Online Sales v High Street

Posted: 2012-09-06 06:37:42

online sales v shopping mall

It can be a little frustrating to see so many negative statistics that ignore the good news in online sales.

Over the last couple of days high street retail figures have been released that show a 0.4% reduction the year-on-year sales adding yet more pain on to our economic misery.

It is, of course, always the high street that makes the news as the media people love bad news. What is seldom talked about is online sales which has been recorded since 2008 and which now accounts for more than 12% of the UK retail sector.

This is the largest percentage in Europe, with Germany only making 9% of its sales online in 2011 and France 7.3%.

The Growth in Online Sales

Perhaps more interesting still is the growth in online retail sales which in 2011 was 14% and is projected to be along the same lines in 2012.

With these figures in mind it is not surprising that, when online retail sales grew by only 4.8% in August 2012, this figure was described as disappointing.

The Olympics has been blamed for both offline and online retail figure declines. Offline because buyers stayed away from London and online because shoppers were watching events streamed online instead of shopping.

As with bad news, the media love simple relationships as they are easy to both write about and understand. The underlying difference between the offline retail sector and online retail will still continue and here, perhaps, there is a simple relationship. The more people buy online the less they are likely to buy on the high street. After all, money is finite.

The decline of the high street is a related to other factors too, but a high growth rate of online sales must have an undoubted effect.

If the economy was growing by 14% the Government would be on easy street, this growth rate even outstrips China. So why is it never talked about?

This digital economy is growing strongly and is a leader, not just in Europe, but pretty much the whole world. It is undoubtedly a massive success story for both the retailers themselves and the rest of the nation who are the beneficiaries of this developing online facility.

Well, reporting bad news is much more fun, but it is also quite difficult to clearly differentiate the two figures sometimes. If I research a purchase online then find a local store that has it is in stock (by checking online) then go to the store to buy it, it will be classed as a retail sale.

If I buy the purchase online then go to the store to collect it, it will be attributed to an online sale. This example not only demonstrates the classification problem it also describes a model that works the best.

The big downside to online sales is waiting for the delivery, in the high street you can have it now. Some of the most successful online retailers leverage their online sales by making use of their high street presence as a collection point.

Final Word

Of course the growth in online sales goes beyond the model outlined above and it is often the case that people will view a product in store and then buy online from another retailer at a lower price.

Nonetheless, even though the picture is not as clear as it seems at first, the growth of our online economy is good news for this country. Online sales is something that we are very good at, something to shout about and something to be taken advantage of.