Multi-channel retailers are losing ground to businesses that sell purely online, according to a report by retail consultant IMRG.
During H1 2016 (January to June), the online-only retailers have recorded growth at almost three times higher the rate of the multichannel retailers.
Watch brands, particularly at the luxury end of the market, place enormous value on face-to-face service with customers, but the investment in maintaining a high street presence is delivering lesser returns than pushing purely online.
“Online retailers have benefited from not having old legacy systems to deal with, not having a multi store operation to deal with and, with the size of the business in infancy, less layers of control and faster decision making. With their nature of the business online only retailers have focused heavily on digital customer experience and development of mobile and these areas have grown significantly providing those who have done it well with reams of benefits,” summarises Bhavesh Unadkat, management consultant in retail customer engagement design at Capgemini, which sponsored the IMRG research.
A key difference could be in the obsession that purely ecommerce businesses have with customer data and how it can be used to improve service and drive sales.
“Whether physical, online only or multichannel, the retailers that will succeed will be those that best use data and insights together with providing a seamless relevant customer experience to their customers,” predicts Mr Unadkat.
IMRG began tracking the performance of multichannel retailers distinctly from online-only etailers in 2010. In the first two years of the decade, multichannel retailers growth far exceeded online-only businesses.
But the online-only retailers have been powering ahead far faster since July 2015, with the difference in year-on-year growth rates reaching a full 20% points in November 2015 compared to the same month in 2014 – almost five-times the rate of multichannel retailers.
For the latest month monitored by IMRG, June 2016 versus June 2015, the divergence between these two groups increased again, resulting in a record 23% difference in year-on-year growth rates.
The online-only retailers also recorded the highest annual growth to date, with e-retail sales up 32.4% compared with June last year.