Insight: brands need physical stores to drive online sales – CACI

Whilst debate continues about the future of the High Street, research by CACI, the consumer and location intelligence specialist, has revealed the negative impact of closing stores on brands’ online businesses.

According to the research, retailers that do not maintain a bricks and mortar store in a catchment alongside a transactional website typically experience 50% lower online sales compared to those retailers that do have a physical presence.

By analysing data collected via a UK wide survey of over 2,500 consumers, CACI has found sales are an average of 106% higher within a physical store’s catchment, with the impact even greater in the electronics (154%), fashion (127%)and sportswear (124%)sectors (the latter also includes the growing trend of athleisure wear).   CACI has termed this uplift in sales the ‘halo effect’of physical retailing.

Key to the enhanced performance is the role stores play in influencing purchasing decisions, with over 50% of online spend touching a physical store.   This is achieved through click and collect; in-store ordering; or via the store’s role as a showroom to ‘try before you buy’, with purchases made later online at the convenience of the consumer.

Alex McCulloch, Director of CACI Property Consulting Group, said:“The halo effect highlights two key points as the industry wrestles with how it evolves in the face of seismic shifts in consumer behaviour.  Firstly, brands should carefully consider the unintended consequences of downsizing their portfolios.   What might seem an effective way to reduce costs may also undermine the viability of the business due to the positive impact stores have on online sales.

“As importantly, the research also points to the need for landlords and brands to work together.  Consumers move seamlessly from one channel to another, which means neither side has the upper hand.  Both sides must recognise the importance of stores across a retailer’s wider business and both should unite in building a stronger, more relevant, and therefore more resilient, offer for consumers.”

The halo effect research is the latest in a series of industry insights published by CACI as it works with landlords, retailers and leisure operators to help them better understand changing consumer behaviour.  Earlier this year, for example, CACI revealed the positive impact festivals have on driving consumer spend, highlighting the Edinburgh Fringe as effectively delivering a second Christmas, in terms of consumer spend, for the city.