Virtually green shoots

The green shoots of recovery have been looking somewhat brown and withered recently – in fact it’s a phrase that politicians seem reluctant to use at the moment; which is strange as they’re normally so fond of it.  With the Bank of England’s governor, Mervyn King, all but pronouncing the recovery “Dead on Arrival” this week, it is no surprise that the outlook for traditional businesses is gloomy.  The only green shoots to be found on Britain’s main shopping streets seem likely to be those of the weeds growing around the ever increasing number of empty shops.  But is growth in the UK retail sector a myth from the past?  Figures published by Interactive Media in Retail Group suggest that growth is alive and, well, clicking. 

Economic life support is not the answer

According to the groups figures the online retail market is growing at the rate of 18% pa, while retail sales in the ‘real’ world have been dropping by 0.3%.  OK, so that drop is not necessarily fatal – offline retail sales may not yet be flat-lining, but with the Bank of England continuing to use interest rates as a life support machine, it’s easy to wonder whether the government shouldn’t be doing more to help traditional businesses access the biggest growth opportunity going.  In the year to May the groups’ figures show that £25.7billion was spent online. 

The devil is in the detail

The strongest performing areas in the e-tail market are clothes, shoes and alcohol.  The latter enjoying a year on year growth figure of 25%.  Consumers are not surfing for expensive, luxury goods, but for so called ‘low ticket’ items and judging from the figures – lots of them.  This is a fairly typical behaviour during recessions; shares in breweries traditionally perform well when the economy is struggling, as people scale back leisure activities to a trip to the pub rather than a trip to Ibiza.  The online retail world offers an even cheaper alternative, and this is where its potential lies; small, inexpensive, everyday products sell. 

Small, traditional businesses have the edge

Traditional businesses may see the internet as either a threat or an opportunity.  One thing that a business with a long history can call upon is its knowledge of its customers.  This knowledge is invaluable; while anybody can set up an internet based business, learning what you customers want, when they want it and why they want it, can take some time.  Established businesses usually have learnt this long ago and it comes to them ‘instinctively’.  Small, is also beautiful, in the world of internet sales, as the IMRG figures show.  Online consumers will be reluctant to buy expensive goods by a virtual route – cars, houses and the like can be displayed beautifully with a ‘virtual tour’ but when you are forking out thousands, you really do want to try before you buy.  With a pint of milk or box of veg it’s another matter. 

 But you can’t buy a pint of milk online

Actually, you can.  A number of very traditional businesses have diversified their product listing and popped online – with remarkable results.  One Costermonger in London – with a family history of selling their fruit and veg straight from the barrow – saw that there was a niche well and truly waiting for him some years ago.  His family’s traditional fruit businesses was exactly what health conscious and technically savvy city workers were crying out for.  The transfer online – allowing individuals or companies to order a daily fruit and veg delivery online – blossomed to the point where he was able to establish a network operating throughout a number of major UK cities.  On similar lines traditional dairies have saved their own and their staff’s bacon by transferring online – offering early morning milk and grocery shopping deliveries with little or no delivery charge – filling a gap in the market that nearly nobody else had noticed was there at all.  While the government, the Bank of England and industry bodies bemoan the fate of the British economy, internet entrepreneurs are proving that the internet can be a tool for more than the spread of riots and revolutions.