With the uncertainty surrounding Brexit, its economic aftermath and the fragility of consumer confidence, it’s fair to say retailers haven’t had it easy this year. Following the EU referendum decision, measures of consumer confidence signalled a sharp decline, as consumers fretted about the potential impact of leaving the EU. Across all retail industries, be it technology, fashion or grocery, it’s certainly been a turbulent year.
However, despite the upheaval, it is surprising to see that consumers are in fact spending more than ever, which is great news for retailers. Consumer spending in the UK grew at the fastest pace in nearly two years in November, according to Visa’s UK Consumer Spending Index. More interestingly, online spending jumped 12.5% during the month, the fastest pace recorded since the Index began in 2009.
Consequently, it seems there is one thing retailers can be certain of – the growth of consumer spending online – and this is therefore where retailers need to focus their attention. The Christmas season is off to a good start, with ONS figures showing continued growth in November boosted by Black Friday and Cyber Monday, but there is still room for improvement. We found in a recent study that just by making small improvements, such as increasing site speeds and adding basic features like guest checkouts, could increase UK retailers’ online revenue by £2 billion each year.
The retail sector has seen major shifts and developments over the last year few years, driven by consumer behaviour and needs. For example, Amazon made its very first drone delivery this month. To keep up with this rapid change, retailers need to look at where they can make small improvements that will improve their customers’ experience if they want to drive profitable growth.
In order to decipher the areas in need of the biggest improvements, we have recently analysed the UK’s top 50 retailers and ranked them on their ecommerce offering. One of the most obvious areas for improvement was website speed. On average, page load speed across the top 50 retailers was seven seconds, which is double the recommended minimum. With every extra second in site load time costing retailers seven per cent in converted sales, the implications could be huge. Morrisons’ website, for example, runs at 10.1 seconds, four times slower than the industry standard. Retailers need to make it much easier for customers – they wouldn’t put up with slow service in-store and the same applies online.
Another basic feature that retailers should be focussing on is guest checkout, as over a quarter of shoppers abandon their baskets without this option. Having a quick and simple guest checkout with auto-complete and address lookup tools creates a smooth hassle-free buying journey for customers.
On a positive front, when analysing retailers’ ecommerce technology and mobile friendliness, we found that virtually all (92 per cent) of the top 50 retailers have websites built for mobile. This is a hugely positive step forward as retail becomes increasingly driven by the customer’s desire to shop on the go, with mobile accounting for over half of UK ecommerce sales.
Retailers are also faring well when it comes to social engagement; B&Q and Sainsbury’s both score highly in this category. Social media offers a unique platform with which to connect with customers, making it a powerful advertising tool along with an important channel for customer service.
While retailers have made huge strides in the last few years with their online presence, many are still struggling with basic ecommerce functions needed to meet shoppers’ needs. While this will not be an easy fix, no-one in retail should need further convincing or evidence of the importance of the online experience on overall profitability.
When the outlook for 2017 is so unpredictable retailers should be looking at where they can improve their customers’ online experience to boost their bottom line. The retailers that do will be one step ahead in the ecommerce battle.