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Independent retailers fear rise of online sales

By Retail Technology | Friday September 6 2013

Rise of 'showrooming' trend leads smaller High Street retailers to see the internet as a threat that requires an online sales tax

Independent retailers see rising online sales as a major threat to their business and believe a tax on e-commerce merchants is necessary to level the playing field, according to the Autumn Fair Retail Sentiment Survey 2013.

The proportion of independent retailers fearing the threat of rising sales from e-commerce rivals is up from 22% to 37% over the past 12 months, according to the survey, which is one of the largest annual surveys of independent retailers in the UK.

Mobile product research impacts loyalty

Their fear is based on a perceived increase in 'showrooming' - when customers photograph and research products on their smartphones instore to buy them online at a lower price. The survey found over half of retailers at 55% have seen an increase in showrooming over the past year.

As a result, a similar proportion of those surveyed (53%) believed e-commerce merchants should have their sales taxed in much the same way as bricks and mortar shops have to pay business rates, despite the prospect recently being ruled out by the Treasury.

Yet independent retailers are doing little to jump on the e-commerce bandwagon themselves, as the number earning revenue from online sources has fallen over the past year. Nearly two thirds (65%)of retailers earned less than £1 in every £10 out of online sales over the past 12 months, up from 44% in August 2012. This is in marked contrast to their hopes a year ago, when they hoped e-commerce would make up over half of their sales by 2015.

Capitalising on e-commerce wave

Nick Davidson, director of Autumn Fair 2013, said: "It is clear that online retailers are seen as a threat to traditional, bricks and mortar stores. But if you can't beat them, join them: independent retailers need to think about how they can spruce up their websites to ride the crest of the e-commerce wave.

"They should also be thinking about how they can use their assets to their advantage. Customers often want to buy high-quality goods in person, which means proactively promoting high quality stock through attractive window displays, running customer competitions and raising the profile of your stores through getting involved in the community. Independent retailers need to put their best foot forward if they are to survive in this tough economic environment."

Although nearly half of retailers surveyed run discount schemes or loyalty programmes to attract more custom, an almost equal amount at 42% do not run any such schemes or competitions.

Retailers believed a cut in VAT is the best solution to improving the overall health of the High Street (57%), followed by government investment into the retail sector (50%) and the freezing of business rates and lower car parking costs (cited by 45% each).

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