Action points for retailers:
- Growth overseas
- Competing on price
- Showrooming effect
- Creating a clear brand proposition
- A fragmented market
- Current climate
Retail Week Prospect’s ranking of the largest UK-based pureplay retailers by overall sales throws up some surprise entries.
|Rank||Pureplay retailer||Group sales (£m)||International sales as a proportion of total sales (%)|
|5||The Hut Group||333.5||50.1|
|11||Chain Reaction Cycles||136.4||53.0*|
|13||Buy It Direct||120.7||1.8|
|15||Mobiles Phones Direct||79.3||0.0|
*Estimate **2014/15 data
The list might be topped by established players such as Asos and Shop Direct, but relatively unknown specialists such as Buy It Direct, Wex Photographic and SportsShoes.com also make the grade.
Targeting overseas customers has been a key enabler of growth, with only half a dozen retailers in the list trading solely in the UK.
Asos, for example, generates around 60% of its sales internationally. Overseas sales have also been behind the spectacular growth of Farfetch, which takes sixth place and generates some 90% of sales abroad.
Other etailers that are growing rapidly through targeting international shoppers include cycling specialists Wiggle and Chain Reaction, as well as The Hut Group.
Competing on price
For some, shopping online is synonymous with getting the best price; this shines through on the list with the majority of those featured competing on price.
Perhaps this should come as little surprise: it’s challenging to replicate a luxury experience online.
Overall, fashion is well represented, accounting for a third of the retailers in the ranking, but it is followed closely by electricals, where Dixons Carphone is the last remaining nationwide bricks-and-mortar specialist.
Despite this list focusing on pureplays, the lines between digital and physical are getting increasingly blurred and a number of etailers are making moves into physical retailing – particularly those selling fashion and big-ticket items which rely more on touch and feel.
Made.com in 21st place operates three showrooms in the UK, and Missguided in 14th place plans to have a handful of standalone stores by the end of the year.
Pro:Direct Sport, in 16th place, even won the Retail Theatre award at Retail Week’s Customer Experience Awards in 2016 for its London showroom.
Creating a clear brand proposition
The average age of the retailers represented in the ranking comes in at a touch over 15 years, with a third having been founded during the dotcom bubble at the turn of the century.
That’s not to say that the early bird catches the worm. Mobile Phones Direct is the youngest of the group, established in 2011, followed closely by Made.com in 2010 and Missguided in 2009.
What unifies these newcomers is their ability to spot a trend and create a clear brand proposition, alongside heavy investment in marketing, both online and offline.
A fragmented market
The UK is regarded as the global leader in online shopping, with more than 20% of non-food sales made online, according to the British Retail Consortium.
The UK generated more than £130bn worth of sales online in 2016, according to the IMRG Capgemini eRetail Sales Index, but the online market is fragmented, with this list accounting for just a small share of that.
The underlying fact is that pureplays are still much smaller than many bricks-and-mortar retailers, as highlighted by only four pureplays being ranked among the UK’s largest 50 retailers.
Online retailers do not face the same pressures as bricks-and-mortar retailers. They are not hit by business rates and the national living wage does not impact in the same way as those with store staff.
UK online retailers are also well-positioned for growth abroad. International bargain-hunters are seeking out British websites due to the weakened pound.
Etailers must remain agile though, and keep a close eye on how shoppers adopt new connected platforms and devices.
This list only covers online retailers that are headquartered in the UK, so excludes retailers such as Amazon. While some online retailers have started operating stores, pureplays are considered those that generate more than 95% of their sales online.
It is ranked by 2015/16 group retail sales – including both UK and international turnover. The data for Farfetch and Nototonthehighstreet.com is overall transactional sales through their websites. Wiggle’s results were for a 48-week trading period. The Hut Group, Farfetch, Ebuyer.com, Wiggle, Chain Reaction Cycles, Pro:Direct Sport, Made.com and Childrensalon show data for period ending December 2015.
- Find out more about Retail Week Prospect here.