Jul 15, 2019
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Brands need physical stores to drive online sales, survey says

Jul 15, 2019

Whilst industry bodies continue their campaigns to save the high street, a new report has shed some light on the future of the online versus offline retail war.

A survey of over 2,500 consumers in the UK has found that online pure players experience 50% lower online sales than retailers with a physical presence.

The research, released by CACI, the consumer and location intelligence specialist, showed that online sales are an average of 106% higher within a physical store’s catchment. And this rises to 127% for fashion and 124% for the sportswear sector, demonstrating what CACI has called the ‘halo effect’ of physical retailing.

“The halo effect highlights two key points as the industry wrestles with how it evolves in the face of seismic shifts in consumer behaviour,” explained Alex McCulloch, Director of CACI Property Consulting Group.

“Firstly, brands should carefully consider the unintended consequences of downsizing their portfolios. What might seem an effective way to reduce costs may also undermine the viability of the business due to the positive impact stores have on online sales.
“As importantly, the research also points to the need for landlords and brands to work together.  Consumers move seamlessly from one channel to another, which means neither side has the upper hand. Both sides must recognise the importance of stores across a retailer’s wider business and both should unite in building a stronger, more relevant, and therefore more resilient, offer for consumers.”

CACI explained that the so called ‘halo effect’ underpins the role stores play in influencing purchasing decisions. Over 50% of online spend is still influenced by a bricks-and-mortar store either due to click and collect or because consumers are using stores as showrooms to try on clothes before making a purchase online.

The findings come as more and more retailers choose to reduce their store portfolio to protect their business amid tough trading conditions on the UK high street. National chains including New Look, Mothercare, M&S and Boots are shutting locations and focusing on growing their online presence to adapt to the rise of online shopping. But the report reveals that completely disappearing from the high street might not be the best solution.

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