Online shopping is king – high street stores must adapt or die

Graham Ruddick
Telegraph UK

Shopping via the internet is no longer just an up-and-coming challenger to the high street
The online shopping revolution hasn’t actually been a revolution. The internet and smartphones have certainly changed where we shop – instead of trudging to the high street, you can now order any product you want from the comfort of your own sofa.
But online shopping has not changed the nature of shopping itself.You still choose a product you want to buy, pay for it, and then wait to collect it or have it delivered. This process is exactly the same in a shop as it is online, even though it feels different. Indeed, is online shopping that different to catalogue shopping, which has been around since the 1980s? You could do that from the sofa, too, albeit with less choice.
However, in the past fortnight there have been three announcements by online retailers that really could revolutionise the way we shop. Each of these new initiatives harnesses the new technology at the disposal of retailers to offer shoppers something they haven’t had before.
In very different circumstances, Napoleon Bonaparte once said: “A revolution is an idea that has found its bayonets.” For online shopping, it could be these three initiatives that power the revolution.
“Pick your own offers” by Waitrose
This promotion allows members of the myWaitrose loyalty scheme to choose 10 products on which they will enjoy a 20pc discount every time they shop in Waitrose shops and online.
Even for cynics who suggest that Waitrose’s new initiative could mask price increases elsewhere and is only eligible on 1,000 products, “pick your own offers” is a clear example of how retailers are handing more power to shoppers. They will pick the products on which they seek a discount through the Waitrose website, and these will be fixed until the end of August.
Mark Price, the boss of Waitrose, has called the scheme “groundbreaking” and a “game changer”. However, he also admitted it is a “gamble”, adding: “It could be very, very expensive.”
Whether the initiative takes off or not, it shows how closely retailers can now interact with shoppers, thanks to technology. Customer loyalty can now be rewarded in different ways, making cards that simply offer points – such as Clubcard – look hopelessly outdated.
Amazon’s membership scheme, Prime, is further evidence of this. Prime members, who pay £79 a year, get access to Amazon Prime Instant Video, Kindle books and lower delivery charges.
Retailers expect “personalisation” to become more critical. The homepages of websites and apps will be tailored to show products that appeal to specific shoppers, and special promotions will be offered to individuals.
At present, the best a high street shop can do is stock products it knows will appeal to the local community. But online retailing will allow shoppers to have an individual experience tailored to their own demands, which will save them time and money.
Amazon Prime Now
The potential repercussions of Amazon Prime Now – enabling shoppers in London to receive orders within an hour – are that it destroys everything we understand about the differences between online and high street shopping.
We have been told that the strength of physical high street shops and supermarkets is that they are convenient. If you need a product urgently, then you still have to go to a shop, because an online order may not arrive until the next day, at best. Also, a weakness of online retailing is that to get your order you either have to wait at home all day for it to be delivered, or traipse to the local shop to pick it up.
But if Amazon can deliver products in an hour, to a destination of your choice, then suddenly the internet becomes the most convenient form of shopping.
At present, Amazon Prime Now is limited to east London and roughly 15,000 products. But it will be available across the rest of the capital within weeks and will spread to other cities by the end of the year. The number of products available for one-hour delivery is also likely to grow quickly, according to the retailer.
Amazon is frighteningly ambitious, so this is just the start. The company’s notorious drone testing programme is also part of its plans to get products to shoppers quickly.
An example of the upheaval Amazon Prime Now could cause was shown by the first products to be ordered in the UK. A holidaymaker, presumably in a last-minute rush, used the service to buy emergency supplies of deodorant, sun lotion and lavatory paper.
John Lewis to charge £2 for click and collect
At face value, charging for click-and-collect looks a backward step for a retailer. However, it is the opposite. It is a recognition that online shopping and click-and-collect have become central to a high street chain.
John Lewis expects online sales to account for roughly half of its trade in the near future, with half of those shoppers collecting their order from a John Lewis or Waitrose store.
Andy Street, the boss of John Lewis, said that the business model for online shopping was becoming “unsustainable” and “bonkers”, pointing to the demise of delivery firm City Link. As a result, the retailer will charge £2 for click-and-collect on orders of less than £30.
There is an adage in retailing that “anyone can give it away”. But delivering products to customers – whether to their home or local store – clearly costs money. Offering delivery and click-and-collect for free may attract shoppers, but is suicide for a business in the long term.
Street and John Lewis are banking on the fact that shoppers will “understand” this and not rebel against the charge. The early feedback from Telegraph readers is split, with some pointing out that they are effectively paying to make sure their product is in stock at their local store.
But either way, the charge is proof that online shopping is no longer just an up-and-coming challenger to the high street, it is at the heart of every retail business, and established chains must change to survive.

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