Tag: retail

Heatwave and summer sales push retail up

highstreet South endJuly retail sales in Britain rose at their fastest pace since January, thanks to summer shopping and the unseasonal heatwave.

According to the Confederation of British Industry (CBI), retail sales hit their six-month high in July. Retailers recorded strong demand for clothing, footwear and just anything related to tropical temperatures.

Shop rents in Cardiff tumble 70 percent

cardiffThe high street is hurting and property owners in Wales seem to be getting the worst of it. According to property experts and the council, the number of empty shops in Cardiff increased from 9.7 percent in October 2008 to 15.8 percent last October.

As a result, shop rents have dropped by up to 70 percent in parts of Cardiff’s historic city centre, reports Wales Online. The depressing figures were presented to Cardiff council planners by property firm Calan Retail, which is struggling to find tenants for its own property.

Calan has now applied for permission to change the use for the ground floor and upper floors in its Habitat building to restaurants and cafes, as they should do better than retail shops. Calan executive Andy Sturrock told the council that the retail market went through a seismic change over the past six years.

Rents on Queen Street have fallen by a third since 2008, but the worst example comes from a unit at Cardiff’s Capitol Center. The unit used to be rented by fashion chain Oasis for £224,000 per annum, but last year it was acquired by a sandwich shop for £70,000.

Online retail challenged by poor infrastructure

visa-epayOnline retailers are on a roll, but many of their sites aren’t performing well due to some rather basic technical limitations.

According to a recent report from NCC Group, the top 50 online retail sites in Britain exhibited poor website performance last quarter and much of the problems were caused by ancient internet connections.

The end result was that fancy sites with plenty of flash content offered a less than stellar shopping experience, as they were simply too slow. NCC Group tested the sites and found that the average download speed was 6.7 seconds on a 2Mbps connection. The average speed in Q1 was 6.27 seconds, but research has shown that load times over 3 seconds tend to drive customers away.

It seems that online retailers are sparing no expense when they develop their sites, so they end up with elaborate and relatively “heavy” websites that take too long to load. Average internet connection speeds aren’t keeping up with the trend.

Worse, the top 50 retail sites averaged a downtime of 4 hours and 17 minutes, which is also up from last quarter’s 3 hours and 23 minutes. It seems that feature packed sites are not only slow, they tend to be less reliable as well.

“It’s a worrying trajectory and one that retailers need to address quickly. If a website is slow to load, consumers will simply go elsewhere, while any downtime will lead to a direct loss of sales,” Bob Dowson, director of NCC Group’s website performance division said. “The potential within the online retail space is massive. In 2012 the value of online retail to the UK was £78bn*, and that’s only going to grow. Retailers that prioritise their website performance will put themselves in a great position to fulfil their potential in the market.”

The financial performance of the UK e-tail market has been largely positive in Q2 2013, with shoppers spending 18.3 percent more in June compared to 2012. However, this report indicates that it could have been a more successful quarter if retailers had prioritised consumer experience through web performance.

Brick and mortar, ecommerce start to converge

visa-epayPhysical retail outlets and e-commerce operations are starting to converge and consumers are starting to treat all channels as shopping, which it essentially is. Although high streets are suffering, e-commerce is becoming a force to be reckoned with, but e-commerce and brick-and-mortar retail are not mutually exclusive.

Google reckons that retail channels are converging, as traditional retailers are starting to make inroads in e-commerce. Physical shops are undergoing a transformation, they are becoming more focused on brand building than actual retail and they are becoming catalysts for related e-commerce services.

In a recent whitepaper Google VP of ads and commerce Sridhar Ramaswamy concluded that consumers no longer see a distinction between online and offline shopping. The experience is becoming seamless and intertwined.

“Whether it’s searching on a laptop, browsing main street shops, or hanging out at the mall — it’s all shopping,” he wrote.

Since shoppers seem to be growing blind to the distinction between e-commerce and traditional shopping, they might end up with similar expectations for customer service regardless of the channel, reports Practicalecommerce.com. In other words, they might expect the same level of service online as they do in actual stores. Salespersons keep physical retail going by offering consumer advice and more information than sterile e-commerce sites, while the online channel is unbeatable for comparing prices and saving money.

“Today’s shoppers have become accustomed to doing their own research to get the maximum value out of every dollar they spend, and to feel secure about the purchases they’re making;” Ramaswamy wrote. “With this power shift comes a great opportunity for retailers; those that use tools and insights from the web have the opportunity to close the gap between the smart online consumer and the offline retailer, and stand out in a competitive marketplace.”

