Wednesday, 11 June 2008

Internet - the death of shops?

Mark Chirnside (Chief Executive Officer at Ukash) makes some interesting observations in a piece that he has written for the Retail Bulletin today. He reminds us of the forecasts in the 1990s, at the commencement of the boom, that many believed that the end of the high street shop was coming shortly. Some of us never did believe it but there is strong evidence, according to what Mark Chirnside is saying that some of the largest store groups were completely wrapped up in this Wilsonian 'heat of the technological revolution' thinking.

The technology certainly arrived in a truly revolutionary manner and there is no denying that a substantial amount of retail trade is carried out online but, as Mark Chirnside comments, there remains a substantial cross-section of the population who are not on-line; I would go further and say that other factors are also at play in this scenario - with the current development in the mortgage lending in the UK where a growing number are moving into negative equity and a further number being subjected to repossession, the worries about personal credit will inevitably drive down the ardour for spending on-line. In fact I can foresee a small but measurable upturn in the use of cash, which goes against the trends of the past decade, and which proves tricky to those wishing to make use of the on-line bargains that Chirnside uses in his argument.

The piece which prompted this blog was primarily about on-line useage and the fact that Sainsbury's have had to acknowledge that having trumpeted about having only on-line job applications have now had to make a concession and install terminals for making these applications in stores. It does however, also raise the issue about growth in on-line trading and how this might pan out during this current retail down-turn. We know from past experience and current turnover eports from the retail press that the value food sector with retailers such as Lidl are performing at a higher than previous level and that the premier brands are not growing their turnover at the same levels as before. It seems to me to be reasonable (without a shred of empirical evidence to support it) to assume that these factors will be reflected in consumer attitudes and spending on-line as much as appears to be happening in physical shops. Does this signal the end of trading? Of course not, but here in the UK the sophistication of the population is often underestimated, the customer will respond to whichever channel they have access to, that they have confidence in and which does what any retail activity must do - to provide the right goods at the right time at the right price and in a customer friendly manner.

Personal experience of on-line shopping has provided me with prima facie evidence that at least one major on-line retailer is absolutely hopeless in providing the sort post-sales after care that a physical shop is able to do. OK! So that's another issue for another blog at another time. For the moment I must lock myself away in a darkened room to ponder how I am to get this message out to all those folk who are currently not on-line - I wonder if Sainsbury's will give access to my readers through their in-store terminals?

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