Online Retailing:
The Impact of Click on Brick
Research Team
Dr Yvonne Court, Cushman & Wakefield
Objectives
- To provide an up-to-date picture of the relationship between the ‘bricks’ and ‘clicks’ channels, including perspectives from retailers, developers and investors as well as shoppers themselves.
- To gain a better understanding of how retailers are adopting online retailing as part of a multi-channel approach, how this might impact their future real estate needs and the way in which retailers use their physical real estate space.
- To define different types of consumers in terms of their attitudes and behaviour towards e-tailers and more traditional 'bricks and mortar' retailers.
- To inform developers, investors and their advisers as to the likely future impact of online retailing on their assets (both existing and future) from a more holistic perspective; from conception of project through design, development, tenant mix strategy and leasing, marketing and asset management stages
|
|
|
Background to the research
Each year adds to the feeling that the original dot.com boom hype was not so much wrong as too early. The rise of e-commerce in the UK in recent years has impacted upon retailers, developers and investors alike. Almost half the UK population now shop online according to figures collected by the Interactive Media in Retail Group (IMRG), which represents web retailers. While scare stories predicting the death of the high street have (as yet) proved unfounded, e-commerce appears likely to take an increasing share of retail sales in the years to come, and the extent to which this will affect traditional ‘bricks and mortar’ retailers - in terms of sales and rental values, and future space and ownership/leasing requirements - is a matter of keen importance for the UK retail property industry.
Online retailing is reportedly growing 26 times faster than the high street, as large numbers of consumers continue to switch to buying online, especially for high ticket discretionary purchases such as LCD TVs and digital cameras, motivated by convenience, huge choice, rich information and significant savings that the internet can offer. Shopping online saves time – the equivalent of an extra week’s holiday each year! It has been estimated that half of the adult population expects to spend more than 40 hours doing their Christmas shopping; three-quarters of this time could be saved by shopping online!
The potential long-term impact on property is huge. The internet opens up a new means of access and communication – for customers, employees, suppliers and retailers alike – and fundamentally changes the balance of location preferences and space needs, as well as the competitive pressures underpinning rental and capital values.
There will be both positive and negative implications for the real estate market. The growth of e-tailing is not the death knell of the retail property market as we know it, rather it provides opportunities to get the fundamentals of retailing right. Likewise, if harnessed appropriately, it also provides an opportunity for shopping centre developers and investors as part of an asset enhancement strategy.
There will be a virtual increase in retail floorspace provision, although not all retail sectors will be affected in the same way. There is the suggestion that the internet is impacting not just high street sales, but also the inclination of retailers to expand their ‘bricks and mortar’ outlets. The increase in virtual floorspace could also have an impact on the number of new start-up retail concepts, who might previously have taken retail outlets. This could lead to a decrease in the level of innovation and number of new concepts/formats in the high street and in shopping centres. Shops are likely to change in physical terms and be used in different ways as this century progresses. New standards of design and specification will emerge.
