Increasing online sales, combined with low levels of retail growth and the shift in market share from homeware specialists to retail generalists, will take their toll on store numbers and selling space with a predicted 4,000 fewer home retail stores by 2015, new research has revealed.
The research, by leading retail analysts Conlumino on behalf of rewards scheme operator, Webloyalty, predicts a 45% increase in online furniture purchases between 2011 and 2015, whilst sales in physical stores will decrease by 9.7% in the same period. For electrical goods, online sales will increase by 11.2% and physical sales decline by 19.3%.
The total loss to the high street of 4,000 stores is equivalent to more than 13.6m square foot of retail space, researchers found.
There is still a future for stores however, said Conluminio. Despite the decline in sales, nearly 80% of consumers still make some of their home product purchases in store. This is especially true of big ticket items, where consumers like to see what they are buying before committing to expensive purchases.
Neil Saunders of Conlumino said: “The stark truth is home retailers need to cut back on store numbers. However, at the same time they need to develop their remaining stores to offer more added value services and provide a more inspirational environment.”
The report predicts the next couple of years will see the rise of the non-specialist store, set to gain a 2.7% share in the home retail market. Some of the major non-specialist retail stores, such as H&M and John Lewis, are actively expanding their home offers. Their rise could signify the end of the specialist big box store. Large, out of town home retail stores may find it a challenge to remain in existence for the long term.
Guy Chiswick of Webloyalty said: “Retailers need to adjust and equip themselves to meet the multichannel world. Larger out of town stores benefitted in the past from exploiting consumer trends, now such stores are facing a mounting challenge to remain relevant in a continuously evolving retail environment.”
“The stores that do survive will become more engaging, often acting as showcases for products and ideas. Marks & Spencer’s new Cheshire Oaks store is a great example. It features a more ideas-led environment with displays being used to convey key trend to consumers. It is this kind of approach that homeware retailers should look to for guidance.”