Ecommerce Marketing

Digital State  discusses Ecommerce marketing in Cheshire.

L’Angleterre est une nation de boutiquiers.” In the 1790s Napolean allegedly quipped that “England is a nation of shopkeepers.” And he had a point. Britain’s rise as a global power was underpinned by huge commercial growth and, since the Victorian era, retail has acquired a prominent position in British culture. Yet, today, our high streets are in crisis. Bricks vs. Clicks….

A recent report by the Centre for Retail Research paints a grim picture for the future of high-street shopping in the face of intense competition from Ecommerce marketing. Over the next five years 22% of high street stores will close; 316,000 people are predicted to lose their jobs and 164 major or medium-sized companies will go into administration.

In contrast, by 2018, online sales will constitute an alarming 21.5% of the entire retail market. We’re examining the effects of booming online sales on traditional “bricks-and-mortar” shopping –concentrating on our adopted home, Manchester.

Clicks and Ecommerce marketing. seem to be winning the retail battle against bricks…but does that necessarily spell the end for the traditional British high street?

Last year the UK spent a staggering £91 billion online, while forecasts suggest consumers will spend £107 billion in 2014. Over the last five years the online sector has doubled its share of the retail market – an average weekly spend of over £650 million – but what has fuelled such extraordinary growth? Firstly, the appeal of online spending is not necessarily region, or nation, specific.

Quite simply, everyone loves a bargain. Market research firm Mintel reported that 77% of online shoppers use the web to save money. E-retail suits our busy lifestyles; shoppers can conveniently browse for the best deals from the comfort of their sofa, whereas retailers can react quicker to new trends and changing customer needs, and therefore, maximise profits and offer better services.

Major retailers have reported record figures for online sales. Online trading, for instance, represented 18.6% of all non-food sales in December 2013, an increase of 2.1% from December 2012. As a consequence, high street chains are expanding their internet offerings. Recently, mobile-retail and “click and collect” services have become hugely popular.

Mark Lewis, online director at John Lewis, says: “The Christmas trading period was a strong one for John Lewis, driven by 22.6% online growth in the five weeks to the end of December…Online now accounts for around 30% of overall sales, up from 25% in 2012.”

He adds, “two stand-out milestones…were the 61.8% rise in Click & Collect orders and a shift to traffic from mobile devices making up over half of traffic to Our customers continue to evolve how they shop, and are increasingly blending stores, online and mobile devices. With strong results from our shops as well, December 2013 was a truly omni-channel Christmas.”

Despite signs of economic recovery, Britain’s high street retailers continued to suffer as a result of online competition. In the first half of 2013, 18 town centre shops closed per day, with photography stores women’s fashion retailers and travel agents the hardest hit.

Research by the Local Data Company (LDC) indicated that 3,366 outlets, in 500 town centres, closed over a six month period, compared with only 3,157 openings – a net reduction of 209 shops.

Charity shops, cheque-cashing outlets, betting shops, pawnbrokers and hearing aid outlets have picked up the slack. Meanwhile, coffee and convenience store chains have seen it as an opportunity to bolster their market share by moving into cheap empty premises.

Research also illustrates the changing profile of town centres and changing patterns of consumer spending. LDC director, Matthew Hopkinson, says the report highlights significant changes to the make-up of Britain’s high streets. “The good news is that the significant decline in chain retailer numbers…is slowing down”, Hopkinson remarks, “closer examination of the data [however], shows the significant on-going decline of traditional shops with food, beverage and entertainment taking their place.”

Mike Jervis, retail specialist and insolvency partner at PwC, says the pace of decline is “getting marginally better, but not markedly better.” Most notably, early 2013 was marked by a spate of major retail closures. HMV, Blockbuster and Jessops all “collapsed under the weight of online competition and changing consumer habits”, reported the Financial Times.

In recent years there has been a move away from purchasing physical goods – cameras, CDs, DVDs – to downloading, streaming and purchasing from the internet. Sebastian James, CEO of Dixons Retail, argues that the entertainment market “has literally evaporated into the ether.” Admittedly, the dramatic shift in the entertainment market may be exceptional, but it nevertheless “reflects a broader trend among customers to buy more goods and services via the internet.”

Has Ecommerce marketing affected a city the size of Manchester? Well, the short answer is yes. Last year, Timberland, Aubin & Wills, Gant, All Saints and Monsoon all closed their premises on King Street – “the Bond Street of the North” – blaming high rents, business rates and discounted rents elsewhere.

Speaking to the Manchester Evening News, Roy Lunt, owner of Hancock’s Fine Jewellery said: “The footfall on King Street is the worst I have ever seen it…this is the number one street in Manchester but the rents and rates are astronomical” – he pays more than £132,000 rent and annual business rates of around £46,000.

Jonathan Thompson, partner at property retail consultants Tushingham and Moore, believes business rates are too high because they are based on “unrealistic” pre-recession rental prices. “We have reduced our rents considerably”, he says, “in many cases by £60,000 a year because this is about supply and demand.”

So is online retail an obstacle or just a challenge for the high street? Jane Sharrocks, general manager of Selfridges Exchange Square, thinks it’s the latter.

Although Selfridges’ flagship store on Oxford Street takes roughly £2 million per day, Sharrocks anticipates their online shop wills soon become the brand’s biggest store. “Online is considered the fifth store, it’s just treated slightly differently…we have online ambassadors in-store and operate click ‘n’ collect”, she says. Ecommerce marketing is here to stay and growing.

