Price Competition between online retailers and High St shops - Essay Example

Price Competition between online retailers and High St Shops Recently, the growth of internet infrastructure and network marketing has occasioned the emergence of online stores, which are steadily becoming more popular and gradually taking over from high-street shops. In Britain, the growing public trust in online shopping is contributing to their overtaking high-street shops; even those with an online and physical presence. This paper will discuss the competitive strategies that both types of stores are applying to boost their sales and respective market shares.

In 2013, virtual transactions for internet exclusive stores went up by 18 percent while those that practiced online sales along with convectional shop keeping experienced 2 percent decline in growth (Passingham 2013). In spite of the increase in demand for online transactions, the amounts customers have to pay for the products keep dropping; the mean value at the checkout is estimated to have reduced by over 10% since 2011. This is evidence that the online customers are using the convenience of online stores to shop for deals.

Online shops have a competitive edge in that they can afford to sell their goods for considerably less than their high street counterparts do (Kelsey 2013). The latter have to account for the cost of; lease, security, staffing and myriad other costs of doing business and the higher overheads ultimately weigh in on their competitive advantage. For online stores, there is the added convenience of transcending geographical boarders; a clothing shop in London will be mostly out of bounds for customers living far from the city but the online one is open to anyone anywhere.

This way, the customer base for online stores is significantly larger than that of high street ones (Kelsey, 2013). Firm’s like ASOS, which deals in both men and women’s clothes, have capitalized on the online marketing sector. Today, it is one of the most profitable clothing stores in the UK because of its online presence, which allows it to cater for the needs of next generations shoppers. Many of these are used to getting everything online and as a result, ASOS provides an opportunity for them to easily and conveniently access fashion accessories.

They also provide services, which allow customers to “try on” the clothes online virtually which makes them even less likely to go for a high-end street shop. High street stores on the other hand have also upped their efforts to remain competitive in the quickly digitalizing market, one of the main methods applied is the opening of websites and online stores so they can function both as online and physical shops. Traditional retailers such as Marks and Spencer have quickly adopted to the new trend and they can just be as easily accessed from the internet as from the high-street shops.

By diversifying, the high-street shops have managed to reduce their prices by leveraging on their saving from their online sales. Their strategy is to provide both at a the same or lower rate than online stores and take advantage of the fact that many people, more so the older generation will opt for goods they can touch. In the end, it is clear that although online marketing is definitely the way of the future, high-end shops have not given in just yet and will continue to compete even as they strive to adapt.

References Kelsey R. 2013. Your view: Online shopping v the High Street. BBC Newsbeat. [online[] Available at http://www.bbc.co.uk/newsbeat/20947017Passingham M. 2013. Online retailers outperform old high street brands. V3.co.UK. [online[] Available at http://www.v3.co.uk/v3-uk/news/2275763/online-retailers-outperform-old-high-street-brands