2023
9
UK Online Retailing Market Report 2023
2023-09-05T04:07:20+01:00
OX1155151
2195
166358
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Report
en_GB
“The online market is still finding its new equilibrium following the COVID-19 pandemic, but its role in all aspects of browsing and buying behaviour remains significantly heightened. The strong value…

UK Online Retailing Market Report 2023

£ 2,195 (Excl.Tax)

Description

Stay ahead of the curve and future-proof your business with Mintel’s Online Retailing Market Report 2023. Our full report is packed with consumer-led market intelligence, the latest UK online retail market trends and consumer behaviours affecting your business. Get a 360° view of the online retail market, including market size, share and forecasted growth to help you align your business strategy with the needs of your audience.

Below, we’ve handpicked the key insights analysed in the full report and summarised the core topics.

Topics Analysed in this Report

  • Who shops online, how frequently and what products are purchased online.
  • Leading retailers shopped with, and demographic profiles of customers.
  • Use of credit, cashback, price comparison sites and other value-led behaviours.
  • Use and interest in rentals online as well as purchasing of second-hand or refurbished products.
  • The impact of the cost of living crisis on shopping behaviour in the online retail market.

Online Retail Market Outlook

The cost of living crisis has naturally placed value high on the agenda. The online channel does excel in its perception of offering the ‘cheapest’ prices but also in a host of other areas. From factors like price-comparison tools, to greater options for second-hand products, the online retail market more easily facilitates a host of value-led behaviours which are heightened in light of the current economic conditions.

  • Online retail market size: Mintel estimates that online sales will grow 3.2% in value terms in 2023.

UK Online Retail Market Trends and Opportunities

Introduction of AI

AI and generative language models have become a mass-market topic of conversation in 2023 and already we are seeing some notable first steps from retailers in utilising this technology innovation in a customer-facing role. Zalando’s new ChatGPT-based virtual shopping assistant has quickly become an early tent pole in what such technology can do, providing true personalised service in the online space.

Increase in credit use

Credit use on online purchases jumps up as the cost of living continues to squeeze incomes. While personal credit cards are the most popular credit option used when shopping online, over a third of online shoppers bought on credit via other means, including Klarna, Paypal or Clearpay.

  • Online retail market opportunity: 64% of online shoppers have purchased items via credit means in the past year.

To learn more about the UK Online Retailing Market, including a five-year forecast, consumer behaviour analysis, and market opportunities recommendations, purchase our full UK Online Retailing Market Report.

Leading Brands in the Online Retail Market

Amazon, Ebay, Tesco, Sainsbury’s, John Lewis, Next, Ocado, The Very Group, Klarna.

Additional Features Included with Your Purchase

  • Interactive Databook: Each Databook is provided as an interactive website where you can deep dive into our consumer research data on your chosen topic so you can draw your own conclusions.
  • Consumer Confidence Tracker: Our Trackers paint the picture of the economic confidence of up to 40 different demographics, as well as their greatest concerns in the current economic climate.
  • Custom PowerPoints: Incorporate our consumer research data into your own work so you can win over your clients and stakeholders. Select insights from your report to create a custom presentation that is ready to download in minutes.
  • Different Digital Formats: PDF for conveniently sharing with your team, PowerPoint for quickly including in your presentations, as well as Word and Excel.
  • Mintel’s Clients Portal: Our portal provides instant access to actionable analysis, podcasts, and trend pieces relevant to your industry that are published almost daily, as well as our annual Global Consumer Trends. You can also browse our extensive catalogue of market research reports.

Expert Insights from a Retail Analyst

This report, written by Nick Carroll, a leading retail analyst, delivers in-depth commentary and analysis to highlight trends in the online retail market and add expert context to the numbers.

The UK online retail market is still finding its new equilibrium following the COVID-19 pandemic, but its role in all aspects of browsing and buying behaviour remains significantly heightened. The strong value credentials of the channel mean that it has overall gained in a market where shoppers are looking for value. The race to the bottom, in terms of base price and promotions, is more competitive than ever and a number of aggressively expanding newer entrants are disrupting more established players. However, price is just one aspect of the value equation, and more should look to leverage other value considerations and leverage the established relationship and trust with their customer base rather than chasing down the disruptors on price alone.”

