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Internet Growth Is Not Materialising

Posted On - 31/10/2014 09:58:52

Growth Predicitions Just Aren't Happening
The relentless growth of the Internet is amazing.

The rise of online shopping is and will continue to destroy traditional brick-and-mortar retailing.

It's only a matter of time before everything is sold online and our high-streets dissapear... 

Except everything you believe about the internet is wrong.

In this first part of "Is The Internet Broken?" delivered as part of our 2014 Open Day, we show how true growth is a fraction of that reported. We get to grips with how the internet is really being used and where growth is actually coming from. See the video for the full story.

The UK loves the web

More and more Brits use the web every yearHuge numbers of us use the web every day. And the number has been growing relentlessly since Office for National Statistics (ONS) records started in 2006.

But when it comes to what we're all doing it's anything but just shopping. With email topping the list we also use it for planning travel and researching pretty much anything and everything.

Sure, more of us are buying more than ever online. But when we do it's important to understand computer hardware accounts for a fraction of online purchases.

Growth is exploding but not all sales are equal

Internet sales growth is heavily skewed towards non-store salesWhen it comes to market penetration the internet is close to saturation in non-store sales. Yet for goods and services sold in-stores it barely makes double digits.

The internets ability to penetrate markets 15 times bigger is pitiful.

The overwhelming share of reported growth comes from goods and services that have never been sold in shops. So things like catalogue sales, banking products, insurance, TV licenses and car tax discs.

When it comes to growth in non-food stores, the majority of this has come from electronically transferrable goods – perfect for distribution over the web. Things like music, film and software.

As for food stores internet penetration of this huge market is a mere few % points.

Death of the high-street? But the majority of closures aren't shops

Shop vacancies mainly come from the closure of banks, building societies and post officesThe prevailing wisdom is that high street retail is in terminal decline. And while many premises are closing the overwhelming majority of vacancies aren't from shops closing. It's banks, building societies and post offices.

What doesn't help is many of these occupy prominent locations. So they're conspicuous and it's obvious when they shut. This fuels perceptions of doom-and-gloom.

That's not to say the departure of some established names in the video, music and travel space aren't to be lamented.

But the truth is internet retailing is not killing shops selling tangible goods at anywhere near the rate many of us think.

The headlines are sensational

It's not the pure numbers aren't true, it's the story they're being used to tell that isn't.

Overall reported growth fails to break out channel displacement, fails to break out goods and services not sold in shops, and fails to identify sales attributable to genuine online only retailers. All we get to see is one big number, not what that number comprises.

So it's impossible to see the wood from the trees. The result is widespread misunderstanding of the facts and the commonly held belief it's only a matter of time until the internet exterminates retail stores. But the internet will never kill traditional shopping in shops. Why? Because shopping will always be an experience. For more see the video.


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Also in this series
  1. The Internet Bubble Has Not Yet Burst
  2. eCommerce Growth is Crashing
  3. Internet Growth Is Not Materialising
February 2018 (1)
January 2018 (2)
December 2017 (2)
November 2017 (4)
Earlier (301)
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