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NEWS - 12. February 2019 14:45

Young people prefer e-shops for shopping

After analysing recent retail trends, SEB has found that the biggest threat to so-called traditional brick and mortar shops suffering from chronic over investment comes from the much more efficient e-commerce.

According to the assessment by the influential bank, large retailers are haunted by the risk of having to close part of their retail space due to the pressure exerted by e-commerce, which is proving to be more efficient in selling books, electronic goods, films, music, clothing and footwear. The sole exception is the retail sale of foodstuffs, the e-commerce segment of which remains reserved, which is also why the sector has the biggest potential for growth.

The spread of electronic commerce is accompanied by fewer physical locations, greater transparency for the consumer and lower purchase-comparison costs, and a greater geographic market reach for sellers. The latter circumstance includes a clear plus for merchants, in the form of greater sales opportunities, as well as a significant negative, since there will be an increase in competition.

The growth of electronic commerce will be helped by demographics. While older people traditionally use electronic channels less often when it comes to making purchases, 78% of 30-49 year old Swedes and 73% of 18-29 year-old Swedes for example made purchases from e-shops in 2017.

E-merchants are divided into those who only have an e-shop and those who have an e-shop in addition to regular shops.

In the case of larger retailers, the standard solution is to also develop an e-shop alongside their regular shops. At the same time, those who have thus far only dealt in electronic commerce have begun to acquire regular shops. It would therefore appear that a combination, in which regular and e-commerce are functioning together, is developing, whereas a portion of the regular sales space may rather be altered to provide product exhibition, testing and presentation space.

This type of development is supported by the fact that new retail spaces are, as a rule, bigger than existing spaces and are furnished more extensively than previously with entertainment and food products. At the same time, the construction of large new shopping centres has not reduced the amount of smaller retail spaces.
Globally, the United States, Great Britain and Sweden are considered to be countries with developed e-commerce. While the share of food product sales in e-commerce was only 2% in Sweden, as indicated by data for 2017, in Great Britain and South Korea it was 20%.

In the Baltic Republics, the share of e-commerce is clearly larger in Estonia than it is in Latvia or Lithuania. The possibility of achieving success among global competition will be discussed on 5 March, when the E-commerce Association, together with SEB and Express Meedia, will be organising the largest topical forum on Baltic E-commerce, at the Creative Hub, in Tallinn.


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