The impact that the growth of online sales will have on some retailers’ businesses is the elephant in the board room.
If retailers are to be believes then the online sales they have generated so far have tended to be at the expense of their competitors. They don’t like to think about whether online or multichannel sales are cannibalising what would have been store sales, and there is yet to be much appetite to measure this trend.
Martec International has spoken to 51 large retailers in the UK and US for its Multichannel report, sponsored by BT Expedite and Epicor, and found that most don’t think cross-channel cannibalisation is occurring.
Only 25% of the retailers surveyed are trying to measure cross-channel cannibalisation, and 82% don’t see a lack of information as a problem. Martec thinks this is going to be something they will find themselves having to face up to within a few years.
Martec’s Brian Hume says: “Online shopping today as a percentage of sales is still small – 7.5% sales without food retail – but it is growing fast.” He says that retail boards haven’t yet thought through the challenges this could present in the way they run their businesses, and is likely to require quite structural changes to store portfolios, supply chains and staffing requirements.
Combined with the online channel continuing to grow, and requiring more investment and resources, retailers have to think about the impact this will start to have on their store sales.
Hume says: “We have run simulations, and a fall of 5% in like-for-like store sales is easily imaginable.”
Retail strategy has been built on the premise that growing like-for-like store sales was always a desirable outcome. In the next few years retailers may well have to come round to the idea that this is neither possible, or even desirable, any longer.