Brick & mortar stores have a place in e-tail

Home > Business > Industry

print dictionary print

Brick & mortar stores have a place in e-tail

Just as the Internet has transformed how we communicate and share, it is now transforming how we work, play and, of course, shop. Whether a retailer or property owner, this is a clear threat to those who cannot adapt, but it is also a source of great opportunity, opening up new markets and speeding the globalization of retail.

While it is a worldwide phenomenon, online retail is not the same everywhere. Local, cultural, regulatory and infrastructure issues that affect physical retailing also have an impact in the virtual world. Even online, retailing can be a very local business.

According to our analysis the U.K. is currently the most developed online market, followed by the United States, Germany, France, the Netherlands, Korea, Japan, Switzerland and Scandinavian countries. While this list is dominated by mature markets, thanks to differing cultural and technology drivers, the Internet will change the global geography of retail with some emerging markets set to advance more rapidly. Asian markets, in particular, will gain as mobile phones become more important in retailing.

In terms of property implications, some retailers are opting for fewer, larger stores, while others are seeking more but smaller stores. However, there is as yet no right answer on the optimal store network and needs continue to evolve as retailers experiment - and landlords must adapt to that. A contraction of the prime pitch is likely in many shopping centers and high streets, but there is clearly a major role for physical stores to play for brands, luxury goods and flagships.

The growth of “click and collect” as well as showrooming also underlines the ongoing importance of physical stores in the supply chain. Conversely, the increasing emphasis on logistics highlights how value is changing and this will also be reflected in property demand and pricing.

Online trading will add to retailer costs and feed down to property, and while in-demand locations will see rents rise, weaker locations serving more as collection and storage sites will see rents fall. Although negative for parts of the property market, large regional shopping centers and core in-town markets have considerable potential to emerge from multichannel retailing as winners. They tend to be areas of high traffic, with a confluence of transport links and parking, and are key hubs for consumers to meet, enjoy experiences and access supporting uses such as leisure and food.

There is also room for managers to offer new services, such as delivery, and hence shopping centers should be a vital part of the e-tail infrastructure platform.

Indeed, the successful combination of online and offline worlds will be a powerful source of competitive advantage to the best retailers and centers, with the online world providing the intelligence to support personalization and customer service, while real estate will provide accessibility as usual but also brand profile and the ability to deliver a real experience - a factor which can’t easily be replicated online.

Benefiting from a developed retail and technological landscape, and to some extent more compact geography, Korea had the highest percentage of Internet retail sales as a proportion of total retail sales -12.7 percent.

The rise in popularity of Internet-enabled mobile devices has brought a surge in mobile online shopping, either through the Web or aided by targeted applications. According to the International Telecommucation Union, active broadband subscriptions per 100 people across the globe grew grown steadily from just four in 2007 to almost 17 in 2011. They are likely to approach 30 by the end of 2013.

Differences across regions are again evident, with Europe and the Americas leading the way. However, since developing countries are generally more reliant on mobile rather than fixed technology, the gap between developed and developing markets is somewhat narrower.

Another relevant data set - but one that includes dedicated mobile data subscriptions (for example modems/wireless adaptors) at a country level - is the OECD ranking of 34 countries. Here, South Korea again leads the way, with just over one mobile and data subscription per person.

* The author is head of EMEA Research Group, Cushman & Wakefield.

by David Hutchings
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now