Nick Carroll - Research Analyst

Nick Carroll
Category Director – Retail Insight

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • Underlying demand to be broadly flat in 2023 before growth returns
      • Figure 1: Category outlook, 2023-28
    • The market
    • Market size and forecast
      • Figure 2: Market forecast for all online retail sales (including VAT), 2018-28
    • Online penetration of sector sales unlikely to hit 2021 levels in the next five years
      • Figure 3: Online sales as a percentage of all retail sales, 2018-28
    • Online-only players claim back share following the return of store trade
      • Figure 4: Share of online sales, by broad type of retail operation, 2019-23
    • All major categories now have significantly greater online exposure than pre-pandemic
      • Figure 5: Estimated breakdown of all online sales, by product category, 2022
    • Leading retailers
    • Amazon has a commanding lead in the online market
      • Figure 6: Top 10 online retailers within the UK, by estimated market share (excluding VAT), 2022
    • Key to Amazon’s continued success is reliability
      • Figure 7: Key metrics for selected brands, 2023
    • AI looks to up service expectations
      • Figure 8: Zalando ChatGPT powered fashion assistant, 2023
    • Growth in the number of retailers looking at refurbished, pre-loved and rental
    • The consumer
    • Frequency of online shop stable year-on-year
      • Figure 9: Frequency of online shopping, 2019-23
    • Mixed picture of category purchasing as the market continues to rebalance
      • Figure 10: Products purchased online in the last 12 months, 2019-23
    • Shein has quickly become one of the most popular online-only players
      • Figure 11: Online retailers shopped with in the past year, 2022 and 2023
    • Credit use on online purchases jumps as cost of living crisis bites
      • Figure 12: Use and types of credit used to purchase products online, 2021-23
    • Cashback use flat highlighting missed opportunity…
      • Figure 13: Use of cashback sites in the past year, 2021-23
    • …amidst rising use of new wave promotional tools
      • Figure 14: Use of automatic voucher sites in the past year, 2023
    • 15% have rented products online, but majority show little interest
      • Figure 15: Use and future interest in renting products online, 2023
    • Value credentials still critical to drive traffic to the online space
      • Figure 16: Online shopping behaviours, 2023
  3. Issues and Insights

    • In the current market value credentials bring opportunity for the online channel
    • Renting and other alternative purchase models: do they have legs?
    • Will the introduction of AI be a step-change in service expectations?
  4. Market Drivers

    • Inflation will continue to eat into consumer spending power for the rest of 2023
      • Figure 17: Inflation, overall index (CPI) and core categories, 2022-23
      • Figure 18: Real wages growth, wage growth versus inflation, 2016-2023
    • Consumers’ financial wellbeing has fallen from the highs of 2021…
      • Figure 19: Household financial wellbeing index, 2016-23
      • Figure 20: Household financial confidence index, 2016-23
    • Consumers cut back in the face of pressure and uncertainty
      • Figure 21: Retail sales growth in value and volume terms, non-seasonally adjusted and excluding fuel, 2022-23
  5. Market Size and Performance

    • Online sales expected to return to inflation-led growth in 2023
      • Figure 22: Market size for online retailing, 2018-23
      • Figure 23: Market size for online retailing, at current and constant prices, 2018-23
    • Following further declines, growth returns to the online channel in early 2023
      • Figure 24: Online retail sales growth, all online sales, 2022-23
      • Figure 25: Online retail sales growth, by major category, 2022-23
    • Stores reclaim the majority of non-food demand but online penetration remains inflated
      • Figure 26: Estimated share of all non-food sales, split by store and non-store, 2021-23
  6. Market Forecast

