Armchair Or Hypermarket? How Our Shopping Tastes Are Changing

The internet is a dynamic environment and accordingly new developments are continually taking place

. Ten years ago it was in many ways a blunt instrument. Some people booked flights on line even as far back as those prehistoric days of the late 1990's. At that time the world wide web was not seen by most as a competitor to High St shopping but purely as information system from which for example you may discover where the nearest branch of a particular store is located. It was not seen by most that eventually it might become the store itself.

In the UK a huge step forward came with the introduction of the Debit Card. Previously only credit cards could be used and in those days there were many people who didn't trust them, believing there was a huge potential for online fraud or alternatively didn't trust themselves or their family to keep their spending in check. However the debit card was different. You could spend only what you had in your account and this many people reasoned was far more sensible.

Even by 2005, all the major supermarket players saw the future not in online sales but in hypermarkets located out of town with plenty of free parking, cafe facilities and a shopping experience that embraced far more than food retailing. This was the concept of the hypermarket which would be a one stop, one shop repository of not only food consumables but also white goods, televisions, computers, clothing and so on. In the UK which commercially was lagging behind the USA in this, where these huge out of town outlets had existed for some time, this was a period of intense activity with supermarket chains acquiring sites with a potential for development subject to planning permission. Local councils understandably objected that these new facilities would lead to a decline in town centre shopping which for a thousand years has been at the heart of the British shopping experience. This would turn out to be true but only partly because of the hypermarkets. Many other factors have played their part in the decline of town centre shopping. But these battles for planning permission take much time and are expensive. Nevertheless in the end they frequently are granted.

In the meantime the world wide web was sharpening its act. Transactions became more secure thanks to sophisticated encryption and services provided by such corporations as Verisign guaranteeing the integrity of each payment.

This increase in security gave shoppers more confidence. They also embraced the idea of being able to sit at a time and place of their choosing and check out the items they were interested in without a sales person breathing down their necks. In addition, in this real but still virtual world, it has become possible to visit ten stores and do comparitive price checks. This would have been unthinkable with personal shopping.

Meanwhile some hypermarkets had been approved whilst others were going through the appeal procedure. Yet slowly almost imperceptibly the internet had begun to make an impact. More and more people were searching online for special offers and trying to save money. The recession was bringing a new realism.

Anyone who has even a small amount of company knowledge will know that Tesco, the giant international grocery and white goods chain recently (First quarter 2012) announced a profits warning. It is difficult to draw firm conclusions from the comments made by the new chairman, but most financial journalists appear to believe that he was tacitly announcing an end to these frenzied hypermarket planning applications. It is not clear yet what plan B actually is but it's a fair bet that whatever it is will incorporate an expansion in Tesco's online presence or at least a firmer more streamlined and seamless connection between real outlets and web trading.

On line trading has now come of age but in retail history terms is still a fledgling. There are many more new ideas on the horizon designed to increase sales. For example, actual cash incentives for simply viewing specific product ranges even if you don't make a purchase (not just discounts) will be coming soon. Could it be in ten, twenty or thirty years that the hypermarkets will become deserted monuments to a previous age of retailing, as redundant as Woolworths or as extinct as the door to door insurance collector became?

In terms of investing, this hugely important trend must guide your thinking and in my view any retail or service business these days without a very strong online presence should be treated with caution.

by: Francis Meehan

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