Online retailers plan physical presence

6 January 2014
LONDON: A growing number of small online retailers in the UK are looking to set up a presence in bricks-and-mortar stores during 2014, a new survey has said.

Royal Mail's annual tracker study gathered responses from 406 SME online retailers and found that 16% planned to either open a store themselves or seek space in one. And a further 15% intended to move into online marketplaces, such as eBay and Amazon, as a way of boosting their growth.

In all, 40% of respondents envisioned trading through new channels during the coming year.

Nick Landon, managing director of Royal Mail Parcels, said small online retailers were "concentrating on exploiting as many channels to market as possible, adding space in physical premises and online marketplace listings to complement their existing web channel".

The Financial Times noted that, thanks to the many empty shops on the nation's high streets, small businesses were often able to arrange low rents and short-term leases allowing them a degree of flexibility in their planning. Similarly, a trend towards temporary pop-up shops has also enabled small online retailers to dip their toe in the waters of physical retail.

Over half the retailers surveyed (56%) expressed confidence that sales would grow, although this figure was down from 64% a year earlier, and Landon observed that competition in this sector was increasing.

Some 54% of respondents believed they faced a greater challenge than last year in attracting customers, with 59% attributing this to an increase in the number of websites while 57% also pointed to customer price sensitivity.

While respondents could do little about the former, competitive pricing topped their list of priorities for increasing consumer satisfaction for the year ahead. This was followed by the range of goods on offer and increasing product quality.

Data sourced from Royal Mail, Financial Times; additional content by Warc staff
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