A Red Herring is a fallacy in which an irrelevant topic is presented in order to divert attention from the original issue.  The saying arguably originates from the practice of escaped convicts using that nasty little fish to throw the pursuing bloodhounds off their scent. There are many other legends in this regard but what matters here is that the growing belief that online shopping is sapping shopping centre numbers is perhaps a red herring.

What we are faced with are some cold hard facts, turning to the IPD Retail Trends Report for the first quarter of 2011: Although there has been a decrease in shopping centre foot traffic over the last few years, individual spending has actually increased in nominal terms; although "in real terms people are spending less with each visit than they were five years ago."

In essence despite consumer confidence renewal off the back of a confidence boosted December 2010 trading quarter, the first quarter of this year remains, in IPD’s words: “unexceptional”. The reasons are diverse.  Comparing the consumer confidence of South Africans prior to the world cup in 2010 to the present is certainly unhelpful at best and deceptive at worst.

South Africa’s economy expanded an annualized 1.3 percent in the second quarter, its slowest pace in almost two years. GDP growth eased from a revised 4.5 percent in the first quarter.  Now that hurts. But IPD reports that retail sales remained positive with a 5.1% year on year increase.  Could it be that the economic context has more to do with the drop in shopping centre feet, why then are some retailers pointing at online shopping?

The boss of Harvey Norman, Australia’s premier electronics retailer, Gerry Harvey, says local retailers are under threat from online stores “They don't pay any taxes, they haven't got any overheads, there's incremental sales and that's where they make their money. In the end they (retailers) just put up their hands and say I can't stay in business," he told ABC news.

But one needs to note that Australia has a strong currency which is a major factor driving online overseas shopping, in that country.

Just out, the Price Waterhouse Coopers (PWC) Australia online shopping report says there has been a 13 per cent increase in the amount spent online last year, and predicts it will rise to $21.7 billion by 2015. PWC partner Stuart Harker expects growth in online shopping to outstrip the ‘bricks n’ mortar’ retail sector.  "Growth of mobile smart phones and the iPad where consumers are continuing to shop anytime or anywhere." he said. "It is faster and more convenient shipping, you can now buy something and have it delivered within a week from anywhere in the world." But Harker remained upbeat saying that local retailers can compete against online competitors. "It's not all doom and gloom, if they embrace the challenge of a fully integrated channel they can really capture and retain current customers," he said. So is there hope?

ECommerce in South Africa has been slow to get going compared to the UK, USA and Australia.  World Wide Worx, a South African research company, indicates South Africans with Internet access grew by 15% from 2009 to 2010. A recent MasterCard survey regarding online shopping trends in South Africa indicated that 51% of the respondents did online shopping. One may argue that e-commerce is definitely still in the infancy phase in South Africa, but it's growing. The same survey indicated that the number of users who make use of mobile phone access and thus using their phones to do online shopping in South Africa has increased considerably. This can be due to advances in cell phone technology and faster browsing systems.

Ignoring ecommerce is no longer an option and may present a threat to the retailer who does not keep up with trends. Consider the terms Complimentary and Supplementary. Rather than being merely threatened by eCommerce, retailers are under obligation to have an online presence to compliment their brick n' mortar stores.  Online stores are open 24 hours a day, 7 days a week extending hours to supplement the sales process.  Many studies have shown that shoppers do their research in physical stores and then do their buying online, possibly skewing survey figures.  It’s probably happened to you.  If 'brick 'n mortar retailers don’t have an online offering, they may not be an option for many shoppers. 

Questions crop up here as to whether it is better to add a company's products to an online shopping facility, create an eCommerce facility or simply allow for ordering of products at its own website? With the amount of users of online shopping mall type facilities increasing, retailers can only benefit from such a move to complement and supplement their physical stores. Although at this stage, surveys indicate that South Africans still use the online shopping facilities mostly for consumer items such as DVDs and books.  Look n’ Listen and Kalahari being among the leaders.

According to Kevin Meltzer, co-founder of a self-service solutions provider Consology, SA's biggest brands have yet to catch up with the expectations and needs of their consumers in the online space.

An example of the complementary/supplementary practice is Wal-Mart, a proactive e-commerce player, who may look to overhaul Massmart's online presence. Wal-Mart, currently purchasing a 51% stake in Massmart for R16.5bn, will be providing the required global expertise as it ventures into areas outside its traditional trading formats. Other local traditional shopping centre tenants like Woolworths and Pick n' Pay have already seen the need to compliment and supplement their business with online shopping sites, making their presence felt on the net.

An area that shopping centres can manipulate the online environment to their advantage has to be the issue of community. Consumers are far more prone to researching than in years past. Especially mobile consumers. By being present online instead of shunning it, puts retailers in the homes, cars and taxis of consumers. Most people still want that human contact and an over the counter experience that they trust.  The abovementioned IPD reports points out that larger centres in particular can transform themselves into entertainment destinations with restaurants and cinemas rather than maintain a pure shopping focus.

With every new trend there is resistance, but every new wave offers the opportunity for a great ride.
It seems that to see online shopping as a threat to shopping centres, could be a red herring throwing us off the scent of a foxy catch. What the trends show us is that online shopping can complement and supplement the whole shopping experience and still bring feet into South African shopping centres.