High street stores are predicted to drive 89% of all retail sales, whether online or offline, by 2020 according to research released today by O2. The Future of Retail report identifies that retail sales of up to £338.5bn will be influenced by the presence on the high street by 2020, but that without stores, online sales would plummet by as much as £52bn, illustrating the value of a physical store presence to the UK economy.

Whilst the increase in online spending comes at the expense of sales in physical stores, this doesn’t signal the much-lauded death of the high street. Instead, the report shows the extent to which the high street will impact overall retail sales and why it cannot be ignored. As people shift from bricks to clicks, the relationship between online and high-street retailers is evolving as retailers create a world where experiences flow naturally between home and store, street and aisle, mobile and market.

Technology is breathing new life into the high street. With more and more people shopping on their smart phones and tablets, stores are no longer just about buying.
Feilim Mackle, O2

As online sales increase, the role of the high street store will evolve, provoking counter-innovation from brands and an increase in the “show rooming” trend where stores become experience rather than sales led. The report shows that quarter of all shoppers are hitting the high street, no longer to buy, but to socialise with friends and family. Half (51%) of us go to shops to be entertained, a third (33%) to eat out and three-quarters to be inspired.

These results show there is a clear opportunity for retailers to continue to introduce social spaces and turn shopping into a source of entertainment – the latest form of leisure. As a result, stores will see an increasing focus on engagement, providing the shopper with tactile and sensory experiences which cannot be replicated online.

With the majority of adults already owning a smart phone, coupled with the introduction of 4G last year, the number of people shopping on their mobiles whilst in-store is expected to soar by more than 1,000 per cent by the end of the decade. The result is likely to be a blurring of boundaries between high street and online as brands become truly multi-channel, harnessing online, in-store, mobile and social platforms.

Savvy retailers can also strengthen customer relationships, and increase interaction, by creating spaces and experiences which will inspire consumers to share their shopping experiences either by commenting, photographing or broadcasting their in-store interactions via their social networks. Retailers who seamlessly connect the in-store and online experience will see the biggest gains with the savviest taking the opportunity to deliver timely, tailored offers and discounts direct to the palm of our hands.

This seamless integration between online and offline shopping will continue to put the high street at the heart of customers’ online experiences; 85% of online shoppers return products in store and 75% go to stores to collect products bought online. The popularity of click and collect is expected to increase further to 2020, growing by 260% to 7% of all retail sales by 2020.

Physical stores also play a key role when it comes to customer trust. When asked to rate how highly people would trust different types of retailers across a number of areas, those with physical stores were trusted 30% more than those only online. With more than three quarters (77%) of shoppers going to stores for advice, in-store staff are increasingly relied upon to be experts, rather than sellers, who are rewarded for giving shoppers a memorable in-store experience.

Feilim Mackle, Director of Sales and Service at O2, comments: “Technology is breathing new life into the high street. With more and more people shopping on their smart phones and tablets, stores are no longer just about buying. They are becoming go-to destinations for social, inspiring and rewarding experiences that ultimately drive sales online.

“Retailers have to recognise that the high street store is here to stay but its role has fundamentally changed. As the distinction between digital and physical becomes increasingly outdated, the brands that truly embrace technology to create a seamless experience for all their customers, wherever they choose to shop, will ultimately win the greatest share of both sales and customer loyalty.”

Topshop creates virtual front row for Fashion Week 2014
In 2014 Topshop used its flagship Oxford Street store to bring the high fashion catwalk experience to the high street. Footage from the Topshop Unique catwalk was live-streamed to the Oxford Street store, giving shoppers the opportunity to be inspired by the latest collections and gain access to an otherwise out of reach experience. Sir Philip Green, CEO of Arcadia Group commented “This season’s live stream in virtual reality takes the idea of the traditional fashion show to a new dimension, as we continually look for new ways to engage, excite and involve our customers.”

eBay trials new click and collect service with Argos
In September 2013, eBay, one of the world’s largest online marketplaces and Argos, the UK’s leading general merchandise retailer, joined forces to offer a new Click & Collect service, enabling shoppers to purchase products from selected eBay merchants and pick them up at Argos stores throughout the UK. The trial allowed shoppers to shop anytime, anywhere and on any device. Devin Wenig, President of eBay Marketplaces commented “Traditional retail isn’t going away; it is transforming. Smart retailers are innovating, reimagining the store and what it means to shop. This exciting pilot takes us one step nearer to our goal of offering customers an inspired and seamless shopping experience.”

To view O2’s Future of Retail report, click here.


Notes to Editors
The financial impact of personalising the shopping experience has been calculated by independent retail analyst, Conlumino, using consumer profile data, estimated average annual spend information combined with data on the number of customers who would respond positively to personalisation.

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