Small E-retailers Plan To Expand, Study Shows

SME Retailers Are Looking To Take Advantage Of Different Markets


Steven Beahan, Partner | +44 (0)114 294 7868

Small and medium enterprises (SMEs) that operate in the retail sector are looking to expand their horizons in 2014, with 40 per cent of online traders planning to explore different market channels.

A new study conducted by Royal Mail has shown that increasing competition in the internet shopping industry is prompting many businesses to find different ways of selling goods.

One in six UK-based specialist e-retailers said they hope to open bricks and mortar stores in the coming 12 months. Additionally, 15 per cent of the survey respondents confirmed they would use online marketplaces to increase their sales.

Overall, 56 per cent of the 400 SME e-retailers who took part in the survey were confident that sales activity will rise in 2014.

However, a similar number (54 per cent) suggested the e-commerce industry is now more competitive than last year, with 59 per cent of respondents indicating that the growing number of websites is the primary reason for this. Around 57 per cent said customer price sensitivity was the main factor behind rising levels of competition.

Nick Landon, managing director of Royal Mail Parcels, commented: "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."

It remains to be seen whether opening physical stores in 2014 is a good idea.

New figures published by accountancy firm BDO showed that while online shopping activity boomed in the run up to Christmas, high street sales were disappointing.

The organisation confirmed that store owners reported a 2.2 per cent drop in transactions in December - a crucial month for retailers in the UK.

At the other end of the scale, online sales rose by 31.1 per cent when compared with the corresponding period in 2012.

Expert Opinion
The New Year is often a time when many of us choose to reflect on our work and life and think about next steps for the coming 12 months.

"It is unsurprising to see so many small businesses in the retail sector carefully considering potential avenues for growth, with many of those currently operating solely online considering how they can diversity their approach and potentially introduce a high street or physical offering.

"While the benefits of taking such steps is huge, it must be remembered that growing pains can emerge in many ways – whether it is employment law issues related to taking on new staff or the general legwork needed when seeking and finalising deals for commercial property space.

"SMEs should ensure that having the right legal support can help greatly in this respect and any retailers considering this move should seek advice at the earliest opportunity."
Steven Beahan, Partner