Searching for products and comparing prices online is easy, provided one knows what to look for, and this is where salespersons need to be involved, with expert advice. Getting a better deal on a product doesn’t really matter if that particular product does not meet the customers actual needs and properly informing and advising consumers online is just as important as having as competent salesperson in a brick-and-mortar shop.

European retail property market stays busy

warehouse-openAlthough Europe is going through the worst economic crisis in decades, the retail property market is still showing signs of life – and it’s getting better. It is estimated that €16.3 billion of retail property was traded in the first six months of the year, up 31 percent compared to the first half of 2012.

Demand is strong and it’s coming from various sectors, with increased spending on cross-border deals. There is a lot more interest from institutional investors, including Asian funds. The focus appears to be on the more traditional shopping centre market rather than out of town locations.

Britain remains Europe’s biggest retail investment market, with an impressive market share of 32 percent. Volumes are up 94 percent over the first six months of 2012, reports Property Magazine. Other big markets are also doing well, especially in Northern Europe. Germany, Sweden, Norway, Denmark and France have all experienced a rally. Oddly enough, there is more interest in troubled markets like Greece, Portugal, Italy, Spain and Ireland. The temptation of low prices and volatility seems to be attracting risk loving investors with nerves of steel.

Michael Rodda, head of EMEA Retail Investment at Cushman & Wakefield, said some investors are starting to look further afield, while others are contemplating taking on more risk, usually via development.

“The Nordics were strong again in H1 and we expect this to continue into the second half of the year but we are beginning to see increased activity outside such core markets,” he said. There have been some notable transactions in Central and Eastern Europe for example, such as Atrium’s acquisition of Galeria Dominikanska in Poland, and there is also now real momentum building up in Iberia, where we expect to see a surge in activity as rental re-pricing looks to have bottomed out and improving availability of finance appears to be on the horizon.”

David Hutchings, Head of EMEA Research at Cushman & Wakefield, said retail property remains in demand across Europe and buyers seem undeterred by the stresses and strains of the market, and the increasing competition from online retailers.

Hutchings believes supply levels are likely to improve toward the end of the year, and investment in the retail sector is expected to increase 8 percent on 2012.

Online retail growth slows

visa-epayAlthough online retail sales are still growing, new research from Mintel has revealed that growth is slowing quite rapidly. The online retail sector expanded by about 50 percent in 2008, but last year growth slowed down to just 15 percent. However, this is still much better than the rest of the retail sector and it means the UK online retail sector will double by 2018, with double-digit growth rates.

On the other hand, the slowdown means new players will have a much harder time gaining market share. Established operations only need to maintain their lead, which was gained with little or no competition. The next big frontier is mobile retail.

Mintel retail analyst John Mercer believes online only retailers have possibly picked all the “low hanging fruit,” so new outfits will have to get more creative. However, he notes that the market is still very dynamic.

“In a low growth market [for retailers generally], double digit growth [in online sales] is nothing to be sniffed at,” he said.

Although online-only outlets seem to have grabbed an early lead, they are about to face a lot more challenges. They currently account for less than half of all online sales, but Mintel believes they won’t see much more growth, as high street retailers enter the online space, reports the Financial Times.

New services like click and collect, coupled with new POS and payment technologies might help the high street gain a competitive edge over online-only retailers. After all, many people still like to touch and feel products before they pull the trigger and this is something the convenient online channel simply can’t deliver.

KPMG: Retail is recovering

highstreetThe KPMG/Ipsos run Retail Think Tank believes the UK’s retail sector is on the road to improvement and has overall steadied in the second quarter.

Demand increased particularly in the end of June, positively impacting sales of goods. Three key segments, demand, margin and cost, which drive growth, were neutral, with demand slightly increased compared to the first quarter, margins still under some pressure, but with cost factors “largely negligible”.

The RTT’s Retail Health Index was marked at 78 points, one up from the previous quarter and the first successive growth since a continued decline in early 2011.

The group pointed to the arrival of the new governor of the Bank of England, Mark Carney, who said interest rates will stay low and should not mess with economic recovery.

David McCurquodale, head of retail at KMPG UK, said the picture is much brighter than last year.
“Compared to the carnage that occurred in 2012, this year we are seeing a far more settled picture which is a welcome sign for the retail industry,” McCurquodale said. “Certainly, there is less gloom, and expectations that retailers will enter into administration are lower, but for those sitting on large debts, there is still inevitably a risk of insolvency.”

Retailers think online sales tax is rubbish

poundsCalls for the introduction of a new online sales tax have been growing louder and unsurprisingly online retailers are having none of it. They believe any additional tax burden imposed on their businesses would be detrimental for people, for jobs and investment.

