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Online Spending Habits - UK - February 2011

This report provides an overview of online spending habits in 2010, assessing the value, growth and potential that the market has, in addition to the typical patterns of behaviour and adoption that consumers display when shopping online.

  • Over half (55%) of all internet users research products online before making a purchase (either in-store or online), with just under half utilising online reviews, comparison sites and discount voucher/code sites.
  • Consumers in the family lifestage and those with young children are amongst the most likely to rely on the convenience of online shopping, while – with the exception of home electronics, portable electronics and online gaming – women are more likely than men to spend in every e-commerce category surveyed by Mintel.
  • According to IMRG data, UK online spending in 2010 grew by 17.6% to reach a total of £58.6 billion, with Ofcom reporting that average spend online per person reached £1,031 in 2010.
  • Two thirds of consumers are spending online on a basis of once a month, or once every two months, with the most frequent spending groups including those aged 25-44, ABs and families with young children.
  • Christmas represents a key occasion for bringing consumer spend online, with even one in five of the least frequent spenders (ie those who say they rarely spend online), shopping online at Christmas.
  • Some 27% of consumers have welcomed internet shopping because they hate shops, and 77% of these consumers say they use the web to try to save money as well. These consumers are highly likely to have children, although there is, perhaps surprisingly, no greater tendency amongst men to have been driven online by a hatred of shopping.

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Table of contents

  1. Issues in the Market

      • Main issues
        • Definition
          • Abbreviations
          • Future Opportunities

              • Trend: Over Optioned Consumer
                • Trend: Brand Co-operation
                • Market in Brief

                  • Boom amid bust
                    • A win-win market
                      • Online refuge
                        • Return of the multi-channel retailer
                          • M-commerce to drive online spend in-store
                            • 2011 the year of social commerce?
                              • Virtually unstoppable
                              • Internal Market Environment

                                • Key points
                                  • Growth of virtual becomes a reality
                                    • Figure 1: Household PC and internet take-up, 2005-10
                                    • Figure 2: Broadband penetration, by demographics, 2004-10
                                  • Social barriers
                                    • Age barriers
                                      • Physical barriers
                                        • Changing technology, changing behaviour
                                          • Figure 3: Hours spent using the internet in the last month, 2006-10
                                          • Figure 4: Device ownership summary, April 2009-October 2010
                                        • Communication over spend
                                          • Figure 5: Claimed use of the internet for selected activities, Q1 2010
                                        • Online empowerment
                                          • Figure 6: Consumers’ agreement/disagreement on their use of online services, 2010
                                        • A click too far
                                          • Familiarity breeds trust
                                            • Figure 7: Top ten online retail sites, by unique internet visitors, October 2010
                                          • Spending on the go
                                            • Figure 8: Use of mobile phones for web/data access, Q1 2010
                                          • The tip of the iceberg
                                            • M-commerce to reap benefits of cutting-edge technology
                                              • Tesco to turn the tide?
                                                • The user experience
                                                  • Targeting opportunities
                                                    • People power
                                                      • The rise of social commerce
                                                        • Facebook to rule the world?
                                                        • Broader Market Environment

                                                          • Key points
                                                            • Low interest rate gains offset by high inflation
                                                              • Figure 9: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                                            • Low interest rates to continue
                                                              • Spending cuts inhibit infrastructure
                                                                • Employment crucial for salaries, internet access and retail distraction
                                                                  • Figure 10: Employment and unemployment, by gender, 2005-15
                                                                • Weather or not to shop online
                                                                  • The shape of things to come
                                                                    • Longevity boosting over-65s
                                                                      • Figure 11: Trends in the age structure of the UK population, 2005-15
                                                                    • ABs continue path of growth
                                                                      • Figure 12: Forecast adult population trends, by socio-economic group, 2005-15
                                                                    • Growth in household numbers
                                                                      • Figure 13: UK households, by size, 2005-15
                                                                  • Competitive Context – Clicks vs Bricks

