How bike shops can benefit from the forecasted decline in online sales

Internet sales accounted for 18 percent of all retail in 2017, says the UK’s Office of National Statistics, and this is a one percent rise over 2016. But, according to one highly-regarded sales data firm, growth of online sales is expected to slow down this year. 

IMRG collects sales data from over 170 retailers each month and, along with consultancy firm Capgemini, its longstanding IMRG Capgemini e-Retail Sales Index is predicting a dip in online sales in 2018. Its latest monthly report revealed that "online retail shows signs of a maturing market with a tough 2018 to come."

The Index performance in 2016 was largely driven by strong sales growth through smartphones, but this slowed in 2017, said a statement from IMRG. Growth through tablets has also stalled, and 2018 growth is expected to slow down further for all devices.

IMRG MD Justin Opie said: “A decline in the rate of online sales growth in 2017 was forecast, though it turned out to be sharper than expected. The macro economic factors – rising inflation, low wage growth, rise in the interest rate etc – are likely to have been influential and the first half of 2018 may be challenging too; discounting in the lead-up to Black Friday started deep into October in 2017 and have been widely available ever since.

Opie continued: “It may be that retailers will now find themselves caught in a cycle of discounting, which also happened in 2011 and 2015 and will probably extend long after the January sales, as the trading climate is tough at the moment. That said, 2018 does look set to be a transformational year for retail – with an increasing use of AI services anticipated plus the rise of ‘browserless commerce’ (through devices such as voice assistants). It may be that we see shopper behaviour shift significantly over the coming period.”

Capgemini’s principal consultant in retail customer engagement Bhavesh Unadkat agrees that 2018 will be "volatile" for retailers but that bricks-and-mortar stores have some key advantages over online-only businesses:

"One opportunity for growth and differentiation will come from emerging technology as we saw as a focus in 2017 – voice and social commerce, connected devices and AI all drove interest and investment and will continue to do so – the big challenge will remain as how to drive value and industrialising this capability. 

However, he adds, "there is sometimes so much focus on technology and innovation we can forget retail basics – ensuring the product mix is right, availability is on point, the shop front is one to be proud of, and ensuring the team are well equipped to give customers the best service can be just as important."

The key, believe many experts, is the interaction between real-world stores and shop websites. Click-and-collect will grow in importance, but then so will "showrooming", giving customers the chance to touch, feel and see up close the products they’re thinking of buying.

This was highlighted in yesterday’s story on BikeBiz about FunkedUp, a previously online-only fixie retailer that has now opened a physical presence in order to give customers the touchy-feely experience that only a real-world retailer can offer.