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Closing physical stores can cause online sales to halve warns CACI research

Closing physical stores can lead to a 50 per cent drop in online sales for retailers, according to new research by consumer and demographic insights group CACI. The research indicates that there is a substantial halo effect to operating a physical store.

The company says that retailers that fail to maintain a bricks and mortar presence in a given catchment area, alongside a transactional website, typically achieve online sales 50 per cent below those retailers that do have a physical presence.

CACI’s research collected data from more than 2,500 consumers around the UK. It found that online retailer sales were on average 106 per cent higher inside the catchment of a physical store than they were outside. This figure rose to 154 per cent for electronics, 127 per cent for fashion, and 124 per cent for sportswear.

Stores play a key role in influencing purchase decisions, with over half of online spend ‘touching’ a physical store, according to CACI.

“The halo effect highlights two key points as the industry wrestles with how it evolves in the face of seismic shifts in consumer behaviour.  Firstly, brands should carefully consider the unintended consequences of downsizing their portfolios. What might seem an effective way to reduce costs may also undermine the viability of the business due to the positive impact stores have on online sales,” says CACI director of property consulting Alex McCulloch.

“As importantly, the research also points to the need for landlords and brands to work together.  Consumers move seamlessly from one channel to another, which means neither side has the upper hand. Both sides must recognise the importance of stores across a retailer’s wider business and both should unite in building a stronger, more relevant, and therefore more resilient, offer for consumers.”