Online retail opens shops
Something curious is happening in Dutch retail. While traditional shops collapse under financial pressure, online brands are eagerly opening physical locations. According to industry body INretail, there has been an acceleration in recent years of online stores opening physical premises. Spokesperson Paul te Grotenhuis says brands like electronics retailer Coolblue and clothing shop Mr Marvis, which grew online during the Covid-19 pandemic, are good examples of this trend. Meanwhile, Chinese brand Shein is finding its way into luxury French department stores.
Established shops like Blokker struggled to make the digital transition because customers expect online offerings to match in-store availability. ‘Blokker had the reputation that you could order vacuum cleaners and frying pans there. If you don’t have that range perfectly organised online, it undermines your reputation,’ says Kitty Koelemeijer, professor of marketing at Nyenrode Business University.
Physical spaces open new revenue streams
The physical spaces these digital natives create serve different purposes than traditional retail. Retail expert Adgild Hop of Deloitte explains while traditional shops focus on selling products, physical stores for online brands extend the identity they have cultivated on social media. ‘Very important in this is that online followers have a sense of community. They want to belong to that brand, and the physical shop must offer them extras,’ Hop notes.
Gymshark exemplifies this strategy at its London location, which doubles as a gym. After closing time, racks mechanically rise to the ceiling, transforming the shop floor into a pilates studio. There’s also a fitness centre at the rear, and a smoothie bar. This creates an experiential destination rather than merely a point of purchase, reinforcing brand loyalty while generating revenue through multiple channels. This strategy of opening multiple revenue streams allows businesses to shield themselves from price shocks and economic instability.
Price shocks for unsustainable products
The appearance and disappearance of retail shops are affected by the prices of raw materials. The prices of foods – and their environmental sustainability – often have a knock-on effect on the retail sector. Soy, for example, is an ingredient in many food products and the source of major environmental problems. Brazil, home to the Amazon rainforest, accounts for 40% of global soy production. It recently abandoned a commitment to protect the Amazon from deforestation, in order to produce and sell more soy.
Flooding the global market with cheap Brazilian soy will affect Dutch retail. Price shocks like this are bad for business. Instability breeds caution, which hampers innovation and investment. In the longer term, Brazil’s decision to sacrifice the Amazon to sell more soy could hurt the food retail sector. Companies want to build sustainable supply chains. Buying soy which causes deforestation in the Amazon won’t help. This is just one example of how global political and economic decisions can impact retail.
Consumers make complex choices
Trends in consumer behaviour are also linked to these dynamics. Veganism is on the rise among millennials and Generation Z, for example. Young people disproportionately buy products like tofu and soy milk, which are made with soy. The environmentally conscious young hope to make green lifestyle choices. Brazil deciding to abandon its Amazon soy moratorium will harm soy’s environmental credentials, which could have a domino effect on retail when young people start buying fewer soy products.
Furthermore, cross-border factors have a particularly large impact on the e-commerce market. Convenience drives more purchases at international platforms. China now represents the largest source of cross-border purchases by Dutch consumers, followed by Germany and the USA. Large platforms like Temu and Shein exert considerable influence on prices and market competition, though product quality, safety and sustainability from China remain points of discussion.
Written by Jason Reed