Can Interior Design Stores survive the ever increasing competition from online stores?

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    11-Mar-2016

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The purpose of this study is to establish whether independent Interior Design stores can survive the digital age with the increase of pure-play (online only stores) and the rapidly changing retail environment.

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<ul><li><p>CAN INTERIOR DESIGN STORES SURVIVE THE EVER INCREASING COMPETITION FROM ONLINE STORES? </p><p>Page | 2 </p><p>CONTENTS </p><p>Abstract ................................................................................................................................................... 4 </p><p>Objectives ........................................................................................................................................... 4 </p><p>Definition of Stores ................................................................................................................................. 5 </p><p>Traditional Store ................................................................................................................................. 5 </p><p>Interior Design Store ........................................................................................................................... 5 </p><p>Online Store ........................................................................................................................................ 5 </p><p>History of Internet Shopping............................................................................................................... 5 </p><p>The Impact of Online Shopping............................................................................................................... 7 </p><p>Online Market Share ........................................................................................................................... 7 </p><p>The Changing Retail Landscape .......................................................................................................... 7 </p><p>Multi-channel Retailing ........................................................................................................................... 8 </p><p>What is Multi-channel Retailing? ........................................................................................................ 8 </p><p>How to implement a Multi-channel Maturity Model ......................................................................... 9 </p><p>The power of Data ............................................................................................................................ 10 </p><p>Is there a limit to online growth? ..................................................................................................... 10 </p><p>Pure-Play Moving to the High Street .................................................................................................... 11 </p><p>Oak Furniture Land ........................................................................................................................... 11 </p><p>Made ................................................................................................................................................. 11 </p><p>Other Issues .......................................................................................................................................... 12 </p><p>The Green Issue ................................................................................................................................ 12 </p><p>Location ............................................................................................................................................. 12 </p><p>Price .................................................................................................................................................. 13 </p><p>Promotions ........................................................................................................................................ 13 </p><p>Supplier Exclusivity............................................................................................................................ 13 </p><p>Store Experience ............................................................................................................................... 14 </p><p>Windows ........................................................................................................................................... 14 </p><p>Retail Design ..................................................................................................................................... 15 </p><p>The Grey Matter ................................................................................................................................ 15 </p><p>Interior Design Start-ups Businesses .................................................................................................... 16 </p><p>EBay Accelerated Growth Programme ............................................................................................. 16 </p><p>Not on the High Street ...................................................................................................................... 17 </p></li><li><p>CAN INTERIOR DESIGN STORES SURVIVE THE EVER INCREASING COMPETITION FROM ONLINE STORES? </p><p>Page | 3 </p><p>Small Independent Interior Design Stores ........................................................................................ 18 </p><p>Store 1 ........................................................................................................................................... 18 </p><p>Store 2 ........................................................................................................................................... 18 </p><p>Store 3 ........................................................................................................................................... 18 </p><p>Interior Design Stores with Multi-channel Operations ......................................................................... 19 </p><p>Conclusion ............................................................................................................................................. 20 </p><p>I Want it Now .................................................................................................................................... 20 </p><p>The Value of Consultancy.................................................................................................................. 20 </p><p>Theres More to Exclusivity ............................................................................................................... 21 </p><p>Own Range ........................................................................................................................................ 21 </p><p>Invest in Multichannel ...................................................................................................................... 21 </p><p>Store Design ...................................................................................................................................... 22 </p><p>Can Interior Design Stores Survive The Ever Increasing Competition From Online Stores? ............ 22 </p><p>Content of Figures ................................................................................................................................. 23 </p><p>Front cover: ....................................................................................................................................... 23 </p><p>Document: ........................................................................................................................................ 23 </p><p>Bibliography .......................................................................................................................................... 