Online retailers open showrooms as internet sales slow

A growing number of formerly ‘pure-play’ online retailers are taking physical stores as the rate of internet sales growth looks set to slow during the next few years.

New research from Colliers International shows that by 2021, the rate of growth in e-commerce sales is expected to decline from the current level of around 11 per cent to seven per cent. In anticipation of this, online retailers are increasingly using physical stores to bolster their sales and their brands. The new trend is being labelled ‘showrooming’ as the primary intention of these stores is not necessarily to generate sales through the tills but to reinforce customer loyalty – and spending – online.

The global real estate advisor has analysed more than 30 different online brands across the EMEA region which are becoming ‘showroomers’.

An example of this migration is the French fashion brand, Sézane, which had its beginnings on eBay before moving to a branded online platform. Having opened physical stores in Paris and New York, the brand’s creator, Morgane Sézalory, is now exploring the London market with a pop-up store in South Molton Street and is considering a permanent presence.

Paul Souber, Co-Head EMEA Retail at Colliers commented: “With the rate of web sales forecast to level out over the next four years, many e-retailers have identified ‘showrooms’ as one of the remedies to a decline in profits.

“Increasingly ‘Showrooms’ in physical shopping environments which both generate online sales, raise awareness of their company, promote brand loyalty and offer the customer an opportunity to see, touch and feel the products.

Taking physical space also delivers benefits for landlords and retailers. Etienne van Unen, Co-Head EMEA Retail at Colliers, observes: “Because showrooms are often located in a non-prime property and in units which would not appeal to mainstream retailers, the rents they command are often acceptable to both landlord and occupier.

“The landlord is letting a property which may have been problematic or not in demand and the pure-play is getting a lower rent than they would pay for a mainstream store”.

The research highlights the changing balance between the channels – online and physical – which are open to retailers.

Press release by Colliers International.

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Written by: Colliers International