In an open letter, signed by the CEOs of Ocado, Shop Direct, N Brown, Boden, Appliances Online and notonthehighstreet.com, the plans for the introduction of a new tax were branded as “nonsense”, as online retailers are overburdened as it is.

“Online retailers already pay tax on many fronts. Customers pay VAT while other taxes include fuel duties, employment taxes, corporation tax, as well as business rates on their warehouses and offices. Just because the online business model does not require as much property does not mean that other areas should be taxed more heavily,” the execs said. “A popular view has been that bricks and mortar retailers have a high tax burden whilst a few very large international online businesses pay a small amount of tax here, therefore the tax system for all online players – big and small, UK and international – should change. But this is a red herring, an issue of domicile not online retail.”

The retailers believe that a new online sales tax would kill entrepreneurial spirit, making it harder for small retailers to get started. It would also have a detrimental effect on supporting industries and exports abroad. They noted that SMEs would be hit by the unintended consequences of the law, along with people that buy stuff.

“The idea is vague and ill thought-out. Does it include just those retailers which operate online-only, or those with stores too? Should online travel agents be wary? Could it also capture online financial services providers? There is no logic to penalising companies that provide consumers the convenience, efficiency and value online shopping offers,” say the e-tail execs. “Online is a rare and precious success story for the UK and one that we should take pride in. We support our high street counterparts in their call for lower business rates, but hitting online businesses by replacing lost revenue with this type of tax will hamper growth, slow the economy, impact jobs and reduce investment whilst not achieving a significant uplift for the Treasury.”

Tablet retail searches are soaring

Keep taking the tabletsYe ancient Tablet has already taken a toll on PC sales and now they appear to be changing the online retail landscape as well.

According to the British Retail Consortium and Google, retail search volumes grew by 15 percent in the second quarter, but tablet search volumes were up a staggering 132 percent. Smartphone growth was 66 percent.

So what are mobile users searching for? It appears many of them enjoy DIY and gardening, as mobile searches for the two categories were up 170 percent and 81 percent year-on-year. Obviously, much of the growth is seasonal. Clothing is also popular and unsurprisingly it appears that most mobile searches are coming from consumers making their purchases while soaking in the sun, or tinkering around the shed.

Helen Dickinson, Director General, British Retail Consortium, said the results also show the changes the internet is bringing to the international retail market.

“The considerable increase this month in the number of UK consumers searching overseas retailers show that barriers are increasingly being broken down. UK retailers are already responding well to these changes and will be keen to continue seeing equivalent increases in overseas customers searching them out,” she said.

Peter Fitzgerald, Retail Director, Google, said the new data merely backs up seasonal trends seen in previous editions of BRC’s Retail Sales Monitor.

“Pureplay retailers in particular regained their growth, responding to the pressure of multichannel retailers in the online space. International interest remains a strong lever for our homegrown retailers,” he said. “UK interest in overseas brands however, has really peaked this quarter driven in particular by interest in US brands.”

Total search volumes from UK consumers searching overseas retailers increased by 51 percent in Q2 compared with the previous year.

Online sales growth hits new high

visa-epayThe online retail market in the UK is still going strong and according to IMRG Capgemini’s latest figures it is growing at the fastest rate in two years. IMRG Capgemini’s e-Retail Sales Index found that June sales rose 20 percent year-on-year. Furthermore monthly sales in June were better than in May for the first time in five years.

IMRG CIO Tina Spooner said the market has beaten expectations this year, with 16 percent growth in the first half of the year, beating the outfit’s earlier forecast of 12 percent. Mobile transactions are also doing well, up 136 percent year-on-year in June.

“Mobile commerce continues to power on in 2013. More specifically, the mobile conversion rate has increased from 1.27% in June 2012 to 2.03% in June 2013 which is a very positive signal that mobile commerce is achieving serious traction in the UK market,” said Oliver Ripley, mobile product manager at eCommera.

Ripley pointed out that modern retailers are investing more in mobile commerce storefronts, both through browsers and bespoke apps. The shopping experience is getting better for mobile users, with improved payment services and user interface improvements.

Ripley also noted that consumers are becoming more used to mobile transactions and this is especially true of younger consumers.

Chris Webster, VP, Head of Retail Consulting and Technology at Capgemini said the uplift experienced this month will provide retailers with a note of cheer.

“With the Index recording its biggest year-on-year growth since June 2011 and Q2 being 17% up on Q2 2012. This is in stark contrast to the continued decline in store footfall reported by the BRC over the first half of the year and amplifies the increase of online at the expense of store sales,” he said. “In addition, Britons remain price-conscious, but have responded well to good deals found online and it’s good to see consumer confidence returning.”

