A new report1 released today by Barclays Corporate Banking reveals that click-and-collect shopping will be worth £1.4bn2 in Wales this year. This growth follows the broader national trend, that has seen the click-and-collect economy swell to be worth over £42.4bn in the UK this year – a significant 8.4% of the industry’s total annual income.
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 31% of sales for retailers who offer the service in Wales.
The popularity of the service grew during the pandemic but, unlike pure online sales which peaked during that period, it has continued to grow 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 6,900 jobs across the industry in Wales which equates to almost half of the region’s retail workforce. Over half of physical stores in Wales (51.6%) are now used as click-and-collect locations, with almost half (47.1%) being used to process returns.
Barclays’ data demonstrates how online and physical retail sales channels are becoming more intertwined. Consumers in Wales like to research products online and in-store in equal measure across a number of products, including fashion (31%), homewares (30%), and entertainment (29%).
Our research reveals that having both an online and physical presence can be advantageous for a retailer’s appeal. Almost a quarter (24.7%) of consumers in Wales say they can be hesitant when buying from online-only brands, a figure which drops to less than two in ten (14.4%) 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, 77% of consumers in Wales agreed that there is, of whom 45% strongly agreed. However, there is a clear demographic split across the UK: just over half (54%) of 16-24-year-olds believe in the future of the physical store, compared with almost three quarters (74%) of 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 is still strong.
Eight in ten (82%) retailers in Wales 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. Almost a fifth (19%) of retailers from Wales have reduced the number of stores they have in city centres, while 47% have increased their presence in retail parks. An increased presence in retail parks will likely be popular with Welsh shoppers, 41% 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 in Wales is energy – selected by 36% of the retailer respondents, ahead of rent (34%), online hosting (32%), and food costs (30%).
In the industry’s scramble for talent, the top three roles Welsh retailers are most commonly looking to hire are:
- Security Guards (22%)
- Staff with strong communication skills (22%)
- Sales Staff (20%)
Karen Johnson, Head of Retail and Wholesale, Barclays Corporate Banking, said:
“Perhaps more than any other sector over the past two years, retail has been forced into a period of accelerated evolution. The pandemic drove everyone online, and now the rising cost-of-living is increasing business outgoings while reducing consumer spending.”
“Encouragingly for the UK’s retail sector, however, businesses are adapting their sales models to weather these financial storms as effectively as possible. Links between digital and physical shopping are being evolved, which are opening up new opportunities and ways to generate income.”
Other notable findings from the ‘What’s in store for retail?’ report include:
- 26% of retailers from Wales report that festive shopping is already underway. Nationally, discount retailers are the most likely to have seen Christmas shopping start early (38%)
- 36% of retailers from Wales have introduced services in-store such as beauty and grooming concessions, while 24% have partnered with another brand to share retail space, and 26% have created co-working spaces in-store
- 34% of retailers from Wales are investing more in their data capabilities
- (16%) of Welsh retailers say they have recreated the traditional in-store experience in the Metaverse
- 33% of Welsh consumers want retail space to become more sustainable through more efficient energy use (e.g. turning lights off at closing), and 29% would like to see more electric vehicle charging points
1 This report is based on bespoke market research conducted by Censuswide among 2,006 UK consumers of a nationally representative make up and 600 UK senior managers in retail businesses who have at least one physical store. The research was conducted between 25th – 27th July 2022 and 25th July – 8th August 2022 respectively.
2 Development Economics used the results of Barclays’ research, coupled with official data from the ONS, to calculate industry workforce totals and the value of the click-and-collect economy.