Retailers need physical stores to drive online sales

New research by Caci, the consumer and location intelligence specialist, has revealed the negative impact of closing stores on brands’ online businesses, adding that brands still need physical stores to drive online sales.

According to Caci, retailers that do not maintain a bricks and mortar store in a catchment alongside a transactional website typically experience 50 percent lower online sales compared to those retailers that do have a physical presence.

By analysing data collected via a UK wide survey of over 2,500 consumers, Caci found sales are an average of 106 percent higher within a physical store’s catchment, which can mean that by maintaining a high street presence a brand could double its web-based sales.

The greatest impact can be seen in the electronics (154 percent), fashion (127 percent) and sportswear (124 percent) retail sectors.

The benefit of physical stores having an uplift in online sales has been coined the “halo effect” by Caci, and adds that stores play an important role as research shows that 90 percent of all UK retail spend is still influenced in store, and even though 80 percent of all purchases are still made in a physical store, customers are increasingly looking for an omnichannel retail experience.

Online shopping in the UK accounts for 20.3 percent of total consumer spend, of this, over 50 percent is still influenced by a physical store. This is achieved through click and collect, in-store ordering, or via the store’s role as a showroom to ‘try before you buy’, with purchases made later online at the convenience of the consumer, added Caci.

Alex McCulloch, director of Caci Property Consulting Group, said in a statement: “The halo effect highlights two key points as the industry wrestles with how it evolves in the face of seismic shifts in consumer behaviour. Firstly, brands should carefully consider the unintended consequences of downsizing their portfolios. What might seem an effective way to reduce costs may also undermine the viability of the business due to the positive impact stores have on online sales.

“As importantly, the research also points to the need for landlords and brands to work together. Consumers move seamlessly from one channel to another, which means neither side has the upper hand. Both sides must recognise the importance of stores across a retailer’s wider business and both should unite in building a stronger, more relevant, and therefore more resilient, offer for consumers.”