Good weather boosts June footfall, high street gets the best of it

highstreet South endRetail footfall in June was up 0.1 percent year-on-year, reversing the negative trend in May, which saw a 0.7 drop. Good weather seems to be the main factor, as high street footfall was up 1.4 percent while out of town footfall was up 0.6 percent.

However, according to the British Retail Consortium, footfall in shopping centres dropped three percent following a previous drop of 1.7 percent in May. Looking at the first half of the year, the trend is largely positive, as footfall fell 1.5 percent compared to 2.9 percent during the first six months of 2012.

Greater London did particularly well, with a 2.4 percent spike, followed by Wales with a 2.3 percent increase. Scotland and the West Midlands were up by 1.2 and 1.3 percent respectively. However, footfall in the East Midlands was down 1.9 percent.

“The improvement in the weather may well have contributed to this,” said BRC director general Helen Dickinson. “Our recent retail sales figures showed a strong performance from fashion and footwear and it is likely that shoppers took advantage of the start of the sunshine in June to visit their local high street and buy items for their summer wardrobes.”

However, Springboard pointed out that good performance of high streets also has a lot to do with the fact that they underwent a bigger decline in footfall in previous year, which means they are starting from a lower base.

Mobile spending increases

ukflagA deal aggregator noted that, according to its own data, mobile spending rose in the first six months of 2013.

This is hardly surprising and isn’t anything new to those who have been keeping an eye on official retail figures.

But aggregator Bownty noted a 25 percent increase in mobile purchases through smartphones and tablets between January and June. The aggregator looks at daily deals from the likes of Groupon and Wowcher, so there has been increased interest in the bargain, time critical offers to be had.

According to Bownty’s data, Brits spend over £1.3 million daily taking advantage of national and local deals.

“We expect mobile transactions to overtake desktop spending before the end of the year,” Steffen Frolund, Bownty CEO, said.

 

Morrisons’ boss calls for online sales tax

 morrisons-dalton-philipsMorrisons chief executive Dalton Philips believes the Government should impose a new online sales tax to level the playing field with its rivals and e-commerce outfits. Philips told The Daily Telegraph that the tax imbalance between internet and high street retailers is illogical and it is taking its toll on Britain’s town centres.

Interestingly, Morrisons is moving into the online space right now, but it still feels it should pay its fair share. Last week Philips said Morrisons lost £700 million of sales last year because it lacked an e-commerce platform. Shoppers simply chose the convenience offered by online groceries instead. In response, Morrisons is entering the e-commerce space with Ocado and it believes the new platform should be able to break even in just four years.

But Morrisons’ online push isn’t about to change Philips’ mind.

“As a country, we need to look at how we’re going to tax retailers in general wherever they operate, because we’ve all got to contribute to society, but one can’t be disadvantaged over the other,” he said. “I’m not into intervention for intervention’s sake but you’ve got to have a level playing field. As more and more sales migrate online, it seems to me intuitive that you would tax the online channels as well.”

Philips added that there was simply no logic to the tax system anymore, as the rates keep going up, while at the same time town centres become ghost towns, as brick and mortar outfits find themselves fighting against the odds to stay competitive.

More often than not, they fail.

BRC reports June retail recovery

poundsThe British Retail Consortium’s data is out for June and online sales were up again, 14.1 percent compared to the same time last year.

With the weather taking a turn for the better at last, clothing and footwear were both up as well as increased footfall on the highstreet. Retail sales overall were up 1.4 percent on a like for like basis from June 2012, and on a total basis sales were up 2.9 percent, compared to a 3.5 percent increase in June last year.

Online sales did their best since July 2012, not including Christmas.

The BRC’s director general, Helen Dickinson, said that the weather helped retail sales along in spite of a generally bleak economic climate. There was a positive reaction to retail promotions as well as continued demand for essential items.

The weather helped along DIY and gardening products, Dickinson said, and there were other purchases that may have been postponed when the weather was more typically British.

TV sales are weak compared to last year – where they boomed thanks to the London Olympics. Electronics promotions did help the segment. Food growth grew in line with inflation.

“June saw another strong performance from UK retailers, with very respectable overall growth across the categories,” Dickinson said. “At this halfway point in the year we are able to see that sales are well ahead of the previous six month period, confirming that the retail recovery is continuing”.

Retail head for KPMG, David McCorquodale, said the statistics mark “another respectable performance”.

“Sales are moving in the right direction, albeit hard-earned and promotion driven,” McCorquodale said. “The statistics are all the more creditable as last year’s sales included a Jubilee boost.”