E-tailers get physical as online sales set to level out

Online sales growth is expected to slow over the next few years, a new report has claimed.

Global real estate advisor Colliers International claimed that by 2021 the rate of growth in e-commerce sales is predicted to fall from the current level of 11 per cent to seven per cent.

This, said Colliers, is creating a growing trend among pure-play online retailers to open physical retail spaces, which some are referring to as ‘showrooming’.

The primary intention of these showrooms, said Colliers, is not necessarily to generate sales but reinforce customer loyalty online.

The growth of pure-players on the high street is being supplemented by a growing number of brands that previously sold through stockists now selling direct to the end user through their own store networks, such as Samsung, Dyson and Volkswagen.

Paul Souber, Colliers co-head of Europe, Middle East and Asia retail, commented: “With the rate of web sales forecast to level out over the next four years, many e-retailers have identified ‘showrooms’ as one of the remedies to a decline in profits.

“Increasingly ‘showrooms’ in physical shopping environments generate online sales, raise awareness of their company, promote brand loyalty and offer the customer an opportunity to see, touch and feel the products.”

His fellow co-head of EMEA retail, Etienne van Unen, added: “Because showrooms are often located in a non-prime property and in units that would not appeal to mainstream retailers, the rents they command are often acceptable to both landlord and occupier.

“The landlord is letting a property that may have been problematic or not in demand and the pure-play is getting a lower rent than they would pay for a mainstream store.”

Head of forecasting and research at Colliers, Mark Charlton, said: “The trend for ‘pure-plays’ to take physical stores will undoubtedly accelerate as increased online competition and lower rates of sales growth requires them to find a competitive edge.”