- Click-and-collect transactions in Northern Ireland will be worth £1.34bn in 2022, accounting for 39.2% of retail for retailers who offer this service
- Nationwide, click-and-collect transactions will be worth £42.4bn in 2022 – 8.4% of the UK’s total retail spending
- The need to balance digital and in-store is fast becoming a standard industry expectation
- However, materials are currently placing the biggest strain on Northern Ireland retailers’ profitability, and consumers in Northern Ireland are looking to cut 32.5% of their retail outgoings in the months ahead, as the rising cost of living begins to take hold
A new report1 released today by Barclays Corporate Banking reveals that click-and-collect shopping will be worth £1.34bn2 in Northern Ireland this year. This growth follows the broader national trend that has seen the click-and-collect economy swell to be worth over £42.4bn in the UK this year – a significant 8.4% of the industry’s total annual income.
The study – ‘What’s in store for retail?’ – focuses on retail businesses with over ten employees, and
looks at the rise of ‘hybrid’ shopping, which involves both physical and digital interactions. Click-and-collect, where goods are bought online but picked up from a physical store, now accounts for 39.2% of sales for retailers who offer the service in Northern Ireland, up from 27.3% a year ago.
The popularity of the service grew during the pandemic but, unlike pure online sales which peaked during that period, it has continued to grow post the lifting of lockdown restrictions, indicating that click-and-collect is a consumer behaviour that is here to stay.
The click-and-collect economy now also underpins 3,600 jobs across the industry in Northern Ireland, which equates to 3.0% of the region’s retail workforce. Almost a third physical stores in Northern Ireland (31.1%) are now used as click-and-collect locations, with around a third (32.7%) being used to process returns.
Barclays’ data demonstrates how online and physical retail sales channels are becoming more intertwined. Consumers in Northern Ireland like to research products online and in-store in equal measure across a number of products, including DIY equipment (36.2%), electronics (35.7%), entertainment (34.5%), and sports or outdoor equipment (34.5%).
Our research reveals that having both an online and physical presence can be advantageous for a retailer’s appeal. Almost a third (27.9%) of consumers in Northern Ireland say they can be hesitant when buying from online-only brands, a figure which drops to less than 1 in 10 (6.6%) when businesses also have physical stores.
Support for store shopping, but locations are changing
Despite the increasing popularity of online shopping, there is still support for high streets. When asked whether there is a future for physical retail space, 82% of consumers in Northern Ireland agreed that there is, of whom 45.9% strongly agreed. However, there is a clear demographic split across the UK: just over half (54%) of 16-24-year-olds believe in the future of the physical store, compared with almost three quarters (74%) of over 55s.
What the report clearly spells out is that, following the inevitable acceleration in the shift to digital during the pandemic, consumers are now returning to stores to make their purchases with confidence, and trust in bricks and mortar stores is still strong.
Almost all (98%) retailers in Northern Ireland feel that operating a physical store is vital to their business success. However, many are re-evaluating where their real estate is based, to make sure they occupy the most appealing destinations for consumers. 6 in 10 (60%) of retailers from Northern Ireland have reduced the number of stores they have in city centres, while 28.6% of Northern Ireland retailers have increased their presence in retail parks. An increased presence in retail parks will likely be popular with Northern Ireland shoppers, 26.7% of whom say it is their preferred location for a store.
Rising cost-of-living adds pressure to profitability and recruitment
Amid these changes, the cost-of-living increase is creating additional challenges for retailers. Barclays’ research shows that UK shoppers are aiming to reduce their spending by between 25% and 30% before the end of the year, across a broad span of retail categories. However, the biggest strain on business profitability in Northern Ireland is materials AND supplier costs selected by 19.6% of the retailer respondents, ahead of staff wages (15.7%), rent (13.7%), and reduction in consumer spend (13.7%).
In the industry’s scramble for talent, the top three roles Northern Ireland’s retailers are most commonly looking to hire are:
- Back-office staff (15.7%)
- Cleaning staff (15.7%)
- Staff with strong communications skills (13.7%)
In response, retailers in Northern Ireland are investing around £376,100 each to increase their workplace appeal.
Adrian Doran, Head of Corporate Banking for Barclays in Northern Ireland, said: “Perhaps more than any other sector over the past two years, retail has been forced into a period of accelerated evolution. The pandemic drove everyone online, and now the rising cost-of-living is increasing business outgoings while reducing consumer spending.
Encouragingly for Northern Ireland’s retail sector, however, businesses are adapting their sales models to weather these financial storms as effectively as possible. Links between digital and physical shopping are evolving, which are opening up new opportunities and ways to generate income.”
Other notable findings from the ‘What’s in store for retail?’ report include:
- More than 4 in 10 (41.2%) of retailers from Northern Ireland report that festive shopping is already underway. Nationally, discount retailers are the most likely to have seen Christmas shopping start early (38%)
- Over a fifth (21.6%) of retailers from Northern Ireland have introduced services in-store such as beauty and grooming concessions, while (19.6%) have partnered with another brand to share retail space, and (15.7%) have created co-working spaces in-store
- Over a fifth (21.6%) of retailers from Northern Ireland are investing more in their data capabilities
- Less than 1 in 10 (7.8%) of Northern Ireland retailers say they have recreated the traditional in-store experience in the Metaverse
- 0% of Northern Ireland consumers want retail space to become more sustainable through more efficient energy use (e.g. turning lights off at closing), and 29.5% would like to see more electric vehicle charging points
