CHAPTER TWO: RECENT DEVELOPMENT IN THE ONLINE U.K RETAIL MARKET
- Recent Developments in the online U.K Retail market
The fashion industry is currently one of UK’s greatest innovative industries, directly contributing £21 billion to the UK economy. It also has an indirect impact of £16 billion totalling the value to £37 billion (BFC, 2011:13).
As seen in figure 2.1, the online retail growth continues to far outperform and in 2014 accounted for 15.8% of sales compared with 4.2% in 2013. With the majority of clothing & footwear retailers already online, growth is now being driven by website improvements to attract new shoppers and drive existing shoppers to spend more. Developing fully multichannel offers, so enabling customers to shop online through PCs and mobile phones, order in store for home delivery and offering services such as click & collect have been the focus over the past year to improve customer convenience.
Despite the current economic climate, clothing retailing (includes shoes, handbags and accessories) has continued to become one of the worlds most internationalised and competitive retail sectors. Consumers grew their clothing spend significantly in 2011 suggesting an underlining resilience in the market (Mintel, 2012). Despite the decrease in spending power, shoppers are reluctant to cut their purchasing of fashionable goods and the market is expected to witness a growth of 1.8% in 2012, taking the sector size to £37.37 billion (Mintel, 2012). In analysing the future of the clothing retailing market sales are forecast to increase continuously between 2012 and 2016, estimated to reach £51.83 billion in 2016 (Keynote, 2012).
To conclude multichannel will drive growth – Most clothing retailers are now online, but multichannel investments are relatively new. More retailers will offer click & collect services as well as invest in smartphone and tablet apps to improve the online browsing experience which is crucial for clothes shopping. Luxury e-commerce will grow rapidly – while midmarket and high street retailers have led the way in online development, luxury retailers have also proved that e-retail can be very successful. Net-A- Porter and the recently launched menswear site Mr Porter are examples of pure-play online luxury clothing, handbags & footwear retailers, which have achieved success.
Though e-commerce is now firmly established in the UK, shoppers rightly remain cautious about which companies they choose to buy from online. The greater convenience of shopping online will continue to resonate with an increasingly time- poor shopper while advantages that online retailers have over physical stores in terms of range and prices will continue to make using this channel more appealing to customers. While store retailing will still make up the majority of retail spend, the growth of online as seen in figure 2.2 is estimated to grow by 60.5% in the coming years (see Appendix A).
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