    • Underlying demand to be broadly flat in 2023 before growth returns
      • Figure 27: Category outlook, 2023-28
    • Online sales to grow by 24% between 2023 and 2028
      • Figure 28: Market forecast for all online retail sales (including VAT), 2018-28
    • Online share unlikely to hit 2021 levels in the next five years
      • Figure 29: Online sales as a percentage of all retail sales, 2018-28
    • Learnings from the last income squeeze
      • Figure 30: All online retail sales (including VAT), market size and growth, 2009-18
    • Forecast methodology
  7. Market Segmentation

    • Online-only players claim back share following the return of store trade
      • Figure 31: Online sales, by type of retailer, 2020-22
      • Figure 32: Share of online sales, by broad type of retail operation, 2019-23
    • Penetration of category sales ease, but most have seen a step change since 2019
      • Figure 33: Estimated detailed store-based retail online market sizes, by value and as a proportion of total category sales, 2019 and 2021-22
    • Detailed breakdown of online-only players
      • Figure 34: Estimated breakdown of online-only retail sales, by leading top 100 online-only retailers, 2022
    • Breakdown of sales by category
      • Figure 35: Estimated breakdown of all online sales, by product category, 2022
      • Figure 36: Estimated breakdown of all online sales, by product category (inc. VAT), 2019-22
  8. Who Shops Online and How Frequently

    • Overall engagement in the online channel flat year-on-year
    • Frequency of online shop stable year-on-year
      • Figure 37: Frequency of online shopping, 2019-23
    • Legacy boost to frequency of shop among older shoppers persists
      • Figure 38: Percentage point change in the frequency of online shop, by age, 2019-23
    • Higher earners most frequent online shoppers
      • Figure 39: Frequency of online shopping, by household income, 2023
  9. Products Purchased Online

    • Mixed picture of category purchasing as the market continues to rebalance
      • Figure 40: Products purchased online in the last 12 months, 2019-23
    • The pandemic has shifted the category customer profile online
      • Figure 41: Products purchased online in the past year, by average age and household income, 2019 and 2023
    • Overall range of products purchased online flat year-on-year
      • Figure 42: Repertoire of product categories purchased from online, 2019-23
      • Figure 43: Repertoire of product categories purchased from online, by household income, 2022-23
  10. Retailers Shopped With Online

    • Amazon’s dominance means online-only retailers still most popular type of retailer to shop with
      • Figure 44: Types of online retailer shopped with in the past year, 2023
    • Shein has quickly become one of the most popular online-only players
      • Figure 45: Online-only retailers shopped with in the past year, 2019-22
    • Argos remains the dominant store-based online player
      • Figure 46: Store-based retailers shopped with online in the past year, 2019-23
    • Asda edges up in terms of overall online popularity
      • Figure 47: Online retailers shopped with in the past year, 2022 and 2023
    • Shein attracting spend from lower-income households
      • Figure 48: Retailers shopped with in the past year, by average age and household income, 2023
  11. Credit and Cashback Use

    • Credit use on online purchases jumps as cost of living crisis bites
      • Figure 49: Use and types of credit used to purchase products online, 2021-23
    • Younger shoppers more likely to use new-wave providers
      • Figure 50: Credit use customer profile, by age, 2023
      • Figure 51: Use and types of credit used to purchase products online, by current financial situation, 2023
    • Cashback use flat highlighting missed opportunity
      • Figure 52: Use of cashback sites in the past year, 2021-23
      • Figure 53: Use of automatic voucher sites in the past year, 2023
  12. Use and Interest in Renting Online

    • A majority are uninterested in renting…
    • …select categories show more promise for a rental platform
      • Figure 54: Use and future interest in renting products online, 2023
    • Younger consumers more engaged with the idea of rentals…
      • Figure 55: Percentage of consumers who have either rented in the past year or are interested in doing so in the future, by category and age group, 2023
    • …with sustainability a key driver
      • Figure 56: Attitudes towards renting products, by age, 2023
      • Figure 57: Second-hand/refurbished purchases in the past year, 2023
    • Affluent city dwellers should be the focus of any rental platform
      • Figure 58: Percentage of consumers who have either rented in the past year or are interested in doing so in the future, by type of area lived in, 2023
  13. Attitudes towards Shopping Online

