On-line retail just as costly as shops: ICSC conference hears

The high costs of transport and returning products make selling on-line no cheaper than running a traditional store, delegates at ICSC's European Research Seminar in Copenhagen heard last week. Customers spend four times more in-store than online, according to research, confirming the importance of shopping centres and high streets to Europe's economy.

Jon Bjornsson, CEO of Danish department store chain, Magasin, which is expanding its multi-channel offer, said costs saved on rent were absorbed by higher transport and goods returns costs incurred by online retailing. 'Around 2% of goods bought in our shops are returned, but that can rise to 25% with goods bought on-line, especially for online clothing retailers where customers may order two or even three sizes, sending back the ones that don’t fit,' he said.

This is welcome news for shopping centre investors and asset managers who have felt increasingly threatened by traditional retailers expanding on-line. However, a multi-channel retail strategy is essential for retailers whose customers expect to see their favourite brand or retailer everywhere they look, he added. Retailers are indeed boosting 'click and collect' facilities as they recognise that on-line shoppers often prefer to collect from a store, frequently adding to their purchases when they do so.

There are other issues for retailers expanding their offer from traditional stores to on-line, including a higher expectation from customers. From changing stock seasonally, customers now expect new products five or six times a year. Magasin's Bjornsson added: 'Customers expect the selection in an on-line shop to change faster than in the physical store.'