the weekly groceries. Online for everything else where possible.
Clothes and shoes have to be tried on, but for almost everything else I’d get it online if the delivery costs were not so steep.
– Bernie Kavanagh
If it’s not sold in Penneys I can’t afford it.
– Laura Mulcahy
Online doesn’t have coffee or wine or tapas or between-shopping pubs or bags or, best of all, bookshop browsing.
– Heather Lyons
Buy from people in shops. Online shopping is so time-consuming and photos at times misrepresent the item.
– Carol McGinty
I only ever buy things online if I cannot get them in a shop. Would always look in shops first.
– Tracey Holsgrove
90 per cent online. Don’t have the time for physical shopping.
– Helen Lane
It would be terrible. Human interaction is important. Humans are innately gregarious.
– Jonathan Kennedy
Online shopping: the pros and cons
Good thing: You have way more choice when you shop online. There is virtually nothing that can’t be found for sale on the internet. There are retailing giants like Amazon and cute sole traders selling their wares on sites such as Etsy. There are home-grown sites and sites in far-off China keen to take your money.
Bad thing: When you shop online in other countries, the money is just sucked out of our economy. Shop local and the money gets recycled in the form of wages – both for retail staff and all the ancillary businesses that support the retail sector.
Good thing: When you shop online you don’t have people elbowing you out of the way in the mad dash for bargains – especially during sale periods. You don’t have to go out in the cold and the rain and everything can be done while you are sitting on the couch giving out about The Late Late Show.
Bad thing: You can’t try things on online. And you can’t feel them. The jeans you see online might look amazing on the model who is wearing them but terrible on you. And yes, you can return the stuff but it is a hassle and you will have to go out in the cold and the rain to do it.
Good thing: You have more rights as a consumer when you shop online and you can return stuff simply because you don’t like it and get a full refund.
Bad thing: But you can’t walk into a shop and give out like you can if you buy something in a bricks-and-mortar store.
Good thing: There are way more bargains to had in the online space and you can take advantage of an increasingly weak sterling to buy from UK websites and get a double discount. First off, you don’t pay the I-live-in-Ireland premium and you also shave off a further 10 per cent or so now compared with last year as a result of currency fluctuations.
Good thing: The shops are never closed, which means you can still spend money even on Christmas Day when you are drunk.
Bad thing: The shops are never closed, which means you can still spend money even on Christmas Day when you are drunk.
Good thing: When you are shopping online – for everything from clothes to hotel rooms – you can read reviews from other shoppers. These reviews tend to be genuine and entirely free from bothersome sales patter.