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Traditional Retailers Should Use Strengths And Evolve To Compete With Online

By June 2, 2014 No Comments
Traditional Retailers Should Use Strengths And Evolve To Compete With Online

Shopping OnlineIt wasn’t long ago that experts were predicting the death of the high street, as more people moved to buying groceries, clothes, books, music – let’s face it, almost everything – online. But if you walk into your local town today you’ll still see old-fashioned independent retailers in operation, albeit in smaller numbers. Customers still like real shops, but the reality is they expect more from them. They want to see goods in person as well as being able to buy them online if they so desire. Many web businesses are realising, too, that just operating virtually has its limitations. There are quite a few things that they can learn from their bricks and mortar peers, and, in some cases, they’re working with them to the benefit of both.

That online retail is booming can’t be denied. There was a further 13 per cent year-on-year growth in the amount spent through the internet in April this year, according to the Office for National Statistics. Britain has the highest proportion of internet retail sales of any country in the world – it boasts about 220,000 online retailers, according to Government estimates, and most of them are SMEs. And so innovative are British retailers proving that many foreign companies are watching what happens here with great interest to see what the future of shopping may look like in their own countries.

While shopping on the internet is quick and convenient in many ways, some old habits don’t change. Shoes and clothes are among the most likely items to be bought through the web, but food sales aren’t as popular as you might think. People still often prefer to see ingredients before they buy them. As a result, what seems to be evolving is a system that incorporates all of the speed and ease of internet ordering with old-fashioned face-to-face customer service where it’s wanted and needed. Experts call this approach ‘omnichannel’. One study by the Centre For Retail Research (CRS) says that modern customers typically like to look at products on a business’s website, as well as visiting their physical store to see items up close. More people will use their smartphones even when standing in a shop to compare prices with competitors. Only then will an individual decide how they’ll make their purchase – in person, online with delivery to their home, or ordering virtually and collecting themselves from the shop.

This last option – so-called click and collect – is seriously taking hold in the UK, and small businesses are wise to gear themselves up to offer it as an option. More than a third of those who shop online in Britain have ordered goods through the internet only to collect them from the actual shop, according to research from Planet Retail. This compares with 13 per cent who use such services in the US, and just five per cent in Germany. Analysts predict that the number of British shoppers catching on to this method of combining high tech and high street will more than double by 2017.

It presents a real challenge to small retailers. To give tech savvy, sophisticated and demanding customers what they want, sellers have to operate across all channels, offering goods via all routes. The CRS research sees a future where retailers first must decide if they have a physical shop, then consider where it would best be placed to attract both passing trade and those who are just using it to collect orders made online. Then, businesses will have to integrate their physical stores with their online shopping offering, as well as how they use social media. But the good news is that physical retailers can compete in a number of ways, including exploiting their natural advantages over online operators:

  • Nothing beats a friendly and knowledgeable salesperson, and investing in staff training in this regard is essential.
  • Highlight the fact that people aren’t paying shipping costs when they shop in person. Many customers will overlook this hidden extra cost now that they’re so accustomed to shopping on the web.
  • Ensure that you have enough inventory, so that if someone has seen something online, but wants to buy it in person, they’re sure to find it in stock.
  • Shops in a high street can work together to promote each other’s businesses, and sell a visit to the area as a one-stop-shop for a number of different goods and services.
  • Installing Wi-Fi in a store that encourages customers to browse product information and prices online may seem perverse, but many shoppers will be attracted to it. Tablets and mobile phones can also be used to pay for goods in this modern wired world.
  • Retailers could offer a discount for goods ordered online but collected in person. Evidence from Amazon’s CollectPlus scheme – which works with small shops to deliver Amazon goods for local collection – shows that once someone is over the doorstep of a shop they’re more likely to buy a few extra items, as we’ve mentioned on this blog before.

The hard reality is that physical retailers need to be at the top of their game, as well as having a website, preferably one that can take transactions. One in three UK firms still don’t have an internet presence, so there’s a lot of basic work yet to be done in this vein. And the Government is keen to help. In particular, it wants to encourage SMEs to sell more – and further afield – through the internet. Last autumn it announced a programme called Grow Online, Expand Worldwide, run by UK Trade and Investment (UKTI), supporting 7,000 British companies with advice and funding to enable them to break into foreign markets via the internet.

But while there are great opportunities for retailers to make their mark on the global stage using technology, would-be entrepreneurs would do well to remember that there are some businesses that will always require a physical presence on the high street, as their goods or services have to be delivered in person. One maverick example is the recent boom in tattoo parlours, fuelled by the growing popularity of body art and piercing. The Financial Times recently reported that higher shop vacancy rates on many high streets have enabled entrepreneurs providing things that can’t be ordered and delivered online – tattoos, cups of coffee, even betting services – to set up old-fashioned businesses that serve people in person. With many general retailers leaving the high street for cheaper service delivery online, the premises left empty in their wake have provided a great opportunity for enterprising small business owners.

The message is that the high street is far from dead yet, and the most innovative retailers are making a success of their businesses both in their bricks and mortar and virtual form. The way people shop is certainly changing – and retailers must both exploit their traditional strengths and evolve alongside their customers to remain relevant and successful in the 21st century shopping environment.
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