    • Value credentials still critical to drive traffic to the online space
      • Figure 59: Attitudes towards shopping online, 2023
    • Extended product guarantees a stronger driver of behaviour for lower income households
      • Figure 60: Attitudes towards shopping online, 2023
  14. Leading Online Retailers and Market Share

    • Amazon the dominant market leader
      • Figure 61: Top 10 online retailers within the UK, by estimated market share (excluding VAT), 2022
    • Grocers remain in an elevated position
    • Marketplace and platforms driving strong growth for key players
    • Mixed-goods: Frasers shifts investment focus into the online space
    • Fashion: Shein already in the top 25 of online retailers
    • Leading Online Retailers: Revenue
      • Figure 62: Top 30 leading online retailers revenues, 2019/20-2022/23
    • Leading Online Retailers: Market Shares
      • Figure 63: Leading online retailers: estimated market shares, 2019-2022
  15. Brand Research

    • Key findings
    • Brand map
      • Figure 64: Attitudes towards and usage of selected brands, 2023
    • Key brand metrics
      • Figure 65: Key metrics for selected brands, 2023
    • Brand attitudes: value critical to the brand image of eBay and Shein
      • Figure 66: Attitudes, by brand, 2023
    • Brand personality: Ethical questions surround the Shein brand image
      • Figure 67: Brand personality – macro image, 2023
    • Etsy has created an aspirational brand image
      • Figure 68: Brand personality – micro image, 2023
    • Brand analysis
    • Shein: Work to be done on addressing consumer’s ethical concerns
    • Amazon: Trust created through reliability of service
    • eBay: Value perception remains key as competition in the C2C market grows
    • Boohoo: Strong performance with younger consumers
    • Very: Strong brand view among older shoppers
    • ASOS: Work to be done on improving online service
    • Etsy: Retains ethical perception amongst consumers, while helping independent and SME sellers to thrive
  16. Launch Activity and Innovation

    • Enhancing the consumer shopping experience through AI
      • Figure 69: Klarna ChatGPT plugin, 2023
      • Figure 70: Zalando ChatGPT powered fashion assistant, 2023
    • Brands are implementing ‘circular’ initiatives to be more sustainable
    • Growth in repair and resell marketplaces
    • Brands partner with rental platforms
    • Helping consumers make fast and efficient purchasing decisions and payments
    • New online retailers
      • Figure 71: New online grocer Motatos, 2022
  17. Advertising and Marketing Activity

    • Above-the-line advertising spend drops year-on-year but remains elevated against pre-pandemic levels
      • Figure 72: UK online retail: Total recorded above-the-line, online display and direct mail advertising expenditure, 2019-22
    • Amazon remains the biggest above-the-line advertising spender
    • Amazon’s Christmas message focus’ on generosity and giving
      • Figure 73: Amazon’s ‘Joy is made’ Christmas campaign, 2022
    • ‘Bargain Hunters’. ‘Style Seekers’. ‘Experts’. eBay characterises its shoppers in advertising campaign
    • Ocado celebrates the British summertime
      • Figure 74: Leading UK online-only businesses: Total recorded above-the-line, online display and direct mail total advertising expenditure, 2019-23
    • Spend on digital advertising remains dominant
      • Figure 75: UK online retail recorded above-the-line, online display and direct mail advertising expenditure, by media type, 2022
    • Nielsen Ad Intel coverage
  18. Appendix – Data Sources, Abbreviations and Supporting Information

    • Data sources
    • VAT
    • Abbreviations
    • Consumer research methodology
  19. Appendix – Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 76: All online retail sales, market size and forecast, at current and constant prices, 2018-28
      • Figure 77: All online retail sales, current price prediction intervals, 2023-28
    • Market drivers and assumptions
    • Forecast methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

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*databooks not available with UK B2B Industry reports.

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