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Insolvency in retail

Traditional sales and e-commerce

Enrico Cimpanelli Enrico Cimpanelli

Grant Thornton International Ltd has examined the connection between the exponential growth of on-line sales and the severe drop in traditional sales drawing on the recent closures of retail giants such as Toys R’US, Maplin and Topshop Australia. (read article on

Enrico Cimpanelli, partner of Grant Thornton Financial Advisory Services, sheds light on the Italian situation.

‘In recent years, e-commerce sales have grown significantly all over the world to the detriment of sales through traditional retail. The competition between traditional sales and e-commerce has always been a price war, a war that traditional shops are bound to lose.

This is particularly true if we look at the US scenario where several shops or megastores have closed. The most popular case is that of Toys-R-US, an internationally known toys retail chain that was forced to shut down its shops being unable to compete with the prices offered by on-line retailers such as Amazon. In Italy, and specifically in the consumer electronics industry, some important brands have faced major crises leading them to close several points of sales, thus severely affecting occupational levels.

In a scenario where e-commerce sales are expected to rise, it is crucial that Italian enterprises understand the trends of this ever-evolving market, by adapting and deeply redesigning their strategies.

This could happen by putting the customer – particularly those who are more inclined to buy at traditional shops - at the centre of each phase of the sales process through a diversified offering that combines unique and general products as well as innovative services to allure more customers into the shops.  Traditional sales channels should leverage this difference, compared to on-line retailers, to sell more products in addition to those the customer originally entered the shop for.

Specifically to the mass-market industry, this change towards strategies more focused on the customer’s needs and expectations shall necessarily entail a balanced combination of on-line and off-line sales, as we can learn from the US experience.

Retail insolvency
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