The rise of online spending in UK retail
Online spending in the UK retail industry
Digital transformation led to the emergence of more sophisticated multichannel propositions, supported by higher penetration of smartphone ownership and online shopping, ultra-convenient home deliveries and more efficient click-and-collect.
The composition of retail spending shifted rapidly online. In the past decade, the value of online retail has risen four-fold, worth an estimated £70 billion in 2018 and accounting for just under £1 in every £5 spent. For some sectors such as clothing, this proportion rises to over a third, which is particular pertinent in some town centres where clothing occupants comprise over 40% of the physical presence.
“As physical and digital realms merged, the experience economy rose to prominence, as consumers reassessed the economic value they attached to material possession as households in the West arguably approached the point of ‘peak stuff’.”
Forward-thinking omnichannel retailers and the emergence of pure online players offering strong online propositions exploited these trends, while benefitting from collecting vast amounts of consumer data. Efforts by retailers late to the party that mimicked the mechanics of offering an online proposition frequently proved dilutive, as additional infrastructure and investment were deployed to service the same customer and the same order.
Figure 1 - Online UK retail sales increase between 2009 - 2019
Source: Retail Economics
But crucially, the fast-paced adoption of consumer technologies presented shoppers with an array of digital touchpoints which fundamentally altered the way they interacted in physical locations. A linear customer journey that had existed for decades quickly dissolved and reformed to a more complex structure. Shoppers now expect to be able to seamlessly transition between channels, redefining the boundaries between physical, digital and on the move.
Watch our video on UK online retail sales in 2020
