So the received wisdom about Christmas is that it was an online one. Retailers with good online offers – or perhaps more accurately – compelling multi-channel approaches, did really well, and those without, well, did without,
Thus the march onwards to a virtual future gathered pace and the death knell of more stores and high streets grew louder – Jessops one day, who the next?
But before we all shut up (physical) shop, let’s pause.
In food it is claimed Morrisons did badly because it had no online presence. Yet, Waitrose and Aldi/Lidl did brilliantly because of their stores. There is also a question over the profitability of food online (in a pure sense); does it make money on its own terms or does it have to be seen as a loss-leader for the business – and if so is this sustainable? What is the true extent of the in-brand food/non-food cross-over?
In non-food the transition to online is somewhat simpler and the cost equations clearer. Internet is an always-on, real-time catalogue with souped-up information and delivery. Do it well and it’s obvious why it works – just think Next and the compelling nature of their offer on-line, through catalogue and in-store together.
And it’s this combination with stores that is so interesting, What percentage of the online sales was collected from a store? And what percentage of this was from an out of town store? Reserve and collect seems to be gaining apace, Is online as successful without such multi-channel approaches? For some retailers it seems not. So the growth in online may “simply” be a transfer of store sales to another channel.
And then there’s the question of like-for-like sales. This measure gets a lot of commentary in the press where it is favoured and usually with the rider “this strips out new store openings”. And this is true. But I still don’t like it.
Like-for-like also strips out store closures. And I wonder what happens for example if say Top Shop closes in a town? Are all these sales lost? Or are some transferred to the internet, mobile or tablet? How are they then recorded? Or do some physically go to the Top Shop in the next town or city? As store networks close , so some growth in like-for-like sales may likely be as a consequence of store closures. How much, who knows? And that’s without thinking of the competitive effects of store closures.
So let’s look at the figures with a cautionary eye. Perhaps not a Sainsbury eye on the Tesco figures, but perhaps an ever so slightly questioning one, and not only about the value of like-for like sales if you’ve bought them by slashing margin. Yes, as always there are winners and losers; the big questions have to be whether for some this is temporary or in the latter case terminal, and the reactions of the management to what they see in the detailed figures (was profit maintained or not is an interesting question for say Tesco and Marks and Spencer?).
Finally, and nationalistically or parochially depending on your view, we should point out that we can say nothing, so it seems, of whether Scottish internet sales differ from those elsewhere in the UK., We can speculate that they are higher proportionately than in England, but wonder whether this is right or not?
Increasingly I suspect some of our data sources may as a consequence of this structural shift in consumer behaviour and retailing, be less meaningful on retail sales trends. Sorting our a decent internet sales monitor for Scotland would seem like a good thing to come out of these figures. Here’s hoping!