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Gift sales soar online; shopping frustration; time for reform

Alan Monahan writes: While UK online retail sales rose a respectable 12% year-on-year in January, the gifts sector was at an eight-year high – up a staggering 62% YoY, according to IMRG and Capgemini.

The average basket value (ABV) for online retailers was recorded as £85 in January – up from £79 a year earlier and making it the highest value for that month since 2010.

And although multiple sectors – including gifts and accessories – recorded a rise in ABV, electricals dropped 12% on January last year as its online sales also fell for the second month running.

eMarketer says that if you ask consumers worldwide what frustrates them most with retail stores, there isn’t really one thing that annoys them above all else – aside from the difficulty of comparing products in-store. Instead, they are irritated by a combination of things. And the litany of complaints isn’t short.

Two-thirds of respondents surveyed by Capgemini said they were frustrated with long lines they faced at checkout counters. Some 65% moaned that bricks and mortar stores didn’t personalise discounts or promotions, while another 65% said they were annoyed that they couldn’t locate products. Almost as many commented that they didn’t appreciate the lack of in-store help.

eMarketer says that shoppers expect a lot from physical retail stores – and more and more those frustrations seem to be influenced by service they take for granted online. According to the same Capgemini survey, three-quarters of internet users said they expect retail stores to have the ability for them to check product availability before they visit that store. And nearly as many respondents said they expect physical retail stores to offer same-day delivery of products purchased in-store.

And it doesn’t end there.

Sixty-six per cent want stores to offer loyalty points for spending time in-store and visiting that retail store again. Others (68%) want physical stores to offer lower prices with a store membership – like Amazon Prime offers online. And they want more on offer than just shopping: 57% want the store to offer additional activities.

Retailers will be hoping for some good news on business rates this coming Wednesday when Philip Hammond rises in the Commons to unveil his spring Budget.

The British Retail Consortium, along with a number of other trade bodies, has signed a letter to MPs that highlights the detrimental impact of the existing system. It has raised the fundamental issues that government has yet to address and believes these should be re-explored in a revised business tax road map.

Despite last year’s review, retailers will pay an additional £2 billion over the next three years, compared to the last three years. BRC chief executive Helen Dickinson is hoping that the Budget will see a commitment to ease the burden across the board by bringing forward the switch from RPI indexation to CPI so that rates better reflect economic conditions.

She also wants the Chancellor to take the opportunity to ensure businesses large and small receive business rates reductions following the revaluation immediately, and implement the same protections for those facing large increases that were in place during the last revaluation in 2010.

Dickinson is further calling on him to ensure businesses pay no more than their fair share by abandoning its attempt to limit the ability for inaccurate valuations to be overturned by the Independent Valuation Tribunal.

I would be surprised if Mr Hammond delivers on all fronts, but he owes hard-working retailers more than just promises and platitudes.

As Dickinson says, another sticking plaster that provides limited targeted relief is counterproductive to dealing with the underlying problem caused by revaluations which take place too rarely to flex with the economic conditions.

It’s time for the Government to commit to fundamental reform of the system, making it fit for the 21st Century.