Pureplays tap into showrooming opportunity
A growing number of pureplays are taking physical stores as the online sales boom starts to cool. According to research from Colliers International, by 2021 the rate of growth in e-commerce sales is expected to decline from the current level of around 11% to 7%. In anticipation of this, e-tailers are increasingly using physical stores, not necessarily just to generate sales through the tills but to reinforce customer loyalty – and spending - online.
The real estate advisor analysed more than 30 different online brands across the EMEA region which are becoming ‘showroomers’. An example of this migration is the French fashion brand, Sézane, which had its beginnings on eBay before moving to a branded online platform. Having opened physical stores in Paris and New York, the brand’s creator, Morgane Sézalory, is now exploring the London market with a pop-up store in South Molton Street and is considering a permanent presence. Also in London, one of the Duchess of Cambridge’s favourite online brands – ME+EM - is opening its third store and is looking at the potential for more.
This is being supplemented by a growing number of brands such as Samsung, Dyson and Volkswagen which previously sold through stockists but are now looking to go direct to the consumer through their own store networks. Paul Souber, Co-Head EMEA Retail at Colliers, comments: “With the rate of web sales forecast to level out over the next four years, many e-retailers have identified showrooms as one of the remedies to a decline in profits. Increasingly showrooms in physical shopping environments which both generate online sales, raise awareness of their company, promote brand loyalty and offer the customer an opportunity to see, touch and feel the products. The trend is also driven by cost considerations: it’s not uncommon for 40% of online fashion orders to be returned by the customer without making a purchase. This is imposing a huge logistical and cost burden on the online brands.”
Showrooming is encompassing all types of retailers. In the Netherlands, one of the online brands that has been most acquisitive of physical space has been Fietsenwinkel – the bicycle retailer where you can test the products and then buy online. It has more than 30 outlets across Holland where you can get bikes repaired or road test new ones. The research highlights the changing balance between the channels – online and physical – which are open to retailers. Colliers’ Head of Forecasting & Research, Mark Charlton, comments: “The trend for pureplays to take physical stores will undoubtedly accelerate as increased online competition and lower rates of sales growth requires them to find a competitive edge.”