                                                                    • Key points
                                                                      • Consumer spend growing online
                                                                        • Figure 14: Percentage of online sales as a proportion of total market spend with selected UK markets, 2010
                                                                      • Multi-channel renaissance
                                                                        • Overcoming virtual barriers
                                                                          • Digital threat
                                                                            • Some markets do ’ave ’em
                                                                              • Figure 15: Music singles and album sales, by volume, 2000-10
                                                                            • An evolving threat
                                                                              • Illegitimate competition
                                                                                • Legal competition
                                                                                  • All eyes on books
                                                                                    • Rising tide of the digital pull
                                                                                    • Competitive Context – Time and Money

                                                                                      • Key points
                                                                                        • Competition for spend
                                                                                          • Figure 16: Trends in what extra money is spent on, Nov 2009-March 2010
                                                                                        • Small ticket favourites to become big ticket subscriptions?
                                                                                          • Competition for time
                                                                                            • Figure 17: Activities do in leisure time, March 2010
                                                                                          • Competition in the cocoon
                                                                                            • Figure 18: Time spent on activities at home during a typical week or typical weekend, June 2010
                                                                                          • Idle time
                                                                                            • Figure 19: Comparative analysis of top 20 most visited websites (daily page views per user, bounce rate and time on site), UK, November 2010
                                                                                        • Strengths and Weaknesses in the Market

                                                                                            • Strengths
                                                                                              • Online thrives on economic downturn
                                                                                                • Weather resistant
                                                                                                  • The consumer friend
                                                                                                    • Multi-channel revival breaks down barriers
                                                                                                      • Potential for growth
                                                                                                        • The promise of new technology
                                                                                                          • Weaknesses
                                                                                                            • Adapting to change
                                                                                                              • Piracy, downloads and free competition
                                                                                                                • Base limitations
                                                                                                                  • Not the real thing
                                                                                                                    • Logistical problems
                                                                                                                    • Who’s Innovating?

                                                                                                                      • Key points
                                                                                                                        • Drive-by shopping
                                                                                                                          • Multi-channel integration
                                                                                                                            • Ministry of Sound
                                                                                                                              • Paying potential
                                                                                                                                • eBay Group Gift
                                                                                                                                  • Pay4Later
                                                                                                                                  • Market Size and Forecast

                                                                                                                                    • Key points
                                                                                                                                      • UK outspending Continental Europe
                                                                                                                                        • Figure 20: UK online spending 2000-10
                                                                                                                                      • Virtual recovery
                                                                                                                                        • Market outlook
                                                                                                                                          • m-commerce to bring online spending to the high street
                                                                                                                                            • Forecast
                                                                                                                                              • Figure 21: UK online spending trends and forecasts, 2005-15
                                                                                                                                            • Forecast methodology
                                                                                                                                            • Who Spends Online?

                                                                                                                                              • Key points
                                                                                                                                                • Nearing a universal must
                                                                                                                                                  • Figure 22: Goods/services bought online, December 2010
                                                                                                                                                • Online constants
                                                                                                                                                  • Online shopping – still a female domain
                                                                                                                                                    • Key activities
                                                                                                                                                      • Who spends in what category?
                                                                                                                                                        • Hard copy still hard core in music, film and books
                                                                                                                                                          • Soft sell
                                                                                                                                                            • Continued passion for fashion
                                                                                                                                                              • Targeting the right end of the market?
                                                                                                                                                                • Wide base, small market
                                                                                                                                                                  • Food and drink dynamics
                                                                                                                                                                    • Insurance under-represented
                                                                                                                                                                      • Big spenders
                                                                                                                                                                        • Travel – old dog masters new trick
                                                                                                                                                                          • One for the oldies
                                                                                                                                                                            • Virtuous circles
                                                                                                                                                                              • Limitations on repertoire
                                                                                                                                                                                • Figure 23: Repertoire of online categories bought from, December 2010
                                                                                                                                                                            • Frequency of Online Spending

                                                                                                                                                                              • Key points
                                                                                                                                                                                  • Figure 24: Frequency of spending money online, December 2010
                                                                                                                                                                                • Online all the time
                                                                                                                                                                                  • Easy transition
                                                                                                                                                                                    • Polar potential
                                                                                                                                                                                    • Reasons for Spending Online

