Discount Stores

2.3 Could Discount Stores survive E-Retailing?

The transition to an online space poses several challenges for discount stores. The challenge for the discounters evaluating the potential of opening an online store is maintaining their momentum without losing focus on their core business model. The constant emergence of new technologies and the expansion of the digital economy places pressure on physical stores. The cost and complexity of setting up online commerce and business activities makes it difficult for discount stores to create an online shop. Discount stores tend to focus on consumers who are price conscious and looking for low-cost quality products. They tend to source high volumes of fast-moving consumer goods at a reduced price and

Processing, packaging and shipping are a costly part of retailing online for discount stores as their profit margins are disreputably low therefore the cost savings will have to be considerable to refute the delivery cost. Discount stores face the challenge of maintaining their reputation for value and selling low-cost products if inflation is on the rise and suppliers raise their prices. This may result in the need to rebrand as the number of items the store will be able to sell will reduce as a consequence of Inflationary pressures. The increase of companies moving to online retail channels creates increased competition and competitiveness for discount stores. Company’s such as Amazon and Ebay that focus solely on online sales are a major competitor for discount stores entering the World Wide Web. In addition to this, discount stores tend to make money from impulse purchases as people enter the store to browse or look for one specific product and they see other things and end up buying them. These type of stores present unexpected deals which shoppers thrive on as they find and seize unpredicted goods. However this type of shopping is problematic to replicate through online shopping. Potential retailers operating online are also faced with other possible payments such as imposing taxes which damage revenue potential and make it difficult to sell goods at a reduced

The aim of this trial was to give the budget company an insight into online retailing. Although the trial was successful for both Primark and ASOS, a spokesperson for Primark believed that the budget retailer would prefer for their customers to ‘keep toodling down to Oxford Street’ than buy online (Daily Mail, 2013).

Primark’s finance director John Bason expressed that the company had no intentions of expanding to online retailing following the 20% rise in sales over Christmas 2013; without a single online transaction. Although Primark proved successful online; Bason highlighted that if the company was to expand their retailing to e-retailing it could affect the company’s sales with regard to the maintenance of their website. Primark also need to take into consideration that the cost of delivering customers products to their homes could be more expensive than the product itself (The Guardian,