British retailers‚ especially those based in the Capital‚ are banking on the Olympics having a positive impact on their sales, but are online retailers expecting to reap the same rewards?
There has been little focus on what the online retail sector is forecasting this summer, but I am confident that etailers will also contribute to the "£13bn boost to the economy" that David Cameron assures us the Olympics will bring to the UK. This being said however, it is clear that the online customer base will be very different from that of the "High Street" store. Whilst the traditional retailer is banking on tourist spend‚ e-tailers will see the domestic shopper log on to escape the madness of London's shopping destinations.
For the bricks and mortar retailer‚ the Olympics has been hailed as a golden opportunity to boost flagging sales, and there has been a list of long-term strategies in place to capture the increased tourist market. The most obvious is the building of the Westfield shopping centre in Stratford. This signaled right from the start of the regeneration project that both the Olympic Committee and retailers were hoping that the sporting event would also become a major shopping event. Retailers have also been conducting short-term solutions‚ with a wave of summer sales starting earlier than usual. The Financial Times recently reported that London department stores have started to put heavy discounts on their current stock so they can make way for high-value items to be sold during the Olympics‚ something I believe the online retailer will have to continue if they want to maximise on sales. At BrandAlley we pride ourselves on offering top designer goods for a fantastic price (up to 70 per cent off), but have recently kick-started a 80 -95 per cent off sale‚ to keep the consumer in spend mode. I strongly believe that if online retailers do not discount‚ people will just not shop‚ deciding instead to begin spending again after the summer.
As noted‚ e-tailers will be selling to the domestic market and as a result they will see the majority of spend coming from the stay-at-home shopper. Retail Week reported a shift in consumer spending habits before the games‚ with shoppers buying 'nesting products' (such as BBQ's and TV's) so that they can relax at home whilst the Games are on. We have also seen a sharp increase in homeware sales, and it has been our Union Jack products particularly, which were also popular over the Jubilee period, that have continued to sell as people get into the spirit of the Games. This behaviour is perfect for the e-tailer to maximise on sales; people are already anticipating that they will be at home‚ disengaged from work and in relaxation mode. If online retailers pitch their offer right‚ the stay-at-home consumer can be converted into the stay-at-home spender.
The tactics retailers use to target the different consumer groups will also be very different. Liberum Capital has conducted some interesting research‚ highlighting that advertisers will increase their spend on digital platforms this summer. TV advertising is down by 10 per cent in July and 5 per cent in August‚ as non-sponsors are confident that it will be online that results in direct sales. I would also not be surprised if non-sponsors start to spin 'anti-Olympic' rhetoric‚ as consumers start to become disenfranchised from the constant selling by the official sponsor brands. This trend will of course greatly benefit the online retailer. It is encouraging that a vast proportion of brands and advertisers believe that the domestic consumer will spend a significant amount of time online during the Olympics - and if e-tailers pitch their offering right they will reap the rewards.
I realise my views so far have been London-centric‚ and whilst I am certain that this behaviour will be defined in the Capital‚ there are other UK cities hosting the games. In other host cities such as Glasgow and Manchester, I believe we will also see a pattern of consumers shopping online, although more sporadically and confined to the short periods that the Games are in town.
I am confident that online retailers can also benefit this Summer‚ but only if their offering is pitched to the domestic consumer. By having cleverly targeted sales and offering a hassle free alternative to shopping on the High Street‚ e-tailers can also be in with the chance of prospering from the Olympics and seeing a gold medal worthy increase in sales.