Online – Trying to get a sense of proportion

Too many commentators seem to lose all sense of perspective when it comes to talking about online. They seem to think that a good online service will cure all other evils. Typical of this sort of comment is that M&S poor recent sales performance is entirely down to its problems online. And to back up this assertion they can quote the excellent performance of Next where sales growth has been stronger online than in-store and it has been for years.

Yet it is worth pointing out that Next's online proportion is very similar to John Lewis', in spite of the fact that Directory is approaching its 30th anniversary and John Lewis has been trading online for little more than 10 years.

So we think it is worth repeating some basic truths about online.

1. Is it necessary to have an online offer?

Yes, we think it is. Online is primarily a service to customers and that is how it should be seen. It is to make it as easy as possible for customers to buy. That is not to say that it is essential – as Primark proves. But we do think that customers should expect a top quality online service, tailored to the device used. It does not matter how customers choose to buy, so long as they do so.

2. The corollary

It is therefore becoming increasingly artificial to make a distinction between online and offline sales. A store based retailer makes sales because its stores are the marketing for the whole business. The vast majority of online buyers from that business buy because they know what the retailer stands for and what its strengths and weaknesses are. There is a flow the other way, but very few people. Buy in John Lewis just because they are impressed with the website.

3. Drawbacks

It's worth remembering that online has its drawbacks. Online shoppers spend less. That is very obvious in food retailing where 18% tell us that they do their main grocery shop online and yet online takes under 5% of all food retailers sales. There are similar, though less extreme figures in fashion. The problem is that websites are not easy to browse. People who shop online generally know what they are looking for and when they've found it, they will buy. It is very hard to make opportunistic sales online - there is no passing trade.

The elephant in the room

We've got this far and have yet to mention the most important fact of all. Retailers succeed if they have merchandise that people want to buy. That is the single most essential thing about retailing. There are numerous other factors which may help enhance sales or whose lack may hinder them, but if the merchandise is unattractive, people won't buy. We have all seen shops on sale before Christmas which are still empty because of the heavy discounts.

M&S had a bad Christmas, not because it lacked an online offer, but because its merchandise did not appeal to enough people. Its problems online may have made matters worse, though its online share is not very large (8% of group revenue, though almost 20% of general merchandise sales in the UK in 2013/14 and a third of that is in homewares) so any adverse impact would have been quite small. Online is a service to customers and not a driver.

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