Insights

eCommerce: The Offline To Online Shift

Offline to Online Insights Header
Lockdown has encouraged an offline to online shift - What does this mean for your business?

Many consumers are itching to get back to the shops to enjoy the sensory pleasures of browsing in person. Particularly after a year of constant screen time. That’s despite the massive - and irreversible - shift to eCommerce.

As our behaviours and reasons for shopping are changing, online and offline retailers must also adapt.

There’s no denying the last 12 months have brought about a massive increase in online shopping. According to analysts IMRG, total online sales growth in the UK rose by 36.6% year-on-year in 2020 – the largest growth since 2007.

Lockdown obviously played a big part, as non-essential physical shops remained off limits. But some of this shift to online is undoubtedly permanent. At its peak last May, the Office for National Statistics reported the total share of online retail sales at 33.8%. However, even when non-essential shops had been open for four months that share dipped to just 28.5% - significantly up on 20% pre-Covid.

Retail as Entertainment

At the same time, there’s every reason to believe we’ll once again see queues of consumers racing around the high street from April, as we did immediately after the previous two lockdowns. But now so many of us have got used to the comfort of buying at our own convenience, shopping in person needs to be more than just a functional activity.

An increase in remote working and buying online will have a lasting impact on the way we consume, even after we’ve all been vaccinated. As such, bricks and mortar retailers will need to create a compelling reason to go shopping, says Ira Kalish, chief global economist at Deloitte.

“It’s the old theatre of retailing. It will need to be entertaining and something people will look forward to - it can’t simply be a chore. I don’t think store-based retailing will die, but it will change. And it may be smaller as an industry relative to the size of the economy than before,” he told delegates at the World Retail Congress in September.

Physical shops are likely to become a showcase for brands’ products – possibly offering a more limited range to what’s available online, while playing to the strengths of the shopping experience. The key here will be connecting digital to in-store, making the long-talked about importance of ‘omni-channel’ an imperative.

In fact, many chains are drastically rebalancing their channels. For example, John Lewis is downsizing its store estate and pushing a digital first strategy – aiming for 60% of its sales to be online by 2025.

The brand’s new priorities are: usability and personalisation of its apps and website, online personal services, expanding click and collect and introducing John Lewis into Waitrose as part of a move to a more local selling strategy.

“Shops will always be crucial to the brand but they will be in support of online,” said its chair Sharon White. Digital is fast becoming the dominant channel.

Small and Agile

Interestingly, independents have been better at adapting to the shift to online than some of the larger brands.

Analysis from the Local Data Company, which tracks retail notes that while small retailers have certainly taken a hit during the pandemic, they have also seen fewer closures than the chains. That’s because they’ve been more agile, bringing in new product lines and having a smaller cost base to cover in periods of little or no trade.

One example is in the hospitality sector, where many restaurants have moved into online deliveries for the first time, as well as expanding into new areas such as meal kits.

More remote working also means local high streets will see a boost, as we spend more time in our immediate vicinity. That could hugely benefit smaller retailers – especially those who have already been quick to adapt.

The million dollar question for retailers is: which shopping habits are here to stay? According to research from Retail Economics and Natwest, almost half of consumers bought something online they’d previously only ever purchased in-store over the last year. However, just under a third said their shopping habits will change on a permanent basis as a direct impact of Covid.

People clearly still have an appetite for in-person shopping: whether it’s enjoying the sights and smells of a farmers’ market, browsing the feel of new fabrics, or just idling away a couple of hours on the high street.

But as more of our buying habits shift online, successful brands will need to capitalise on the convenience of digital, as well as the allure of the physical.

If you need any more insight into the offline to online shift, get in touch with one of our experts today, who will be happy to help.