Click-and-collect economy worth over £42bn as ‘hybrid’ shopping grows
A new report released today by Barclays Corporate Banking reveals that click-and-collect shopping will be worth £42.4bn in the UK this year, 8.4% of the industry’s total annual income.
Click-and-collect transactions will be worth £42.4bn in 2022 – 8.4% of the UK’s total retail spending
It also supports 184,000 jobs across the industry, 7.4% of the overall workforce in small to very large retailers
The need to integrate digital and in-store is fast becoming a standard industry expectation
Staff wages are currently placing the biggest strain on retailer profitability while consumers are looking to cut between 25% and 30% of their retail outgoings in the months ahead, as the rising cost of living begins to take hold
The study – ‘What’s in store for retail?’ – focuses on retail businesses with over ten employees, and looks at the rise of ‘hybrid’ shopping, which involves both physical and digital interactions. Click-and-collect, where goods are bought online but picked up from a physical store, now accounts for 40% of sales for retailers who offer the service, up from 37% a year ago.
The popularity of the service grew during the pandemic but, unlike pure online sales which peaked during that period, it has continued to grow to post the lifting of lockdown restrictions, indicating that click-and-collect is a consumer behaviour that is here to stay.
The click-and-collect economy now also underpins 184,000 jobs across the industry, which equates to 7.4% of the total workforce. Over two-fifths, (41%) of physical stores in the UK are now used as click-and-collect locations, with the same amount (41%) being used to process returns.
Barclays’ data demonstrates how online and physical retail sales channels are becoming more intertwined. Consumers like to research products online and in-store in equal measure across a number of products, including homewares (34%), fashion (33%), accessories (31%), and garden products (28%).
Our research reveals that having both an online and physical presence can be advantageous for a retailer’s appeal. A quarter (24%) of consumers say they can be hesitant when buying from online-only brands, a figure which drops to just over one in ten (13%) when businesses also have physical stores.
Support for store shopping, but locations are changing
Despite the increasing popularity of online shopping, there is still support for high streets. When asked whether there is a future for physical retail space, 67% of consumers agreed that there is, of whom 32% strongly agreed. However, there is a clear demographic split: just over half (54%) of 16-24-year-olds believe in the future of the physical store, compared with almost three-quarters (74%) of those over 55s.
What the report clearly spells out is that, following the inevitable acceleration in the shift to digital during the pandemic, consumers are now returning to stores to make their purchases with confidence and trust in bricks and mortar stores still strong.
Almost nine in ten (88%) retailers feel that operating a physical store is vital to their business success. However, many are re-evaluating where their real estate is based, to make sure they occupy the most appealing destinations for consumers. Two in five (41%) have reduced the number of stores they have in city centers, while 32% have increased their presence in retail parks. An increased presence in retail parks will likely be popular with shoppers aged over 55, a third (33%) of whom say it is their preferred location for a store.
Rising cost of living adds pressure to profitability and recruitment
Amid these changes, the cost-of-living increase is creating additional challenges for retailers. Barclays’ research shows that British shoppers are aiming to reduce their spending by between 25% and 30% before the end of the year, across a broad span of retail categories. However, the biggest strain on business profitability is staff wages - selected by 23.4% of the retailer respondents, ahead of fuel costs (21.6%), rent (21.6%), energy bills (21.3%), and a predicted fall in revenue (21.0%).
