That cliche about the future lying in “clicks and mortar” appears finally to be coming true
How did you spend your Christmas? For a lot of Britons, the answer would appear to be: online. That’s the conclusion suggested by the latest batch of results from some of our largest retailers. Tesco saw online sales of food in the run-up to Christmas shoot up 18%. While many other clothes retailers were panicking, Next enjoyed an 11% rise in mail-order sales – even while their stores were barely up. House of Fraser’s internet sales rocketed 50%; John Lewis’s by 44%. Put together the trading statements published over the past few days by the big high street names and the picture that emerges is of a Christmas in which many shoppers spent more time and money on the web than ever before. This was the retailers’ first-ever big online Christmas. That cliche about the future lying in “clicks and mortar” appears finally to be coming true.
The flipside of this is that businesses without a first-rate internet service suffered. Take Marks & Spencer, forced this week to admit to a slump in Christmas trade. And, most notably, Jessops, which was finally forced to call in the administrators this week. It’s true that camera shops have been threatened as much by the advent of the smartphone (on which users can take better-quality snaps than they could manage even on some of the older digital cameras). As for the disarray at Marks, that has disturbing echoes of the turmoil the venerable old firm went through in the late 90s. The performance of any business is always a reflection of its own management as much as it is of its sector and the wider economy. And it shouldn’t be forgotten that internet sales remain a small part – about 5% – of a much larger retail market. But it’s growing so fast that executives can no longer dismiss it as an optional extra.
From this, a number of conclusions flow. Many of them are deeply discomforting for retailers, while some should give shoppers pause. The most obvious trend that is emerging is that customers are demanding ever more of online retailers: not just free delivery to a nearby store, but their orders ready to pick up within hours. So many customers return their online purchases that clothes shops and others need a sizeable and costly operation to accept unacceptable orders and put them back on the shelves again. Retailers who can’t do this may as well kiss goodbye to their sales.
All this might be feasible if you are a FTSE-100 retailer with the war chest and the expertise to push your online operations. For smaller and independent businesses, however, this may well be a world in which they will not be able to play a part. As has happened in other industries, the prevalence of the internet in the world of retail threatens to be a polarising force: there will be behemoths, and there will be bespoke businesses – and there may not be much of a middle ground.