E-commerce is on the decline. What does this mean for indies?

14 December 2022, 09:54 AM
  • Over the past 12 months e-commerce sales have begun to decline, with bricks and mortar back on the agenda
E-commerce is on the decline. What does this mean for indies?

According to Charles Allen, global retail analyst at Bloomberg Intelligence, “E-commerce sales in the UK, as measured by the Office for National Statistics (ONS) have dropped every month this year.

“This is true of all the sub-categories – clothing, non-specialised, household, other, non-store (online only) and food – in all months.”

But what does this mean for independent high-street retailers such as delis, cheesemongers and bakeries?

The decline of e-commerce
Shoppers are returning to the high streets, but have they simply had enough of shopping from their sofas or is the retail landscape changing once again?

According to Andrew Goodacre, CEO of the British Independent Retail Association (BIRA), “For many years people have been writing off the high street, citing the trend towards online shopping. 

“However, since the end of Covid, and high streets being fully open, we have seen a decline in online sales as people return to the shops. This does not surprise me given the renaissance in local shopping, the growth of hybrid working and the greater appreciation of supporting the local economy. 

Emma Jones, founder of Enterprise Nation, agreed, “We’re seeing a wider trend towards omnichannel retailing via high street pop-ups, regular events, online marketplaces as well as via traders’ own website amongst the product-based start-ups, micro and small businesses we support. 

“The huge boom in e-commerce over the pandemic followed by the cost-of-living crisis and industrial disruption has meant customers are now looking for affordability as well as sustainability. We see this as a positive thing for independent retailers in the longer term who offer much more to their customers than an anonymous box through the door.”

But according to Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), “A dip in e-commerce won’t necessarily mean lost online sales will turn up in shops, as there are signs now across the board of people tightening their belts due to the increased cost of living. There cannot be any complacency when it comes to helping our high streets to make it through a tough winter and then thrive.

“Our traditional high street staples, like butchers, cheesemongers, and bakeries, are currently facing an uphill battle with a hike in energy bills, increased rents, and runaway inflation.”

Capitalising on the drop
According to Emma, fine food retailers can grasp this opportunity with both hands and capitalise on the drop in e-commerce. 

“By making use of pop-up shop initiatives, street food events or local markets, small food retailers can focus on meeting their customers in an affordable way and testing and marketing their products through local outlets.” 

For Andrew, “I believe we are seeing a ‘re-set’ and I still believe that high street businesses, including delis and food halls, need to embrace digitalization to both better engage the consumer and improve the in-store experience.”

The future of the high-street
With e-commerce on the decline, this could mean that high streets have the opportunity for a comeback in the near future. 

“A recent survey by the ONS found the exodus of large department stores from our high streets has been somewhat mitigated by the rise in new, small, independent food outlets and cafes

“While the rise in energy bills will certainly impact this phase of growth in the short term, it’s good to see a resurgence of support for independent food producers and start-up hospitality businesses making our high streets a destination for shoppers again. 

“What we need to see now is for landlords to make sure their stores are accessible and suitable for this new breed of short-term, pop-up and small independents who are looking for the right space to grow a business.”

But it will take intervention and help from both the government and consumers, as Tina added, “If we want to see vibrant, bursting high streets everyone values and loves, we need everyone to support them. 

“Local authorities can agree on free parking in the run-up to Christmas; consumers can choose to spend their hard-earned money in local community businesses; large businesses can pay their small firms promptly, and government ministers can agree on the future of the Energy Bill Relief Scheme which is due to end in March. To get these right could see the small business community grow once again, after two years of contracting.”

Andrew concluded, “The high street, and specifically independent retailers, have a vital role in supporting the local community, and if they do it well, they will thrive in the future, and we will continue to see vibrant, diverse places for people to enjoy.”

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