Online Shopping and its Impact on Retail

By Sam Iontton09/08/2021

Since the advent of the internet, the rise of online e-commerce has changed the way we shop. Physical retail stores have had to compete with the growing popularity of online shopping. So what has this meant for the retail sector? Here at Displaysense, we’ve taken a closer look at the online shopping impact on retail and why consumers are favouring it over brick and mortar stores.

Why is online shopping growing in popularity?

To understand the online shopping impact on the retail industry, we must understand why online shopping is so popular. According to a WBD report titled The Digital Tipping Point, online shopping currently accounts for 29% of total retail sales in the UK, which will rise to 53% in the next ten years.

Data from the same report showed that the popularity of online shopping comes down to three main factors: it’s cheaper, faster, and easier to return items. There’s no denying that, often, shopping online is more convenient – especially when the internet is at the tips of our fingers thanks to smartphones.


It also tells us that Generation Z (those born between 1997 and 2015) are the age group that shop the most online. Shopping habits have changed; younger generations primarily are using their smartphones to easily browse retailers online, which is a stark contrast to the pre-internet age when shopping was exclusive to brick and mortar stores.

Online shopping has the appeal of convenience, but added to that is the fact the internet has also created a whole new way to contact customers. Now, internet users are frequently exposed to targeted advertisements, personalised emails and social media campaigns. Brick and mortar stores simply can’t replicate this marketing strategy.

The online shopping impact on retail stores

Over the years, many high street stores have been struggling to stay afloat, unable to successfully compete against this rise of online shopping. Last year, the pandemic forced several household names to close their doors for good, including the likes of Debenhams, Laura Ashley and the Arcadia Group empire. Tellingly, the former high street goliath has been acquired by the hugely popular online retailer ASOS.

But all is not lost for the high street – in fact, previously online-only brands will open 850 brick and mortar stores in the next five years. As convenient and easy as online shopping is, many customers still desire the in-person experience, particularly when it comes to trying on clothes and sampling make-up. Despite new technology that allows customers to try on glasses and clothes virtually, this is one aspect of the shopping experience that online shopping can’t truly offer.

How can brick and mortar retailers compete?

To compete with the convenience of online shopping, the high street must adapt. Just as brands are trying to replicate the in-store experience online, many retailers are already starting to combine the tech and software aspects of the online experience in-store. Brands like Uniqlo, for example, have piloted RFID electronic tags to streamline and speed up the checkout process.

Similarly, omnichannel marketing is an approach that offers customers the best of both. Retailers should have an in-store and online presence and find ways to combine the two. Examples such as providing in-store collection of online orders will help to make the in-store experience more convenient for the customer.

The rise of experiential shopping is also a major way retail stores are changing. 52% of millennials reported that they are more likely to spend on experience-related purchases. As a result, to compete with online shopping, retailers are now focusing on how to make their in-store experience immersive and enticing, dubbed ‘retailtainment’.

For a more detailed look into the ways in which retailers must adapt, read our blog: what is the future of retail stores?

The takeaway

The online shopping impact on the retail industry has been huge. The knock-on effect has meant the loss of jobs closures of stores that were once high street giants. To adapt, the retail industry has started to converge the online and offline shopping experiences, and brick and mortar stores are focusing more and more on experiential retail.

Online shopping has changed the way we shop, but the high street is also evolving to match.