High transport and returns costs make selling online no cheaper than running a traditional shop said a retailer at ICSC's European Research Seminar in Copenhagen. Customers also spend four times more in-store than online, according to research, confirming the importance of shopping centers and high streets to Europe's economy.
Last week's admission from retailers is welcome news for shopping center investors and asset managers who have felt increasingly threatened by traditional retailers expanding online. Retailers are also boosting 'click and collect' facilities as they recognize that online shoppers often prefer to collect from a store, frequently adding to their purchases when they do so. Far from being uncertain, these findings show the shopping center industry's future holds significant new opportunities.
Jon Bjornsson, CEO of Danish department store chain, Magasin, which is expanding its multi-channel offer, said costs saved on rent were absorbed by higher transport and goods returns costs incurred by online retailing.
"Around 2% of goods bought in our shops are returned, but that can rise to 25% with goods bought online, especially for online clothing retailers where customers may order two or even three sizes, sending back the ones that don't fit," he said.
However, a multi-channel retail strategy is essential for retailers whose customers expect to see their favorite brand or retailer everywhere they look, he added.
There are other issues for retailers expanding their offer from traditional stores to online, including a higher expectation from customers. From changing stock seasonally, customers now expect new products five or six times a year.
Magasin's Bjornsson added: "Customers expect the selection in an online shop to change faster than in the physical store."
However, many retailers are still only paying lip-service to multi-channel retailing, according to ICSC seminar speaker Dr Jonathan Reynolds, of Oxford Institute of Retail Management in the UK.
"69% of retailers claim to have a multi-channel vision and strategy, but only 29% of them have the technological and infrastructure capability to roll it out," he said.
ICSC Conference Chair, Kathrine Heiberg, CEO of specialist refurbishment company, Reteam, said: "Shopping center industry professionals have spent the last few years in a state of uncertainty, a few even called the end of large scale retail development as they predicted a big consumer move online. It is now clear that such a pessimistic attitude was way off the mark.
"Far from facing the end, shopping centers professionals are now looking at the huge opportunities that exist to make shopping centers real destinations, places for people and communities. The digital dawn has opened up far, far more opportunities than it has restricted growth."
Source: Nicky Godding