UK shops face closure with rise in online sales

As many as a quarter of all shops in the UK could be redundant over the next few years. This was the stark prediction given at this week’s inaugural Retail London Conference by Tony Stockil, chief executive of Javelin Group, who believes

“the recession is only now hitting some retailers and so we will see more vacancies”.

But it is more than just economics, as Stockil also points to: the rising costs of operating shops; the increasing costs of raw materials that is impacting gross margins; the ever-more competitive retail environment as a result of the supermarkets targeting non-food; and more fundamentally the rapid growth of e-commerce.

This has pushed online sales to around 8% of total UK retail sales, which is one of the highest in the developed retail world, and the predictions are that this will reach more than 10% by 2014.

One of the reasons for the UK’s impressive adoption of e-commerce is the moves by the major players who have made it an important plank of their expansion plans to develop their online businesses, and the recognition by stores-based retailers that multi-channel strategies can be beneficial.

Stockil told delegates: “UK retailers have seen a feature that’s often missed by other people – the dual-purpose of a website. For clothing and home-wares, customers are doing research as well as shopping online.”

This is leading to a high level of store sales that can be directly attributed to the online channel that is making the “cross-channel effect very significant”. It now accounts for 15% of clothing sales.

As a result of the ‘web-to-store’, effect whereby customers first research online and buy in-store, Stockil says there is now a focus on exactly what role stores play in the multi-channel mix – especially when considering how popular Click and Collect-type services are proving.

For the retail industry as a whole Javelin is forecasting a decline in store numbers in the UK of 25% by 2020. “Retailers need to plan in advance, understand customer journeys and what role stores play in this. Plan the size of the stores estate and ensure you are not locked into long leases,” recommends Stockil.

The Javelin Group is Europe's leading consultancy in ecommerce and multi-channel retail.

Image: Shop closure