E‐commerce and retail property in the UK and USA
| Published date | 01 April 2002 |
| DOI | https://doi.org/10.1108/14635780210420034 |
| Date | 01 April 2002 |
| Pages | 142-158 |
| Author | Elaine M. Worzala,Anne M. McCarthy,Tim Dixon,Andrew Marston |
| Subject Matter | Property management & built environment |
JPIF
20,2
142
JournalofPropertyInvestment&
Finance,Vol.20No.2,2002,
pp.142-158.#MCBUPLimited,
1463-578X
DOI10.1108/14635780210420034
ReceivedSeptember2001
Revisedandaccepted
December2001
ACADEMICPAPERS
E-commerceandretail
propertyintheUKandUSA
ElaineM.WorzalaandAnneM.McCarthy
ColoradoStateUniversity,Colorado,USA,and
TimDixonandAndrewMarston
TheCollegeofEstateManagement,Reading,UK
KeywordsE-commerce,Realestate,Shoppingcentres,Entertainment,USA,UnitedKingdom
AbstractPresentsfindingsfromseparateresearchprojectsconductedintheUKandthe
USAontheimpactofe-commerceonretailersandretailproperty.Examinesdifferences
betweenUKandUSretailersalongseveraldimensions:Internetstrategies,perceptionsof
theInternet,barrierstoe-commercegrowth,andfuturespacerequirements.Overall,
findingsindicatethatUKandUSretailershavesimilarattitudesaboute-commerce.
Specifically,retailersinbothsamplesperceivelittlethreatorimpactfrome-commerce.
Second,barrierstoe-commercegrowtharesimilarforUKandUSretailersandinclude
fulfillmentandsecurityissues.Third,UKandUSretailersindicatethattheirretailspace
needswillremainthesameorincreaseintheshortterm,despitethethreatofe-commerce.
Finally,bothsetsofretailersbelievethatentertainmentisanimportantstrategyifshopping
centersaretoremainviable.
E-commerceandretailintheUKandUSA
You'dbettersellyourshoppingcenters.In2010,halfoftheretailstoresinAmericawill
beclosedbecausehalfofallpurchasingwilloccuronline.Thewholenotionofan
automobile-basedretailinfrastructureisdead(LesterThurow).
Introduction
E-commercehasbeenthesubjectofintensedebateworldwide.Intheretailreal
estateindustry,opinionsvarywidelyontheeffectofe-commerce.Forecasting
thefutureofanewtechnologyisdifficult.Whilesomeanalystspredicta
negativeimpactonretailsalesduetotheInternet,othersarguethattheInternet
hasnorealfutureandthatphysicalspacewillcontinuetoattractshoppers.A
majoraimofthispaperistoreviewtheseconflictingviewsandtohighlightthe
findingsfromtwoseparateresearchprojectsintheUK(Dixonetal.,2001)and
theUSA(WorzalaandMcCarthy,2001).Bothstudiessurveyedretailersabout
keytopics,including:
.Internetstrategies;
.perceptionsoftheInternet;
Theresearchregisterforthisjournalisavailableat
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Thecurrentissueandfulltextarchiveofthisjournalisavailableat
http://www.emeraldinsight.com/1463-578X.htm
The authors gratefully acknowledge their funding agencies. Funding for the UK study was
provided by the British Council of Shopping Centres and the Royal Institution of Chartered
Surveyors Education Trusts. Funding for the US study was provided by the International
Council of Shopping Centers Educational Foundation.
Academic papers:
E-commerce and
retail property
143
.barriers to e-commerce growth; and
.real estate requirements.
Following an examination of retailing in the UK and USA, the paper provides
an overview of key research from previous studies in both countries. Next, key
findings from the current studies are presented. The paper concludes with a
discussion of e-commerce predictions and areas for future research.
Retailing in the UK and USA: similarities and differences
The retail industry is a global marketplace. Wal-Mart has expanded into
Europe, Carrefour into China, and Zara, Sephora and Hennes into the USA.
Nonetheless, there are differences in the UK and USA, as Table I shows, that
combine to generate lower prices for US consumers. While prices are generally
lower in USA, purchase amounts are higher, indicating competitive pricing for
bulk purchasing. Yet, margins in the UK and USA are similar, with the best
retailers achieving 6 per cent to 7 per cent.
E-commerce, retailing and retail real estate
While it is difficult to pinpoint exactnumbers for e-commerce sales,estimates are
available. US e-commerce figures for the first quarter of 2001 report that
approximately 1 per cent ($7 billion) of retail revenues were online, excluding
travel and financial brokers/dealers (US Department of Commerce, 2001). This
represents a 33 per centincrease from the first quarter of 2000.Dixon et al. (2001)
estimate that B2C retail sales in the UK were approximately 0.6 per cent of total
sales in 2000, including home/catalogue shoppingbut excluding services.
The evolution of e-commerce has been different in the USA where online
firms had a three-year run at establishing themselves. In the UK, entrepreneurs
and traditional company managers discovered e-commerce almost
simultaneously. UK and US differences include the size of current markets and
Internet access levels, as Table II and Figure 1 show. Sales in the USA are
greater than in the UK in terms of current e-commerce revenues, although as a
per cent GDP both countries are closer. Interestingly, an International Council
of Shopping Centres' report (1999) forecasted that in the USA only 4.7 per cent
of retail sales would be online by 2005 and 5.3 per cent by 2010. The question
then becomes, not whether the Internet will impact the retail industry, but how.
In the UK, several studies suggest an increasing polarization between prime
and secondary locations as online shopping grows (DTI, 1999; Jones Lang
Table I.
Characteristics of the
UK and US retail
sector market
UK USA
Wages as a per cent of total costs 5.75 per cent 5.15 per cent
Average rent per square foot $62 per sq.ft $28 per sq.ft
Combined sales of the top five retailers (1997) $6,544 million $12,6691 million
Shopping space per capita (1997) 2.5 sq.ft 19.4 sq.ft
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