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Almost 35 per cent of sales to be online by 2025: KPMG

04
Sep '19
Pic: Shutterstock
Pic: Shutterstock
Almost 35 per cent of sales will be online by 2025, according to the latest KPMG/Ipsos Retail Think Tank (RTT) meeting. Though this will not make physical stores redundant, it is expected to lead to closures and restructuring work across the UK. The meeting discussed the future for retailers, and the shopping landscape likely to be experienced in 2025.

Many figures have been suggested and discussed with regards to the number of purchases that will take place on the high street versus online.

The trend of reducing physical stores will undoubtedly continue. However, as consumers – especially millennials – seek out experiences over tangible ‘things’, it is expected that successful retailers will be ones that drive footfall with in-store experiences that complement and enhance the offering, even if that ultimately drives online sales.

By 2025, not only will the role of physical stores change, but the number of stores and where they are located will look very different too. Jonathan De Mello, head of retail consultancy at Harper Dennis Hobbs, said: “Retailers are looking for fewer stores not more – and it is increasingly about being in the right location as opposed to saturating the market with stores. 40-50 stores in the right centres is typically sufficient to cover the UK market, with other distribution channels such as wholesale, concessions and online covering the rest.”

Where these stores are located is also expected to have evolved by 2025, with dense footfall centres not always being formed on ‘traditional’ high streets in towns and cities across the UK, but at travel hubs, large out of town shopping centres and on key ‘premium’ high streets such as Oxford Street. RTT members warned that this consolidation of stores into key locations will cause shoppers and retailers to desert some of the traditional high streets, where many units and buildings will need to be re-categorised and re-used, with some likely to become derelict and vacant.

Looking at those traditional footfall centres, the think tank was especially concerned for the future of department stores. Six years from now it will be commonplace for brands to sell directly to consumers, skipping department stores out of the buying process. These will likely consist of a single brand flagship store that personifies the brand through an experience, and complements a direct to consumer online operation. This will leave department stores struggling to compete for the best brands to sell, and consequently competing for customer footfall and sales.

Six years is a long time in any industry, although with the fortunes of retailers being so intrinsically linked to the slightest deviations to the economy, consumer confidence, advancements in technology, political legislation and societal changes, 2025 will almost certainly bring with it a very different retail industry than seen today, members said. (SV)

Fibre2Fashion News Desk – India


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