Internet vs Store-based Shopping: The Global Move Towards Omnichannel Retailing

August 2014

As consumers continue to blend their offline and online activities – from “showrooming” and retail apps to sofa shopping and click-and-collect – the lines between e-commerce and physical retailing are becoming increasingly blurred. As a result, big retailers are taking an omnichannel approach by merging their offline, online and mobile capabilities to create a seamless experience for shoppers. This report studies the impact of these modern shopping trends on global internet sales and strateg

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Consumer behaviour driving internet sales surge

E-commerce and m-commerce have changed the way that consumers, even those who still visit physical stores, approach shopping. The main drivers of e-commerce include:

  • the search for value and convenience
  • increased access to, and usage of, the internet
  • faster download speeds;
  • improved delivery and online payment methods
  • the shift towards mobile devices such as smartphones and tablets.

Global internet sales were worth nearly US$640 billion in 2013, roughly $90 per head. Although e-commerce accounted for just 5% of global retail sales in 2013, its growth has been spectacular, with internet sales soaring by 127% in current value terms over the past five years. 

These trends have been identified by Euromonitor International’s Strategy Briefing in this report which compares and contrasts the characteristics and buying behaviours of internet shoppers, looks at the total market size and share of retail, distribution trends across each consumer market sector, highlights behaviours in key countries, analyses retailer strategies and identifies future opportunities for growth.

EXECUTIVE SUMMARY

Growth drivers
Internet retailing trends
Chart 1 Global Internet Sales by Category 2013
Behaviour and characteristics of online shoppers
Retailer strategies
Outlook
Summary 1 Opportunities and Threats to Retailers

INTRODUCTION

A new way of shopping
Definitions

KEY GROWTH DRIVERS

Expansion of the internet
Global user base expands China and India drive growth Improving access in remote areas Table 1 Internet Users as % Population by Country 2008/2013
Technological progress
Growth in mobile internet subscriptions Chart 2 Global Mobile Internet Subscriptions 2008-2013 The US and China almost neck and neck Chart 3 Mobile Internet Subscriptions in Key Markets 2013 Higher network speeds Expanding access to Wi-Fi
Online payment and security issues
Personal data at risk Alternative payment systems Mobile wallets
Regulatory issues
Consumer rights US e-commerce tax on hold Some states already impose internet sales taxes Russia abandons plans to tax e-commerce imports
The search for value
Economic prospects remain uncertain Chart 4 Global GDP Growth 2008-2013 Thrift embedded in consumer mindset Getting the best prices Group buying websites Flash sales websites – the survival of the fittest Price comparison websites One-off sales events

INTERNET RETAILING SALES

Internet versus total retail sales
Internet retailing share doubles over the review period Chart 5 Global Internet Sales Versus Total Sales 2008-2013 Table 2 Global Retail Sales and Internet Retailing 2008/2013 China makes up for lost time Chart 6 Internet Sales in Leading Countries 2008/2013 Chart 7 Per Household Internet Sales In Leading Countries 2013 Chart 8 Internet Sales Versus Total Sales In Leading Countries 2013
Broad sector trends
Internet sales still minor Online grocery driven by convenience factor Chart 9 Global Internet Sales as a % Total Sales by Category 2008/2013 Apparel and footwear accounts for a fifth of online sales Consumers turn to online health and beauty for repeat purchases Home care benefits from subscription services Internet growth affects specialist retailers Table 3 Global Internet Sales by Category 2008/2013
Distribution trends in apparel and footwear
Specialist retailers and mail order lose share to online sales Chart 10 Apparel and Footwear: Global Retail Sales by Channel 2008/2013 US most developed market Pure-play e-tailer strategies Physical retailer strategies Clothing retailers target mobile market Chart 11 Specialist Retailer Versus Online Sales of Apparel and Footwear, Global 2008-2013
Distribution trends in the electronics and appliances market
Specialist retailers still favoured Chart 12 Consumer Electronics: Global Retail Sales by Channel 2008/2013 Chart 13 Consumer Appliances: Global Retail Sales by Channel 2008/2013 Online sales enjoy triple-digit growth Chart 14 Specialist Retailer Versus Online Sales of Electronics/Appliances, Global 2008-2013
Distribution trends in food and drink
Internet sales still undeveloped Chart 15 Packaged Food and Drink: Global Retail Sales by Channel 2008/2013 Online food and drink forms part of multi-channel strategy UK leads the way Chart 16 Grocery Retailer Versus Online Sales of Food and Drink, Global 2008-2013
Distribution trends in health and beauty
Grocery retailers claim largest share of sales Chart 17 Beauty and Personal Care: Global Retail Sales by Channel 2008/2013 Chart 18 Consumer Health: Global Retail Sales by Channel 2008/2013 China drives online growth E-tailers become innovative Online OTC regulations relaxed in some markets Physical retailers fight back Chart 19 Specialist Retailer Versus Online Sales of Health and Beauty Products, Global 2008-2013
Distribution trends in media products
The struggle against digital content Video streaming benefits from faster network speeds Free-to-play mobile games become more sophisticated The success of e-books Media stores focus on experience Chart 20 Physical Versus Online Sales of Media Products, Global 2008-2013
Distribution trends in traditional toys and games
Toy stores face tough competition Toys “R” Us gets creative Chart 21 Physical Versus Online Sales of Traditional Toys and Games, Global 2008-2013
Home and garden products
Specialists remain the preferred channel Chart 22 Home and Garden Products: Global Retail Sales by Channel 2008/2013 Augmented reality addresses visualisation issues Providing expert advice Chart 23 Specialist Retailer Versus Online Sales of Home and Garden Products, Global 2008-2013
Mobile internet retailing
The shift towards m-commerce Augmented reality QR codes M-commerce remains niche Chart 24 Mobile as a % Total Internet Sales by Country 2011/2012/2013

