Part 1 - Will online retail escape the worst effects of the credit crunch hitting the high street?

YES – But 2009 is no time for complacency
By Steve Davis, President International of GSI Commerce.

Perhaps one of the reasons for deceleration in the growth for online sales is the fact UK retailers are simply not using some of the tactics, unique to the online market place, that their American cousins have so successfully implemented.

The fact that online-only retailers, such as Play.com, are recording successes over the Christmas period, while excellent news for them, is actually indicative of the wider failure of the established high street retailers online. It’s 2009 and, unbelievably, some major brand retailers such as Primark and H&M have not even developed a transactional web presence. Crucially, however, these retailers don’t realise that not only are they losing revenue from potential online transactions but that they are seriously inhibiting their high street sales.

Put simply, the areas that are lacking in the UK can be grouped into three broad areas:

Genuine multichannel

The same old sound bite but still it’s not happening. For years, UK retailers have been waxing lyrical on the merits of genuine integration but, beyond the marketing puff, very few are actually doing it. How many UK retailers can you think of that have integrated to the extent that they can offer buy online, pick-up in-store? This capability actually gives high-street retailers the opportunity to best their online-only competitors and yet we’re still not seeing it.

Rather than waiting three days for delivery, this gives the customer the opportunity to walk to the high street and pick it up on the same day. If the product’s not available in a local store at the time of transaction, there should be the option to ship it to the store within a few days.This capability gives high-street retailers the opportunity to best their online-only competitors. Picture the scenario, if you’re desperate to buy a last minute gift and if you had the option to walk down the road and collect your pre-paid DVD at an HMV store, you’re surely more likely to do that than waiting three days for Play.com to deliver.

The on/offline relationship

Most UK retailers seem to be of the view that it’s perfectly acceptable to not place their entire product range online. It’s not. GSI research shows that between 25-60% of high-street sales are researched online before store purchase. If you have no site, you provide consumers with no means of researching your products and are missing out a major driver of high-street sales. An online store should not be a retailer’s biggest store first and marketing platform second – it is the biggest marketing vehicle that a retailer has. Where else can brands engage with millions of customers in a 10-15 minute dialogue every day?

In the same way that UK retailers will have to learn to use their high street assets to charge their online growth, they need to recognise that the reverse is also true.

Technology investment

Not really a tactic as much as a reality. In spite of everything the technology landscape continues and will continue to get more sophisticated. To stay ahead of their competitors retailers are forced ensure that their ecommerce technology is current – not necessarily an easy task in the current climate but the alternative of losing market share is hardly preferable. To weather the economic storm, UK retailers are going to have to find the means of minimising or eliminating the risk that attached to these essential investments.