The week before last, one of my children said she wanted a copy of Roald Dahl’s book Charlie and the Chocolate Factory for her birthday, so I duly logged on to Amazon.co.uk and ordered it. The website told me I should also buy the book’s “perfect partner”, the Charlie and the Chocolate Factory Gift Book, so being an obedient sort of person, I ordered that too.
Amazon said both books were “usually dispatched within 24 hours”. Instead, it took three days. After that, the actual delivery took so long that the books had still not arrived on the eve of my daughter’s birthday last Wednesday. So I had to make the trek to a real bookshop, Waterstone’s, to get what I wanted.
The punchline is that, when the two Amazon books finally arrived and I set about returning them, I discovered they were exactly the same story, just in slightly different formats, so I would have ended up returning one of them anyway.
Oh, the perils of online shopping. Probably no big internet retailer has a better reputation than Amazon, yet even this company can let you down.
Experiences such as this, however, have not prevented people from doing more of their shopping online. In the two-month run up to Christmas, internet retail sales in the US rose by 25 per cent year-on-year, according to comScore Networks, or 30 per cent according to Goldman Sachs, Nielsen//NetRatings and Harris Interactive. In Britain, according to the Interactive Media in Retail Group, the figure was nearly 50 per cent.
ComScore reckons online sales now account for 6 per cent of US retail spending, and in the UK, IMRG puts the figure at an astonishing 9 per cent. At this rate, how much longer will it be before shops and stores as we know them start to disappear?
A while yet, I suspect. The thing is, there is plenty of scope for spinning the retail figures depending on what story you want to tell. The skill lies in deciding what to include and what to leave out. For example, does spending on new and used cars count as retail? Or on fuel? Do you count spending on entertainment, hotel rooms, restaurant meals, supermarket food, banking, estate agents’ commissions, iPod downloads, airline tickets or video games? What about spending on Dell computers, supplied direct by the manufacturer? What about pornography? What about Ebay?
To give some idea of the latitude, the US commerce department reckons that, even after years of double-digit percentage increases, online sales still account for only 2.3 per cent of the US total – hardly, one would have thought, a basis for declaring the end of shopping as we know it.
Perhaps we can agree that the really interesting figures would be those showing the extent to which people were giving up shopping in the mall or on the high street and making the same purchases online instead. Unfortunately, as far as I know, no such figures exist. But a moment’s reflection is surely enough to suggest the sums are not large.
Think, for example, of some of the biggest categories of internet spending: pornography, gambling, banking, broking, airline ticketing, event ticketing and online auctions. Admittedly, any increase in spending elsewhere could reduce the amount available for spending in conventional stores, and perhaps some banks, betting shops, travel agencies and porn shops have disappeared, but none of these areas of spending are traditionally associated with mainstream shopping.
Using a stricter definition of retail, the comScore and GNH surveys say the top three online categories in the Christmas run-up were computer hardware and peripherals, consumer electronics and clothing. Well, does this really represent much of a loss to conventional retailing? In computers and consumer electronics, the growth of internet spending has coincided with the rapid growth of the categories and I doubt it has led to many store closures. In clothing, the growth of online spending has coincided with the decline of mail order and catalogue retailing, so again I do not think we are talking about a mass exodus from the stores.
What of the future? I cannot deny the internet is (usually) marvellous for planned purchases. It is also a boon to the time-starved. But it is a poor substitute for shopping as a social activity and/or leisure pursuit, which is how it is enjoyed by many.
To build on this, shops should strive to make the shopping experience more pleasurable – particularly in Britain, where customer service is dire. More retailers should emulate the John Lewis department store chain, which according to Nick Greenspan at Bain & Company has the country’s highest level of customer advocacy (that is, people recommending the store to others). Mr Greenspan says John Lewis’s tactic is to over-invest in customer service by employing more people per square foot of retail space than any competing chain.
One more point. In developed countries, consumers are switching their incremental spending towards services, not goods or durables. As the growth of internet gambling shows, some such services can be provided online, but many more cannot.
You must know that old joke about the sign outside the tattoo parlour: “Ears pierced while you wait.” You cannot have your hair cut on the internet, buy a cup of coffee or eat a restaurant meal. So yes, the internet may one day affect the high street and the mall, but my guess is they will change, not die.