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New Horizons
Recent weeks have taught us that the high street is very far from being out of danger in this recession. Indeed, it seems as though there may be a good many more victims to fall by the wayside before we see happier times. However, there is more positive news to be found in those retailers who have reacted quickly to the new trends in the nation's shopping habits, changes that are bringing multi-channel retailing to the next level.
Grocery
The highly competitive grocery sector is certainly no stranger to etail, but for a long time it seemed that an online-only store was just a pipedream.
This attitude was shaken last month, however, as online-only grocer Ocado threw off its "underdog" image by scraping its first ever half-year profit, despite slowing sales growth and problems keeping up with orders thanks to capacity problems at its Hatfield site.
This news came just days after it was announced that Asda had lost market share as shoppers cut back. Its market share slipped after it posted only a 2.6% increase in sales over the 12 weeks to June 13th, well below Tesco's 4.9% and rivals Sainsbury's at 4.3%and Morrisons with 5.6%.
At the time, Andy Clarke, Asda's chief executive, said: "The true cost of living is now beginning to take its toll. Inflation is rising twice the rate of earnings, petrol prices are at a record high and utilities bills are only getting steeper - all adding up to a £14-a-week hole in people's pockets. The combined effect is creating a perfect storm for customers trying to make ends meet."
However, Ocado's sales increased 24.7% in the first 12 weeks of its trading year, with profits increasing to £200,000, compared to losses of £6.7 million the previous year.
Last year, the company beat off Argos, Marks & Spencer, Wal-Mart, HSN.com and electrical parts store eSpares.com to be crowned World Etailer Of The Year at the Oracle World Retail Awards 2010.
This was, in part, helped by the fact that Ocado was the first UK supermarket to launch a transactional smartphone app for the iPhone, including 'search by voice technology' - not bad for a retailer that didn't deliver to its first customer until 2002.
In addition, the increase in its capacity at Ocado's main distribution centre and a recently announced deal with French giant Carrefour, which will see it trial a range of authentic French products, might just keep it ahead of the game when Waitrose and Morrisons launch their own online offerings later this year.
Fashion
Over £200 billion has been spent online in the UK since 2000, according to the IMRG Capgemini e-Retail Sales Index, with clothing one of the best performing categories over the last 11 years. In fact since February 2001, it has grown by 3,245% according to IMRG and this news was exemplified when the seemingly unstoppable ASOS reported annual retail sales up an impressive 58% earlier this year.
ASOS is the perfect example of a company succeeding in the current climate by fully embracing the opportunities offered by multi-channel retailing. Not content with simply growing its enormously successful website, the company has extended its offering with ASOS Marketplace, a fashion community website where independent labels and vintage specialists can sell directly to customers and ASOS Fashion Finder, a social network-based shopping experience.
Meanwhile, the company has also boosted its multi-channel offering in the form of a mobile site as well as Europe's first Facebook store, opening the door to what could be an intriguing new era of "F-commerce".
Similarly, my-wardrobe.com reported a 93% increase in sales in its latest financial year. In the first three months of 2011, the etailer achieved 118% growth following the rebranding and relaunch of its site.
Meanwhile, fashion group Boden which began life as a catalogue retailer, has seen demand explode since entering the virtual world, despite a sceptical beginning. Mark Binnington, marketing mirector at Boden remembers:
"Boden first went online in 2001. It is fair to say that we were sceptical and as luddites ourselves felt that our customers would be too. We were very wrong. By 2004 we had taken over £50m demand online representing 40% of our business. We expected it to stop there. However, by the end of 2009 we had taken almost £200m demand online representing almost 80% of our business. And, it's still growing."
Alongside its website and the ubiquitous Facebook and Twitter presence, the company also operates its own Boden Community site including social networking, blog-hosting for customers and photo and video sharing. Surely a mobile website and application will not be far off.
On the other hand, the bricks and mortar fashion sector has truly been through the wringer this year, with the failure of Jane Norman last month still fresh in our minds and close on the heels of All Saints' close shave with administration until Lion Capital, the owner of clothing retailers La Senza and American Apparel, bought the business in a deal securing hundreds of jobs.
Meanwhile, Mothercare, despite an e-tail site and a foray into social media in the form of its gurgle.com site, said in May that it would be slimming down its estate, resulting in the closure of 110 outlets and rent reductions on 40 more. The company's new focus will be on out-of-town parenting centres, which contain its Early Learning Centre brand.
Multi-product Retailers
Another recent casualty of the high street was department store TJ Hughes, which went under last month after losing over £10 million in one year and suffering a 19% drop in like-for-like sales in the three months preceding its collapse.
However things seem considerably more rosy at Debenhams, traditionally a bricks and mortar retailer, but one which has been quick to respond to the new era of multi-channel retailing. The company now has two Facebook pages, a YouTube page, Flickr account, Twitter page, a blog and a mobile shopping app for Nokia, Android phones and iPhones. In addition, to top this impressive list of multi-channel platforms, the group has now launched its own TV channel.
TV channels seem to be the latest "must-have" platform, especially in multi-product retailers, with Argos having launched its own channel just last month. Hosted on Sky, the retailer says that it is designed to act as a 'shop window' for the retailer, allowing customers greater access to products with in-depth demonstrations, showcasing over a thousand products a week.
What Next?
Altogether it is clear that the traditional high street is far from becoming a completely barren wilderness in the near future. Even given the success of e-commerce detailed here, online spending still only accounts for less than one pound in every 10, according to the British Retail Consortium's head of online retailing Richard Braham.
However, it is clear that bricks and mortar retailers cannot go on believing that simply having an e-commerce site is enough to keep them above the water. We are beginning to see not only a difference in the way consumers choose to shop but a fundamental shift in the retailer-customer relationship.
Cameron McLean, general manager for merchant services at PayPal UK, summarised: "The face of online retail is set to change considerably in the next 10 years as the rise of social media creates a collective shopping power. Our latest research shows over 16 million shoppers (34%) are already creating peer reviews online and 36% usually refer to reviews before making a purchase. Over one in 10 (12%) internet users are already a fan of a brand, retailer or product on a social networking site, such as Facebook and this trend is only going to go up.
"In response we expect online retail to become a much more collaborative experience for consumers. Just as gaggles of shoppers used to hit the high street on a Saturday, now shoppers will share reviews, highlight great deals and ask their peers' opinions of purchases at any time of day, via sprawling social networks."