                                                                                                                                                                                      • Key points
                                                                                                                                                                                          • Figure 25: Online shopping habits, December 2010
                                                                                                                                                                                        • Christmas a key conversion tool
                                                                                                                                                                                          • In search of a bargain
                                                                                                                                                                                            • The discount divide
                                                                                                                                                                                              • Utilising all the tools
                                                                                                                                                                                                • Safety in meerkats?
                                                                                                                                                                                                  • Grocery + coupons = Groupons
                                                                                                                                                                                                    • Recommendations or unwanted marketing?
                                                                                                                                                                                                    • Pros and Cons of Spending Online

                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                        • The majority feel safe spending online
                                                                                                                                                                                                          • Figure 26: Attitudes towards spending money online, December 2010
                                                                                                                                                                                                        • Fancy a quickie?
                                                                                                                                                                                                          • Some like it cheap
                                                                                                                                                                                                            • The high street alternative
                                                                                                                                                                                                              • Barriers to entry
                                                                                                                                                                                                                • You can’t touch this
                                                                                                                                                                                                                  • Logistical nightmares
                                                                                                                                                                                                                    • Virtual frustration
                                                                                                                                                                                                                      • Social commerce short of a tipping point?
                                                                                                                                                                                                                      • Targeting Opportunities

                                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                                          • Figure 27: Target groups for online spending, December 2010
                                                                                                                                                                                                                        • 38% – Small Acorns – Old Oaks
                                                                                                                                                                                                                          • Profile
                                                                                                                                                                                                                            • Understanding the Small Acorns – Old Oaks
                                                                                                                                                                                                                              • 29% – Online Solutions
                                                                                                                                                                                                                                • Profile
                                                                                                                                                                                                                                  • Understanding the Online Solutions
                                                                                                                                                                                                                                    • 33&% – Virtual Players
                                                                                                                                                                                                                                      • Profile
                                                                                                                                                                                                                                        • Understanding the Virtual Players
                                                                                                                                                                                                                                        • Appendix – Market Size and Forecast

                                                                                                                                                                                                                                            • Figure 28: Best and worst case forecasts, online spending, 2010-15
                                                                                                                                                                                                                                        • Appendix – Who Spends Online?

                                                                                                                                                                                                                                            • Figure 29: Most popular goods/services bought online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 30: Next most popular goods/services bought online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 31: Other goods/services bought online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 32: Least popular goods/services bought online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 33: Goods/services bought online, by most popular goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 34: Goods/services bought online, by next most popular goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 35: Goods/services bought online, by other goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 36: Goods/services bought online, by least popular goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 37: Repertoire of goods/services bought online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 38: Goods/services bought online, by repertoire of goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 39: Repertoire of goods/services bought online, by frequency of spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 40: Online shopping habits, by repertoire of goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 41: Attitudes towards spending money online, by repertoire of goods/services bought online, December 2010
                                                                                                                                                                                                                                        • Appendix – Frequency of Online Spending

                                                                                                                                                                                                                                            • Figure 42: Frequency of spending money online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 43: Goods/services bought online, by frequency of spending money online, December 2010
                                                                                                                                                                                                                                        • Appendix – Reasons for Spending Online

                                                                                                                                                                                                                                            • Figure 44: Most popular online shopping habits, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 45: Next most popular online shopping habits, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 46: Online shopping habits, by most popular goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 47: Online shopping habits, by next most popular goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 48: Online shopping habits, by other goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 49: Online shopping habits, by least popular goods/services bought online, December 2010
                                                                                                                                                                                                                                            • Figure 50: Online shopping habits, by frequency of spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 51: Online shopping habits, by most popular online shopping habits, December 2010
                                                                                                                                                                                                                                            • Figure 52: Online shopping habits, by next most popular online shopping habits, December 2010
                                                                                                                                                                                                                                        • Appendix – Pros and Cons of Spending Online

                                                                                                                                                                                                                                            • Figure 53: Most popular attitudes towards spending money online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 54: Next most popular attitudes towards spending money online, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 55: Goods/services bought online, by most popular attitudes towards spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 56: Goods/services bought online, by next most popular attitudes towards spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 57: Attitudes towards spending money online, by frequency of spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 58: Online shopping habits, by most popular attitudes towards spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 59: Online shopping habits, by next most popular attitudes towards spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 60: Attitudes towards spending money online, by most popular attitudes towards spending money online, December 2010
                                                                                                                                                                                                                                            • Figure 61: Attitudes towards spending money online, by next most popular attitudes towards spending money online, December 2010
                                                                                                                                                                                                                                        • Appendix – Targeting Opportunities

