Online Xmas shopping impacting UK Retail

As Christmas shopping is approaching, experts from market intelligence agency Mintel predict prospects for the upcoming festive season to be good, and expect total UK retail sales will grow 2.5% in December 2016, taking retail sales up to £42.2 billion.

PURE London - a trade fair for retailers sourcing fashion and accessories.

Many of the consumers will shop online, to avoid high street crowds and to surf for cheaper prices while shopping at hours that best suit them, according to Mintel in a recent report.

Richard Perks, Director of Retail Research at Mintel, said:  “The economic background for consumers continues to be favourable. Real incomes are rising and unemployment is falling. There are some worrying signs though. Consumer credit has risen back to record levels and the housing market has weakened a little but overall, the prospects for Christmas remain good.”

“When it comes to Christmas shopping, it is increasingly artificial to make a distinction between online and in-store as the two increasingly are working together to suit shoppers’ needs. We are seeing pure players recognise the advantages to having a physical offering, signified by Amazon and Zalando’s interest in moving to the high street. At the same time, a number of high street retailers now price match against online retailers, trying to fight back against the continued belief among shoppers that it's cheaper to buy online,” said Richard.

However a new report released this week predicted that online shopping will drive more fashion stores to close.

PricewaterhouseCoopers (PwC) and the Local Data Company (LDC) have predicted that as consumer spending habits continue to evolve, UK fashion store numbers on town centres are falling at their fastest rate in several years and fashion is suffering more than the wider retail sector.

The report said there were 2,656 store closures across the UK retail sector in the first six months of the year with only 2,153 openings, the lowest number in half a decade.

Notably 206 fashion stores closed while only 119 opened for a net fall of 87. However, the jewellery category saw an extra 24 stores added.

PwC said the advance of online shopping has prompted many national chains to overhaul their retail store strategies and offer click and collect services to help drive visitor traffic to their physical stores, or through special arrangements to allow customers to pick up goods from local outlets in convenient locations.

LDC analysis shows there are over 22,200 click and collect services across 130 of the largest national retailers in the UK.

The report said the retail sector weakness in H1 was also increased by the failure of the BHS* chain, the 88-year-old retailer that collapsed into administration in April and was wound up in August, and the news of further higher-profile closures with Gap Inc’s Banana Republic recently saying it would close all its retail outlets in the UK while retaining its online presence.

Greater London, where online shopping has taken off most strongly, was unsurprisingly the biggest sufferer from the closures in the first half with 164 store close across the entire retail sector.

Matthew Hopkinson of the director of the Local Data Company said the spaces vacated by the traditional occupants of UK high streets are being increasingly filled by healthcare operators, food and beverage outlets and value stores such as pound stores,

*BHS is now offered only online, with the new owners Al Mana Group - a Qatari retail congolmerate which bought BHS’s online and international operations from administrators in June -  unveiled plans to expand the department store overseas, and is reportedly in the final stages of agreeing contracts with three new franchise partners in Africa, the Middle East and Europe.