Friday 22 May 2020 3:36 pm Apater Capital Talk

Facebook shops for customers as e-commerce explodes

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City A.M. contributor

Do you remember when you needed a new item of clothing and headed to the high-street to browse the shops? Perhaps a few try-ons in different places before making your selection?

Coronavirus means that’s obviously not possible at the moment, meaning a choice of either waiting until lockdown passes or going online.

More and more of us have been doing the latter. The British Retail Consortium (BRC)-KPMG Retail Sales Monitor for the four-week period from 5 April-2 May, published last week, showed retail sales plunging by 19.1% in April – the worst decline recorded since the monitor began in 1995. But the same dataset revealed that online non-food sales increased by 57.9% in April, against a growth of 4.0% in April 2019; and what is known as the ‘non-food online penetration rate’ surged from 29.9% in April 2019 to 69.9% this April.

Online trends accelerating

But even before this Matterhorn of spikes, the UK has long been on a journey towards home-shopping and e-commerce. City AM was writing about UK consumers being more likely to do their shopping online than any other EU country five years ago. It’s a global trend, of course. Here, we read this week about African countries’ similar trajectory, also now propelled by the global pandemic.

Unveiling the latest UK retail figures, the BRC’s chief executive Helen Dickinson OBE said that coronavirus has accelerated trends and “it is likely that as the lockdown wears on, these new shopping habits – such as the trend towards online purchases – will become more entrenched for many consumers”.
Steve Rowe, the chief executive Marks & Spencer – that famous bastion of British retail – was singing from the same hymnsheet this week, saying that customers ‘may never shop the same way again’.

For many ‘native’ digital brands, e-commerce has always been at the core of their business, of course – albeit that there are always technical, legislative and security trends and challenges to keep up with.
But traditional bricks-and-mortar businesses are having what the Economist recently described as a ‘crash course in e-commerce and digital payments’. Sadly, e-commerce cannot save everyone and high streets are surely likely to see a flow of shutdowns among retailers that can limp along no further.

Facebook Shops enters the fray

It is against this extraordinary and tumultuous backdrop that we hear of the launch of Facebook Shops. Mark Zuckerberg’s latest venture, which was unveiled this week, wants to ‘empower anyone from a small business owner to a global brand to use our apps to connect with customers’.

The California-headquartered social media giant said the initiative had been accelerated due to coronavirus and that this summer, starting in the US, it would also be introducing ‘Instagram Shop’ (Facebook owns Instagram), which it describes as ‘a new way to discover and buy products you love in Instagram Explore’.

Although there are many platforms already available for SMEs to make sales, it’s easy to see the appeal of using a conduit that many already use – Facebook – to keep the tills ringing. In fact, monetising social media will never have been so nakedly tangible.

For so many businesses, the immediate focus is day-to-day survival. But those with the bandwidth to consider retail trends, and the launch of new sales channels such as Facebook Shops, will be in a better position to evolve and even perhaps thrive when we reach the ‘new normal’.