                                                                                                                                                                                                                                            • Figure 62: Target groups, by demographics, December 2010
                                                                                                                                                                                                                                            • Figure 63: Attitudes towards spending money online, by target groups, December 2010
                                                                                                                                                                                                                                            • Figure 64: Goods/services bought online, by target groups, December 2010
                                                                                                                                                                                                                                            • Figure 65: Frequency of spending money online, by target groups, December 2010
                                                                                                                                                                                                                                            • Figure 66: Online shopping habits, by target groups, December 2010
                                                                                                                                                                                                                                            • Figure 67: Repertoire of goods/services bought online, by target groups, December 2010

                                                                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                                                                        • Amazon.co.uk
                                                                                                                                                                                                                                        • Argos
                                                                                                                                                                                                                                        • Bank of England
                                                                                                                                                                                                                                        • Barclaycard
                                                                                                                                                                                                                                        • British Market Research Bureau (BMRB)
                                                                                                                                                                                                                                        • British Phonographic Industry Ltd (The) [BPI]
                                                                                                                                                                                                                                        • Chester Zoo
                                                                                                                                                                                                                                        • Co-operative Group
                                                                                                                                                                                                                                        • ComparetheMarket.com
                                                                                                                                                                                                                                        • Council of Mortgage Lenders
                                                                                                                                                                                                                                        • easyJet Airline Company Limited
                                                                                                                                                                                                                                        • Ebay UK Ltd
                                                                                                                                                                                                                                        • Facebook, Inc.
                                                                                                                                                                                                                                        • Fédération Internationale de Football Association
                                                                                                                                                                                                                                        • Google UK
                                                                                                                                                                                                                                        • Government Actuary's Department (GAD)
                                                                                                                                                                                                                                        • Halfords Ltd
                                                                                                                                                                                                                                        • HMV Retail Ltd
                                                                                                                                                                                                                                        • Home Retail Group
                                                                                                                                                                                                                                        • Homebase Ltd
                                                                                                                                                                                                                                        • House of Fraser Plc
                                                                                                                                                                                                                                        • International Federation of the Phonographic Industry
                                                                                                                                                                                                                                        • J. Sainsbury
                                                                                                                                                                                                                                        • John Lewis Partnership
                                                                                                                                                                                                                                        • Kantar Media
                                                                                                                                                                                                                                        • Kelkoo S.A.
                                                                                                                                                                                                                                        • LA Fitness PLC
                                                                                                                                                                                                                                        • LinkedIn
                                                                                                                                                                                                                                        • London Aquarium
                                                                                                                                                                                                                                        • London Zoo
                                                                                                                                                                                                                                        • LOVEFiLM International Ltd
                                                                                                                                                                                                                                        • Microsoft Ltd (UK)
                                                                                                                                                                                                                                        • Ministry of Sound
                                                                                                                                                                                                                                        • MySpace.com
                                                                                                                                                                                                                                        • Ofcom
                                                                                                                                                                                                                                        • Office for National Statistics
                                                                                                                                                                                                                                        • Office of Fair Trading
                                                                                                                                                                                                                                        • PayPal Inc.
                                                                                                                                                                                                                                        • Research in Motion Uk Ltd.
                                                                                                                                                                                                                                        • Samsung Electronics (UK) Ltd
                                                                                                                                                                                                                                        • Shop Direct Group
                                                                                                                                                                                                                                        • Starbucks Coffee Company UK Ltd
                                                                                                                                                                                                                                        • Tesco Plc
                                                                                                                                                                                                                                        • Twitter, Inc.
                                                                                                                                                                                                                                        • VeriSign, Inc.
                                                                                                                                                                                                                                        • Virgin Media Ltd
                                                                                                                                                                                                                                        • Yahoo! UK & Ireland
                                                                                                                                                                                                                                        • YouTube, Inc.
                                                                                                                                                                                                                                        • Zavvi

                                                                                                                                                                                                                                        Online Spending Habits - UK - February 2011

                                                                                                                                                                                                                                        £1,750.00 (Excl.Tax)