The Importance of D2C Retailing in the 2019 Multichannel World
In the 2019 multichannel retail world in the UK – the world’s most dominant e-commerce market by overall percentage of all retail sales – almost 20% of all products and services are now purchased online (source: Office for National Statistics 2019).
Multichannel retail industry sector forecasters are predicting that the ratio of online sales could, within the next decade, reach as high as 30% of the entire UK retail market as the role of the High Street outlet continues to evolve and adapt in accordance with this platform migration in consumer buying behaviour.
For Retailers and Brands who have relied on their retail wholesale customers to sell the lion share of their products and services historically, and have not managed to establish and scale their direct to consumer sales strategy to date, this challenge will become ever greater as overall online sales continue to grow. In short 20% of their overall sales should be direct to consumer in 2019 in order for them to keep up to pace with the rapidly changing UK retail landscape.
The need to align sales and marketing ambitions to match the multichannel retail environment will become exponentially greater as they strive to meet the current demands of the multichannel based consumer. For many companies who, for a myriad of reasons, are behind the curve in terms of the ratio of their direct to consumer sales versus the overall retail market this challenge will become increasingly harder to manage looking ahead.
For Retailers to face this fundamental multichannel challenge ultimately means tackling the inherent issue of retaining too much retail physical space versus declining retail sales per square foot. For Brands this requires sensitive communication to Retail wholesale customers that they now need to explicitly develop their own direct selling operations to face this commercial challenge and prosper looking ahead too. These fundamental operational changes clearly are both challenging to implement and will cause material disruption to staff, operations and commercial relationships in the multichannel retail sector – but will ultimately define commercial survival in the 2020’s.
It is worth noting, however, that the published figures of circa 20% online of all UK retail sales includes pureplay online monolith of Amazon.co.uk, who sell virtually 100% of their merchandise and services via the internet and now account for over 51% of all online sales in the UK in 2019.
On the flip side, as part of their recently announced multichannel UK expansion plans Amazon are now branching into Bricks and Mortar retailing, growing their presence in the more traditional format on the High Street in the UK selling both books and a wider merchandise offering including grocery. Multichannel appears to be going full circle for those operators whose consumer offering is connected and ‘360 degrees’ in terms of its consumer touchpoint implementation.
Multichannel thinking applies more than ever to Retailers and Brands who want to survive and prosper as we enter the next decade. In these times of uncertainty in the multichannel retail world with bankruptcies continuing for household name brands on the High Street on a virtual weekly basis – Mothercare being the latest established retailer to fall into administration announced today – it would appear that the previous way of doing business with the new consumer needs to be, in many cases, radically addressed otherwise other significant casualties are inevitable in the decade ahead.