September 18, 2001, 12:00 AM

TV-based interactive retail faces a grim future in the U.K., its testbed

The cost of developing interactive TV shopping in the U.K. is far outstripping the revenue and retailers should consider combining to develop a shared infrastructure, a new report, "Resuscitating Interactive TV Retail," from Forrester Research Inc. says.

The cost of developing interactive TV shopping in the U.K. is far outstripping the revenue and retailers should consider combining to develop a shared infrastructure, a new report, "Resuscitating Interactive TV Retail," from Forrester Research Inc. says.

Forrester says British retailers will spend 47 million pounds by the end of this year for 12 million pounds of revenue.

"British retailers` dissatisfaction with current television-retailing revenues is wholly justified," said Forrester Research Director Fraser Pearce. "Retailers` combined costs massively outweigh the gross revenues available to them -- making ROI a distant prospect. Platform operators have created an impossible scenario for tv retail. While retailers have pressured platform providers into reducing tenancy fees and commissions, cutting these costs doesn`t attack the real cause of the problem -- an excess of supply."

“Retailers must take stock of their opportunity and take one of the following paths: renegotiate, reinforce and reinvest to stay on the platform; move into aggregated retail presences; or retreat altogether from the platform,” Forrester says.

"Today`s top TV retailers broadly separate into two groups -- general retailers such as WHSmith and Woolworth`s, and specialists with populist products like Carphone Warehouse and Electronics Boutique," Pearce added. "For the next two years, these should be the only companies with stand-alone walled-garden presences. While these companies have been relatively successful so far, to capitalize on their existing momentum and ensure success, they must increase their commitment to and investment in television-retail. They should ensure collaborative relationships with platforms, guarantee a connection with consumers and staff the TV investment properly."

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