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According to Forrester, one of the world’s most influential research and advisory firms, online sales will account for 17% of all retail sales in the USA by 2022, up from a projected 12.7% in 2017. Their new Online Retail Forecast also states that they expect US online sales to grow by approximately 13% year-on-year in 2017, five times faster than projected offline sales growth. This is in line with the estimates also given by the US’s National Retail Federation.

It’s not good news however for more traditional retailers. According to the report, bricks and mortar retailers are on the wrong side of the digital shift, with many of them suffering falling footfall, declining in-store sales and more and more store closures. In fact, another report from Credit Suisse states that nearly 9000 retail stores could close this year in the United States, more than the last two years combined.

The major driver of the boost in online sales according to the report is Amazon, stating that 83% of online adults in the US bought something from the retailer in 2016 and 55% of them using it as a research tool before making a purchase.

Some of the key takeaways from the report include:

  • Bricks and mortar retailers are fighting back by using omni channel fulfilment methods that leverage their store locations and in-store inventory to compete better in ecommerce. This includes things such as click-and-collect and ship-from-store.
  • Few retailers have as yet mastered these services though which has led to increasing shipping costs harming their profit margins.
  • To optimise these omnichannel offerings, bricks and mortar retailers must take the time and pay the costs to transform their logistics, inventory, operations and store management systems.

Not All Bricks And Mortar Retailers Are Going Online Or Omnichannel Though

In other news this week however, it was revealed that Primark, one of the UK’s largest clothing retailers will NOT be going online. The go-to retailer for on-trend clothing, accessories and so much more, Primark shoppers have been asking for a long time when there will be an online Primark store. The answer? There won’t be. The reason is that their prices are too low to make online work. With an estimated one third of clothes bought online returned, it would simply not make sense for the to offer their £2 t-shirts online for example, as there is simply not enough margin to work with online. For that £2, someone has to pick it, pack it, deliver it, take it back it returned and then refold it. It simply does not work at that price point.

 

Scott Bretton
Author

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