Ireland Multi-Channel Retail Viewpoint 2012
A DOUBLING OF ONLINE CLICKS IN IRELAND CAN BE GOOD NEWS FOR OUR RETAIL BRICKS
- Ireland has the fifth highest proportion of global retailers that can deliver goods bought online
- 90% of consumers surveyed still visit a physical store before purchasing online
- ‘Clicks and Bricks’ are now merging into one strategy, leading to innovative real estate opportunities
Dublin, 25 June 2012 – A doubling in the number of global retailers that can deliver goods purchased online to Irish consumers over the last twelve months, has led to Ireland becoming the fifth most developed online market globally, according to the latest research carried out by global real estate advisor CBRE.
Growing from 24% in 2011, 43% of the 326 global retailers surveyed in CBRE’s How Global is the Business of Retail? study can now deliver goods purchased online to Irish consumers - Not far behind the US and UK where 44% of the same retailers can deliver goods. Value and Denim retailers have particularly embraced the online delivery platform while Food retailers lag well behind as the challenge of delivering fresh food remains an obstacle for supermarkets.
Suzanne Barrett, Associate Director of CBRE who has studied these online retail developments in a recent report notes:
“There has been an obvious focus by global retailers on the Irish market over the last year and perhaps a recognition that the age profile of the Irish population offers huge potential for online sales. Our lack of a postcode system could have been a factor impeding delivery of goods purchased online in the past. , However, retailers such as Debenhams and Marks and Spencer now seem to have overcome this hurdle and utilised the advanced logistics network with the UK and Europe to improve their online platform in Ireland”.
CBRE believes that the evolution of the online retail platform should no longer be seen as the kryptonite of the retail sector’s bricks and mortar. A study of over 10,000 consumers across Europe in its “European Online Consumer Study” found that two thirds use the internet to research products and prices online, while 90% would want to visit a physical store at least once as part of the purchasing process. Therefore, the multi-channel approach is the future of retailing on a global scale and will continue to grow beyond our current comprehension over coming years.
With this in mind it is interesting to note that only 40% of those global retailers that can deliver goods purchased online to Ireland actually have a physical store in the Irish market - in comparison to 83% in the US and 81% in the UK. This means that there is potential for close to 40-60% of those global retailers selling goods online to Irish consumers to open a physical store in Ireland in coming years. Or to put it another way, there are over 80 global retail brands serving online and delivering to the Irish market that could in theory adopt a multi-channel strategy and open a physical store locally to complement their online sales. Think Abercrombie and Hollister who were enticed to look at Dublin as a new store location purely due to the overwhelming strength of their online retail sales.
Indeed, as prime rents on the high street and in key shopping centre locations throughout Ireland are now at a much more competitive level than years previous, there is real potential for some online retailers who have tested the Irish market to now complement their offering by establishing a physical presence in our market. ‘Click-and-collect’ offerings are popping up all over the UK and Ireland and some in unique ways such as Tesco’s first ever drive-through and collect service where consumers can collect goods that are ordered online earlier in the day without getting out of their car.
Suzanne Barrett comments:
“Not only does multi-channel retailing act as a great test site for global retailers considering physically moving in to the Irish market, the actual shape of these bricks is also changing. Interesting store concepts are appearing across the globe to meet the consumer who is now so technically advanced and connected than was ever before envisaged. In the not too distant future we will have electronic wallets on our Smartphones, virtual scan fitting rooms and not even have to leave the car to collect our food shopping. This will mean a change to the layout of some retail stores, a need for high internet connectivity throughout units and centres, larger storage areas and yard/common areas for click and collect ease and an increase in digital advertising in store – all of which will have implications for rents, service charges and lease arrangements between landlords and tenants. A key challenge for landlords will be determining what proportion of a tenants income is generated in the physical store and what proportion is generated online as this has obvious implications considering the growing prevalence of turnover-related rental agreements. The move towards online retailing will also have implications for Government who will have to make a greater effort in capturing and tracking online sales so that the appropriate taxes can be collected for the Exchequer .
Whatever the future holds for the retail sector, the facts presented by CBRE show that clicks and bricks are merging, and the manner in which retailers and landowners evolve leases and strategies to meet this change will be the key to their longevity and success.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.