Sales for online-only retailers, such as Zalando, Boohoo and Asos, have grown 24 times faster than bricks-and-mortar retailers between 2012 and 2017, a new study has found.
Between 2012 and 2017, pureplay online retailers grew their sales by 281% on average while bricks-and-mortar retailers’ sales increased by just 11.8%.
The study by location intelligence data specialist Loqate found that bricks-and-mortar retailers are planning to grow their number of physical stores by 12.1% over the next five years, despite being outperformed by online-only competitors.
One in four bricks-and-mortar retailers with international stores, such as Gap, will not keep up their sales growth with the rate of projected physical store expansion by 2022.
The study also revealed that only 40% of the analysed retailers that are likely to expand internationally by 2022 have physical stores. The findings suggest that online presence, rather than physical expansion growth, will be the key driver of international expansion in the retail industry.
However, bricks-and-mortar retailers continue to lead in the volume of absolute sales, and are optimistic about the impact of physical store expansion on their total sales growth. This is despite the fact one-third of retailers that expanded their store portfolio in the last five years recorded decreased revenues over the same period.
David Green, managing director at Loqate, said: “While traditional bricks-and-mortar brands remain the lifeblood of retail, the role of the physical store is evolving as many purchases now start in-store and finish online.
“For instance, after trying on clothes at your local John Lewis, you might go home and order the one you like online. This trend will become even more pronounced with the proliferation of virtual personal assistants, same-day deliveries and more shopping taking place through a device in the pocket.
“Our research suggests that online offers are growing at the expense of offline. As such, the size of physical store footprint will no longer be the central strategy to increasing retailers’ revenues and international appeal.”