A recent PricewaterhouseCoopers economic report suggests the gradual shift in demand from traditional high street to digital channels has had a number of important implications for businesses.
The impact and trends of the digital channels shift
- Revenue: A shift to digital has not necessarily translated to extra demand via higher revenues, but businesses have been able to protect their revenue (rather than losing out to online competitors) by setting up multichannel distribution networks;
- Expenses have, however, increased as the shift from a ‘single-channel’ to a ‘multi-channel’ distribution framework has meant more spending on setting up and maintaining an e-commerce infrastructure; this creates the need for a strategy that better integrates digital and traditional channels into a single framework.
- Competition has intensified as it has become easier to compare prices for similar products. In the medium term, this could lead to some downward pressure on prices (and consequently profit margins) as comparison websites become more popular across an ever wider set of products.
Strategy amendments for the digital channels shift:
- Retailers have to be much clearer on their proposition and targeting. The success that high street discounters have experienced, even five years after the financial crisis, highlights the benefits of implementing a transparent successful pricing strategy
