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ACCELERATING DECLINE IN TRADITIONAL BRICKS AND MORTAR RETAIL EQUALS A NEW COMMERCIAL OPPORTUNITY

Bricks and mortar retail is undergoing a significant accelerated contraction with 17,000 physical outlets closed during 2022 in the UK alone. This figure is predicted to grow during 2023 driven by several concurrent factors: continued growth in online consumer purchasing, punitive operational costs for retail stores and broader sector competition.


Many Retailers and Brands alike have been over dependent on their high street presence to drive their businesses forward for too long. However, this material sector wide change also signifies a growing commercial opportunity to expand their own online sales operations, by adopting a profitable performance-based business model in the future.


Retailers can capitalise on this by concentrating more on bolstering their web presence to reflect the consumer profile of purchasing habits - 26% of all UK retail sales are now being made online - and to drive a more consistent ‘lifetime value’ business model. Ongoing direct contact and promotion with their customer base will build online business and greatly reduce future operational costs.


Brands who focus on building online business can enjoy cashflow, margin and the longer-term benefits of dealing directly with their end-customer. They can also loosen dependence on high street retailers, who have been known to dictate consumer pricing and demand increasingly higher margins than can be generated from their own online direct sales operation.


In addition to the high street becoming increasingly less significant the growth of Amazon, with 90% of UK shoppers using the platform and over 13million using the Prime service, has also dramatically altered the overall UK retail landscape.


Some of SmartResponse’s clients have seen that this significant shift in purchasing behaviour has also led to consumers often buying from Amazon as a result of seeing TV advertising campaigns, even if the platform has not been specifically mentioned as a listing outlet in the TV commercial itself. In fact, the online direct sales achieved have in some instances been greater via Amazon than on their own advertised dedicated websites.


Whilst clearly a percentage of Amazon sales generated from a DRTV advertising campaign will be replacing existing online sales there can also be no doubt that a proportion are also incremental too as the total UK digital retail economy continues to mature both in terms of scale and consumer preferred buying behaviour.


Over the festive period when footfall was disappointing and sales were reported down in many high street outlets, those clients who continued to be on air with DRTV advertising campaigns not only generated significant increases in profitable direct sales via their own and other digital platforms, but they can also now nurture lifetime value with their growing online customer base.


During challenging economic times those Retailers and Brands that continue to adapt to the rapidly accelerating changing environment will prosper especially if their marketing campaigns are augmented with effective and attributable DRTV. Those whose presence remains too dependent only on the high street will inevitably find commercial life increasingly difficult in 2023.


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