Three-quarters of the UK's top 60 retailers still favour physical stores over online according to a study of retail growth strategies. If asked to choose, only 25% said they would operate solely through a website.
Yet despite retailers’ clear support for their shops, the TLT Retail Growth Strategies Survey 2014 reveals that nearly all will invest in online and mobile channels over the next year. They also rank these as the most important areas for investment.
Mobile payments are viewed by half as offering the best prospects for growth and nearly three quarters are looking to use it in the future. iPads in-store and apps for customers are high on the agenda for roughly half of retailers.
Perran Jervis, head of Retail & Consumer Goods at law firm TLT says, "Retailers clearly still see the benefits of a physical presence. But our work for retailers tells us that the store's role is changing. With savvy customers now using various channels simultaneously to research and buy, retailers have to respond. For many, the response has been to invest in stores as well as technologies that link on and offline.
"Stores are no longer just places to browse and buy, but an increasingly critical link in the retail chain. We are seeing even pure-play e-tailers setting up shop on the high street to meet consumer needs.
"Stores help build brands that drive online growth. They are the billboards that advertise to passers-by and, with the growth of click and collect, they help complete the sale. They are also important for retailers looking to expand internationally. The brand power of a London store can help to drive growth in Asian markets. It's not surprising that a physical high street presence is now back on the agenda - it’s an integral part of omni-channel retailing.
"As predictions that TV would be the death of radio proved wrong so, it seems, are the doomsday scenarios for the high street. Its surprising saviour is the online world it has traditionally been pitched against."
The survey also reveals that, despite retailer's support for the high street, it is still under pressure. Three-quarters of those questioned say the Government could do much more for the sector with concerns over parking charges and local business rates are highlighted as significant barriers to growth in the UK.
Making overseas retailers pay corporate tax to fund a reduction in business rates was also supported by an overwhelming majority.
Overall, the retailers surveyed, which account for 71 per cent of all retail trade, are “fairly upbeat” about prospects for growth this year. Most think the worst is over and predict an improvement in trading conditions. Electricals, entertainment and beauty are cited as sectors most likely to drive growth.
However, there remain concerns about the impact of high levels of consumer debt and increasing energy prices on retail spending.
The in-depth study also shows the continued march of strong British retail brands abroad. More than one-third of retailers plan to expand in 2014, with most using cash reserves to fund expansion. China and Germany are the two countries cited by most retailers as providing strong growth opportunities for UK retailers. China's consistent growth obviously appeals, but perhaps the German opportunity is buoyed more by its proximity and economic stability.
Over three-quarters see online as the most important route to overseas expansion in the next five years, with overseas store openings becoming less popular.
Perran continues, "Retailers are saying that now is the time to invest with a clear fear that failure to do so could impact growth. But they're treading much more carefully this time around."
"Expansion plans are focused on 'less risky' web and mobile offerings. They do offer huge opportunities for growth and improved service for customers but they aren't without their risks and shouldn't be seen as the easy option. Product, price and convenience still apply in the online world, but with the added complexities of regulations around issues such as data usage, distance selling, payment methods and fulfilment."