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Online retailers eyeing physical store openings

One in six UK small to medium-sized enterprise (SME) e-retailers are planning to expand into physical stores during 2014, according to new research commissioned by Royal Mail.

The study of 406 companies indicated that 16% of UK SME online retailers expect to either open a physical store or seek space in an existing location in order to increase sales this year. The survey, which was conducted by independent research company Brass Insight, comes as sales growth confidence among online SMEs has dropped.

Royal Mail's annual tracker study into the expectations and challenges facing UK SME online retailers has revealed that 56% of e-tail SMEs are confident their sales will increase in 2014, compared to 64% one year before.

Additional research from Royal Mail shows that 15% of UK SME e-retailers are planning to expand by using online marketplaces to sell their goods, while 40% of they are planning to start trading from new channels in the coming 12 months.

The concept of online retailers expanding into bricks and mortar stores is not new, with eBay experimenting with a pop-up store in the run-up to Christmas 2011 and agreeing a delivery partnership with Argos last year, while health and beauty e-tailer Feelunique has previously opened salons and stores to strengthen its brand presence.

Similarly, leisure retail complex IntoOutdoors is set to open on the outskirts of the Cotswolds in 2015, providing a space where online retailers can open up stores. Site owner Eagle Land is looking to develop the concept of "try before you buy" which will allow shoppers to try out sporting goods in suitable outdoor surroundings before they make a purchase.

And the signs are that a significant proportion of online retailers will be keen to embrace such opportunities, as they look to distinguish themselves from the increase in competition online.

Nick Landon, managing director of Royal Mail Parcels, said: "Royal Mail's annual tracker study of UK SME online retailers shows that while the majority expect to increase sales, competition is more intense than it was last year.

"UK SME online retailers are thinking carefully about how they can develop their businesses during 2014. They are concentrating on exploiting as many channels to market as possible, adding space in physical premises and online marketplace listings to complement their existing web channel."