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As Shops Reopen, What Does This Mean for Online Retail?

Online retail had been growing steadily for well over a decade. But when the Covid-19 pandemic led to ‘stay at home orders’ and lockdown restrictions across the globe, the impact on eCommerce was dramatic, immediate and significant.

Total retail volumes fell whilst online retail sales grew. According to the ONS, in 2020, total retail sales volumes in the UK fell by 1.9% compared with 2019, the largest annual fall on record. However, online sales rose to a record high of 33.9% as a share of all retail spending, climbing from 20% pre-lockdown in February 2020. 

New product categories were suddenly purchased online. A 2021 report from Retail Economic and Natwest found that, since the pandemic began, nearly half (46%) of UK consumers bought something online that they had previously only purchased in a physical store. In the UK, Amazon sales grew an almighty 51% in 2020 to reach $26.5bn (£19.4bn). 

The impact has been seen globally too. A report by SEM Rush published in July 2020 found that overall retail websites generated almost 22 billion visits in June 2020, up from 16.07 billion global visits in January 2020, an uplift of 37%. This surpassed even holiday season traffic peaks.

Online retail has boomed in the Covid-19 economy, but as the UK opens up, what does this mean for online shopping long-term?

How can eCommerce adapt as we replace on-screen time with in-real-life interaction?

 

Embracing the new hybrid model

We are undoubtedly facing an imminent shift in consumer behaviour. In the first sign of change for online retail, eBay’s shares dropped 7% last week as investors fear the pandemic-induced boom is coming to an end.

In-person experiences are more important than ever, as we seek to rebuild relationships and lost communities. The drive to rediscover physical locations and stimulate our senses will increase over the summer months as more people across the country are vaccinated.

But this isn’t necessarily bad news for eCommerce. Online retailers and marketplaces are in a stronger financial position than traditional retailers and have the leg up as we leave our homes. This strong standing gives them the flexibility to explore blended channels, to experiment with pop-up stores and brand experiences.

High street retailers are disadvantaged, even as footfall returns. Those with no online presence will have experienced substantial financial lows this past year and will be facing one of the greatest uphill struggles they have ever experienced.

It has long been assumed that for the high street to survive, physical stores need to digitise. I believe that ship has sailed. The new high street will be online-first, led by the big eCommerce players who see physical retail as a channel to provide enhanced, in-real-life experience to loyal shoppers.

 

From online to IRL

Pre-pandemic, there were many online-first retailers and marketplaces getting this right. In 2019, Glossier launched a pop-up in London which was intended to become a permanent store after welcoming over 100,000 shoppers in just two and a half months. 

In the spring of 2020, the Glossier store closed due to impacts of the pandemic. In a statement on the matter, CEO Emily Weiss shared the company’s strategy for integrating offline and online experiences:

“As a digital-first company, we have always viewed our offline experiences as a channel for connection and community, and that mandate has not changed. We will keep working to find new formats for bringing joy to our community in this current environment, while reimagining Glossier retail for the future so that we can reopen with renewed creativity, energy, and scale when it is safe to do so. And we’ll continue to focus on delivering an engaging customer experience on our primary channel, e-commerce, at a time when beauty shopping and discovery are rapidly moving online.”

Depop ‘Live’ is another great example of how marketplaces can deliver memorable in-person experiences for buyers and sellers. The fashion marketplace has over 13 million users worldwide and prides itself on a strong and creative Gen Z community. 

At its debut Live event in New York, the company invited 50 of its bestsellers to set up shop within Depop's rented space. Shoppers were entertained with music, art installations and workshops. Panel events discussed sustainability and activism in the fashion industry, and how to build a successful business for sellers. According to a spokesperson for the company, Depop Live welcomed more than 3,000 visitors in two days and made tens of thousands of dollars in sales. 

And it’s not just female-centred Millennial and Gen Z brands that are playing in this space. In 2019, Amazon launched ‘Clicks and Mortar’ in partnership with Enterprise Nation, opening 10 stores across the UK. The year-long pilot programme was set up to explore a new model to help up and coming online brands grow their high street presence. eBay also launched a pop-up shop in May 2019 in Wolverhampton, housing small businesses to investigate how stores drive online sales. 

This industry-wide shift to embrace community in a long-term bid to boost sales and grow market share is clear. After a year of ‘staying at home’, those that capitalise rapidly on this approach will likely win. 

 

What’s next?

Creativity, flexibility and community will prevail as shops reopen and the purpose of stores evolves. For the nostalgic among us, it will be sad to say goodbye to the fixtures we’ve become used to, with the likes of Topshop and Debenhams noticeably absent.

But perhaps this regeneration is exactly what was needed, a shock to the system to reboot retail and deliver an altogether greater customer experience.

 

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