Selfridges’ physical stores in Exchange Square and in the Trafford Centre are specifically tailored to offer customers an experience they can’t get online – beauty make-overs, restaurants and launch parties.

Retailers are also adopting innovative methods to harness mobile technology. David Allinson, director of Manchester Arndale, says that “with 57% of people owning a smart phone and 27% of those people using it to shop, we need to harness the power of this technology… you have to see it as an opportunity.” And there are masses of opportunity.

The IMRG Capgemini Sales Index indicates that sales via smartphone and tablet devices increased 138% in 2013; while in December alone, 27% of all online sales came from a mobile device – equating to around £3 billion.

The Trafford Centre is also using mobile technology to create a new shopping experience. In September last year EE launched 4G mobile services, enabling 31 million annual visitors to access superfast mobile internet throughout the complex.

“The launch of 4G at intu Trafford Centre is part of our wider strategy that will guarantee our customers are provided with the best possible shopping and leisure environment”, says commercial director at intu, Trevor Pereira, “we are making [the] Trafford Centre the most digitally connected shopping and leisure destination in the UK [enhancing] our customer service, enabling great mobile coverage throughout the centre.” Technology doesn’t need to be the high street’s enemy.

In 2010, Marketing Manchester promotion agency launched – a self-labelled “destination website…supported by a unique digital concept that will revolutionise the city’s online presence.”

An Application Programming Interface called “Fabric” gathers relevant information from social media feeds and other web sources about the best things to do in Manchester. For instance, customers can browse Manchester’s abundance of “Independent shops”, you can check out the “Top 5 boutique shops” or the “5 ways to shop in the city”. Local authorities need to do all they can to promote their high streets.

A new cross-industry coalition – target200 – has set up an innovative e-commerce network called giving towns a platform to showcase their high streets and independent shopkeepers an opportunity to present their products online.

Despite the doom and gloom of national retail statistics, Manchester enjoyed a 5.4% rise in retail sales over last year’s festive period from 2012, as well as a 58% increase in sales compared to November 2013. The UK experienced a growth of just 0.4%, but the popularity of Manchester’s shopping destinations, and the Christmas market, helped the city to buck the trend.

Vaughan Allen, CEO of CityCo – an organisation that develops initiatives to support Manchester’s economic growth – believes “the high street is actually thriving in cities like Manchester, so much so that even previously online brands are launching real retail units.”

For the first time ever, CityCo, in partnership with the Heart of Manchester Business Improvement District (BID), brought this month’s Chinese New Year celebrations into the city’s retail district. Over 90,000 people attended the event’s centrepiece on Sunday 2nd February – the Dragon Parade – and the city’s shops saw uplift in footfall between 60-70%.

Reports indicate that leisurewear brand Henri Lloyd in St Ann’s Square witnessed an 83% increase in shoppers; fashion and home-furnishings retailer, Cath Kidston, reported a 125% increase in sales; Boots on Market Street experienced 41% sales growth and Selfridges in Exchange Square reported that sales were up 12% over the festival.

The success of the Chinese New Year celebrations raises some important points about the future of the city centre retail. In the current retail climate innovation is essential. Accordingly, established brands are moving into physical premises to supplement their web channels, injecting much needed vigour back into Britain’s high streets. Physical stores offer shoppers the chance to touch and try on merchandise, which is particularly important for expensive and luxury items.

The number of empty shops has meant that landlords are offering cheaper rents and more flexible terms – fuelling the recent proliferation of “pop-up” shops. For emerging brands, “pop-ups” are helping to bridge the gap between online and offline.

Many brands now run a core website over which most business is conducted, while physical “brand experiences” on the high street, or in department stores, enable their customers to engage first-hand with their products.

In the long run, Manchester should emerge relatively unscathed by the recession and increasing online competition. However, smaller towns and cities will experience further decline under current retail trends.

This begs the question: how responsible is the government for safeguarding the future of Britain’s high streets? Let’s first consider the benefits of retail to the UK economy. It accounts for over 10% of all jobs and 40% of all employment for under 20s.

Retailers pay 28% of all business rates and contribute £18 billion to the Exchequer from four of its largest taxes. Nevertheless, a reconsideration of high business rates is essential. The Chancellor has limited business rate increases to 2% – 1.2% under inflation – and halved rates for retailers opening in vacant properties. But more needs to be done. Retailers argue that further business rate cuts would stem high street decline and encourage expansion, which would generate more corporation tax and boost employment.

Meanwhile, e-retail will continue to innovate and thrive. Amazon has been testing a 30-minute drone delivery service, whilst eBay has launched “digital storefronts” in New York and San Francisco, allowing customers to order products for same-day delivery. The mixed results of the “Portas Pilot” schemes demonstrates that Britain’s high streets need more than just investment to compete in the dynamic retail market – they need to innovate.

Retail expert Doug Stephens believes “we will see more disruption in the next ten years of retail than we did in the previous one thousand.” Stephens predicts that bricks and mortar stores will develop the same analytic intelligence as online brands. Apple, for example, has installed blue-tooth technology that senses who is in store and other retailers are expected to implement in-store “dynamic pricing”.

Looking forward, the lines between bricks-and-mortar and online retailing will become more blurred and multi-channel retailing will become more commonplace. Digital technology has been a problem for the high street, but it is also the solution. Retailers who can strike the right balance between offline and online experiences will have a real commercial future.

“England expects…”