23 </p></li><li><p>CAN INTERIOR DESIGN STORES SURVIVE THE EVER INCREASING COMPETITION FROM ONLINE STORES? </p><p>Page | 4 </p><p>ABSTRACT </p><p>In recent years traditional retail stores have been facing tough competition from online stores. </p><p>Online sales now account for approximately 10% of retail sales and is predicted to increasing year on </p><p>year. The recession has hit the retail sector hard and this, combined with the ease at which </p><p>consumers can compare products and prices online to search for the best offer have been reported </p><p>to be major factors in shop closures. Whether a small independent store or a large High Street </p><p>name, retailers need to consider their options to compete against online stores as a result of </p><p>changing shopping habits. Customers who choose to use retail stores expect to be able to carry out </p><p>research online prior to purchasing. As a result, retailers can no longer charge a premium for </p><p>products without considering how much their competitors are charging for the same or similar </p><p>items. The success of online trading has significantly affected specific markets such as books and </p><p>electrical goods where direct comparisons can be easily made but with the ever increasing </p><p>advancement in technologies no retail business should remain complacent. </p><p>Town Centres in traditional market towns are losing their local shops and City Centres and Retail </p><p>Parks are filled with big High Street names. Is online trading further undermining the survival of </p><p>Independent stores and Town Centres, or can the internet transform businesses regardless of size? </p><p>Interior design stores will often display new lines of wallpapers, fabrics, furniture and furnishings </p><p>from suppliers and have a library of books for customers to browse through. In recent years it has </p><p>become apparent that many customers will use these stores to make their selection and then order </p><p>them online through discounted stores, making it ever more difficult for niche retailers to maintain </p><p>a reasonable profit margin. </p><p>The purpose of this study is to establish whether independent Interior Design stores can survive the </p><p>digital age with the increase of pure-play (online only stores) and the rapidly changing retail </p><p>environment. </p><p>OBJECTIVES </p><p> Examine statistics relating to online sales </p><p> Compare overheads associated with both retail stores and online stores </p><p> Evaluate shopping trends to determine how multi-channel retailing can benefit Independent </p><p>Interior Design stores </p><p> Determine how suppliers and retailers can work together to protect brands and profits </p><p> Establish areas where bricks and mortar stores gain the advantage over online stores </p><p> Conclude how Interior Design shops can offer a personal shopping experience and deliver a </p><p>customer focused service </p></li><li><p>CAN INTERIOR DESIGN STORES SURVIVE THE EVER INCREASING COMPETITION FROM ONLINE STORES? </p><p>Page | 5 </p><p>DEFINITION OF STORES </p><p>TRADITIONAL STORE </p><p>A traditional store can be defined as a shop where businesses display and sell goods to the general </p><p>public. This could be a local shop, a Town or City Centre store or a retailer in an out of town </p><p>shopping centre or Retail Park. </p><p>The cost of maintaining a retail store is high, with rent and rates being the main overhead. This can </p><p>vary enormously due to location but in any case would be a significant cost. Other fixed overheads </p><p>consist of staffing, heating, lighting, telephone and IT systems costs. This is before any other sundry </p><p>costs have been considered such as maintenance, advertising, marketing, transport, professional </p><p>services and, more recently, website management. </p><p>INTERIOR DESIGN STORE </p><p>For the purpose of this study an Interior Design store is considered to be a traditional bricks and </p><p>mortar store that displays and sells design-led interior products such as furniture, accessories, </p><p>flooring, lighting, wallpaper and paint. These types of stores are typically established by individuals </p><p>with a passion for, or background in either in furniture or interiors and are often referred to as an </p><p>independent store. They may offer interior design services such as - custom made window dressing, </p><p>CAD assisted furniture plans or a complete project management service. </p><p>ONLINE STORE </p><p>Online stores have a short history and are a product of the dot.com era of the 1990s. Initial financial </p><p>outlay associated with traditional retailing, such as solicitors fees for arranging leases, the fit-out of </p><p>the retail premises and upfront payments for rent and stock was all but eradicated. The success of </p><p>online stores and the low start-up costs inspired many would-be entrepreneurs to set up shop, </p><p>which could viably be started from home. </p><p>The irresponsible pricing strategies of some of these new inexperienced traders would prove to be </p><p>costly to independent retailers who need to maintain a health margin to meet the overheads. </p><p>HISTORY OF INTERNET SHOPPING </p><p>Online shopping was invented and pioneered by Michael Aldrich in the UK in 1979. It was first </p><p>introduced as a business-to-business system used mainly by travel agents, car dealers and finance </p><p>companies. The idea of online shopping was developed from this when Tesco experimented with an </p><p>online shopping system in 1984. In 1990 Tim Bermers-Lee invented the World Wide Web as a way </p><p>of accessing information globally, but it wasnt until 1995, when Amazon opened for business that </p><p>online shopping really began to take off. Originally trading from a garage in Bellevue, Washington, </p><p>Amazon has grown to be a world renowned company and one of the biggest online retailers. </p><p>From 1995 to 2000 internet shopping advancement was perceived as a phenomenon with huge </p><p>investments being made in what was collectively known as the dotcom companies. This eventually </p><p>resulted in the dotcom crash in 2000, as non-profit making companies went bust and share prices </p><p>plummeted. This was the result of over confident investments in internet businesses that were </p><p>either trading at a loss or making very little money. </p></li><li><p>CAN INTERIOR DESIGN STORES SURVIVE THE EVER INCREASING COMPETITION FROM ONLINE STORES? </p><p>Page | 6 </p><p>Although this was a big setback for many online businesses, shoppers had begun to appreciate the </p><p>convenience of online shopping and so online stores were definitely here to stay. The technology </p><p>was now available and small businesses were exploiting the cost advantage of running an online </p><p>store, often winning sales at the expense of traditional stores, enticing customers with lower prices. </p><p>FIGURE 1 </p></li><li><p>CAN INTERIOR DESIGN STORES SURVIVE THE EVER INCREASING COMPETITION FROM ONLINE STORES? </p><p>Page | 7 </p><p>THE IMPACT OF ONLINE SHOPPING </p><p>ONLINE MARKET SHARE </p><p>In a recent report the Centre for Retail Research put the size of the online market at 12% of sales in </p><p>the UK for 2011, compared with 8.6% for 2008. This figure is estimated to rise to 13.2% for 2012. </p><p>These figures amount to a 14% growth in the market year on year. (Centre of Retail Research, 2012) </p><p>Figures reported by Mintel were slightly more conservative with a total of 8.5% for 2011 and a </p><p>growth of 13%. Half of these sales were through multichannel retailers and the other half through </p><p>pure-plays stores. (Mason, 2011) </p><p>THE CHANGING RETAIL LANDSCAPE </p><p>There was an explosion of new retail shops opened in the 1980s and 1990s as consumers had more </p><p>disposable income and retailers responded by opening new stores. However, the economic </p><p>downturn and loss of sales to online stores over the last decade are often reported as being major </p><p>causes for store closures. Many Independent stores have failed and some high street stores are now </p><p>reducing their property portfolios in a bid to control costs. The current tendency is to have fewer </p><p>stores and to back this up with...</p></li></ul>

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