There is now a clear consensus that the rise of online retail is not killing the UK high street. In fact, in some cases, the internet is helping to promote the need for retail space as the boundaries between online and bricks and mortar become increasingly blurred.

Multi-channel retailing is the key word in the industry as retailers see that physical stores can have a positive impact on their online sales. Indeed, multi-channel retailers are tending to report stronger online sales growth than their pure play counterparts: 21 per cent year-on-year as of June 2015 as opposed to 13 per cent.

This outperformance is set to continue. Click and collect is one of the fastest growing segments of the retail market, accounting for an estimated 18 per cent of total online sales last year, four times what it was in 2010. In 2014, 44 per cent of retailers offered click-and-collect services, the previous year it was 32 per cent. This growth has come as both the consumers and retailers see the benefit of being able to order online and pick up in store.

It has also been reported that some retailers have found that opening a new store has resulted in an increase in online sales. And it is this relationship between online performance and physical stores that is starting to attract pure play retailers into multi-channel retailing: our research shows that 22 retailers have already made the transition, either with stand-alone units or concessions, such as Screwfix and more recently Misguided.

One of the biggest moves into bricks and mortar has been made by China’s biggest online retailer, Alibaba, which has taken a 20 per cent stake in the ‘physical’ retailer, Suning. This is a collaboration we will definitely be watching as it will allow Alibaba customers to experience the product first hand and collect the item from store with the whole transaction process taking place on-line.

We expect this trend, known as online-to-offline (O2O), to gather pace – and that means that we are likely to see more pure play retailers entering the occupational market in some form over the coming years.

Further information

For more details, contact Savills Retail.