ONLINE SHOPPER BEHAVIOUR AND CHARACTERISTICS

In-store versus online shopping preferences
Online shoppers are still in the minority Internet offers variety Delivery most appealing to older shoppers Chart 25 In-store Versus Online Shopping for Non-essentials, by Country 2012
Motivations for internet shopping
Table 4 Online Shopping Motivations by Country 2012
Use of mobile phones in stores
Technology plays a greater role in shopping Apps replace salespeople The influence of reviews Chart 26 Frequency of Mobile Phone Activity in Stores 2012
Characteristics of online shoppers
Downloadable items still the most common online purchases Young people most likely to buy online Chart 27 Online Purchases by Age Group 2013 Chart 28 Online Purchases by Gender 2013 Online purchases by country Chart 29 Frequency of Online Purchases by Type and by Country 2013
Mobile shoppers
Chart 30 Frequency of Using Mobile Phone for Purchases, by Country 2011/2013 Chart 31 Global Use of Mobile Phone for Purchases, by Age 2013

KEY MARKET TRENDS

Brazil
Shoppers prefer to pay in instalments Online clothing overcomes barriers M-commerce is emerging Table 5 Brazil: Internet Shopping in Leading Categories 2008/2013 Competitive environment Chart 32 Brazil: Internet Retailing – Top 10 Brands by Value Share 2013
China
A burgeoning market Apparel and footwear becomes largest category Mobile purchases gaining pace Table 6 China: Internet Shopping in Leading Categories 2008/2013 Alibaba dominates online Bricks-and-clicks retailers make progress Amazon slow to adapt Chart 33 China: Internet Retailing – Top 10 Brands by Value Share 2013
France
Number of e-tailers continues to grow Clothing retailers have more flexibility online Electronics retailers struggle to compete with online players Free’s cheap mobile plan fuels the m-commerce market Table 7 France: Internet Shopping in Leading Categories 2008/2013 Competitive environment Chart 34 France: Internet Retailing – Top 10 Brands by Value Share 2013
Germany
Price and convenience are key Apparel and footwear is the largest category Grocery retailing remains underdeveloped Consumers remain wary of mobile payment Table 8 Germany: Internet Shopping in Leading Categories 2008/2013 Competitive environment Chart 35 Germany: Internet Retailing – Top 10 Brands by Value Share 2013
Japan
Japan leads in m-commerce Growth of mobile fashion Launch of Net Super fuels online grocery sales Showrooming common in electronics sector Table 9 Japan: Internet Shopping in Leading Categories 2008/2013 Competitive environment Chart 36 Japan: Internet Retailing – Top 10 Brands by Value Share 2013
Russia
Market held back by logistics and online payment issues CyberMonday provides a boost to sales Online grocery still embryonic Table 10 Russia: Internet Shopping in Leading Categories 2008/2013 Competitive environment International players have only a small presence Chart 37 Russia: Internet Retailing – Top 10 Brands by Value Share 2013
UK
A highly developed market Online clothing makes strides UK has the most sophisticated online grocery market Media downloads affect specialist retailers Rise of m-commerce Table 11 UK: Internet Shopping in Leading Categories 2008/2013 Competitive environment Asos makes great strides Chart 38 UK: Internet Retailing – Top 10 Brands by Value Share 2013
US
Leading global e-commerce sales Consumer appliances makes the most progress Online grocery slow to take off Home Depot promotes click-and-collect concept The move to m-commerce Table 12 US: Internet Shopping in Leading Categories 2008/2013 Competitive environment Chart 39 US: Internet Retailing – Top 10 Brands by Value Share 2013

RETAILER STRATEGY

Consolidation and globalisation
Amazon rules the roost Tmall dominates Chinese market eBay maintains third position Apple focuses on digital channels Ongoing consolidation Table 13 Internet Retailing – Top 10 Global Brands by Value Share 2008/2013
Adopting multi-channel strategies
Summary 2 Recent Acquisitions of Online Retailers by Store-based Retailers
Omnichannel retailing
Digitalising physical stores
Mobile technology
The growth of shopping apps Geolocation Couponing Virtual shopping shelves
The move to digital channels
Amazon at the forefront of-book delivery
Improving the user experience
Providing more information Improving website design Simplifying the checkout process The offer of return shipping Virtual reality tools
Improving delivery options
Speeding up the shipping process Subscription delivery services Building fulfilment centres Collaboration with courier services Store-based click-and-collect Click-and-collect locker services
Combating the showrooming trend
Bringing customers back to stores Price matching Retailtainment
Online to offline
Subscription based services
Creating excitement Beauty boxes take off in Asia Appealing to new parents

FUTURE OUTLOOK

Trends to watch
Internet to play an ever greater role in the shopping experience The continuing shift towards mobile Shopping apps will become more sophisticated The future is hands free In-store technology will enhance the shopper experience Shopping malls to become major entertainment hubs A wider range of delivery solutions The industry will become more tightly regulated Globalisation and internationalisation will be ongoing Chinese market holds potential for Western players
Recommendations to marketers
Offer an omnichannel experience Work on improving delivery options Improving website functionality Keep customers coming to stores Include mobile in the equation
Forecasts by sector
Apparel and footwear, appliances and grocery offer most potential E-tailers will continue to facilitate media content delivery Online beauty: Consumers need convincing Table 14 Forecast Global Internet Sales 2013/2018
Growth markets
China to see dramatic growth, but average sales will remain low E-commerce to expand to the regions in Russia Chart 40 Forecast Internet Sales In Leading Countries 2013/2018 Chart 41 Forecast Internet Share of Total Retail Sales In Leading Countries 2013/2018
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