2021
9
UK Online Retailing Market Report 2021
2021-08-06T04:06:08+01:00
OX1049191
2995
141178
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Report
en_GB
“The online channel has been one of the main benefactors of the pandemic, as consumers have naturally lent more on online retail for a broader variety of needs than ever…

UK Online Retailing Market Report 2021

$ 2,995 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the UK Online Retailing market, including the behaviours, preferences and habits of the consumer.

54% of online shoppers have done more shopping online, helping online sales soar 44.9% to reach £111.1 billion in 2020, with online sales taking a record 27.6% of all retail sales. While some growth came from new customers in the market as 1% of current online shoppers had not shopped online prior to the pandemic, the real driver of growth was an increased frequency and dependency on the channel, with 45% of online shoppers now shopping at least once a week online compared to 36% pre-pandemic.

The pandemic drove growth across almost all product categories and for all retailers operating in the online channel. Most major store-based specialist categories saw growth of over 50%, with particular growth at specialist food and drink retailers (+109.4%), household electricals (+92.6%), and furniture (+61.4%). This broad-based growth served mixed-goods retailers particularly well, with the UK being the quickest growing of Amazon’s core regions in 2020, helping to take the leading online player’s market share to an estimated 28%.

The reopening of stores, and latterly the removal of all legal restrictions in the UK that aimed to suppress the pandemic, is perhaps the biggest threat to the continued growth of online in the short term. Indeed, we forecast the market will rebalance across the next two years with marginal growth (+0.3%) in 2021 and a decline in online sales in 2022 (-4.4%). The pandemic has also served to put some potential downsides of online shopping in a starker light, with the number of online shoppers saying they are concerned around the environmental impact of shopping online growing from 41% to 52% in the past 12 months.

However, despite this rebalancing in the market, we expect the extended period of heightened online purchasing caused by the pandemic to give a legacy boost to the online channel. By 2025 we expect online sales to account for 30.0% of all retail sales, compared to 27.2% in our pre-pandemic estimates. There will be opportunities for all within the online channel during the period, but we expect to see particular growth in marketplaces, D2C and alternative platforms.

Read on to discover more details or take a look at all of our UK Retail market research.

Quickly understand

  • The impact of COVID-19 on the size of the online market and online shopping behaviour.
  • The breakdown of the online market by category and an overall forecast of sales including the expected impact of COVID-19.
  • Who shops online and how frequently and the impact COVID-19 has had on this behaviour.
  • Changes in purchasing levels for key product categories.
  • The use of digital service methods since the pandemic began.
  • The leading retailers shopped with online, including market shares, as well as use of social platforms and other alternative platforms, such as Wish and Depop, for online purchasing.
  • Attitudes to shopping with independents, buying second-hand products online and sustainability concerns when shopping online.

Covered in this report

Brands: Amazon, eBay, Tesco, Sainsbury’s Group, John Lewis Partnership, ASDA, Dixons Carphone, Next, The Very Group, Ocado, ASOS, Boots, ao.com, Boohoo, Argos, Currys PC World, Littlewoods, Marks & Spencer, IKEA, Etsy, Sports Direct, Debenhams, PrettyLittleThing, Nasty Gal, Not On The High Street, JD Williams, Jacomo, Simply Be, Missguided, Mennace, Zalando.

Social Media Platforms: Facebook, Instagram, Wish, Snapchat, TikTok, GumTree, Twitter, Pinterest, Depop, Shpock, Preloved.

Expert analysis from a specialist in the field

This report, written by Nick Carroll, a leading analyst in the UK Retail Analyst sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The online channel has been one of the main benefactors of the pandemic, as consumers have naturally lent more on online retail for a broader variety of needs than ever before. While the market will naturally see some rebalancing over the next two years, we expect the extended period of reliance caused by the pandemic will have been habit forming and lead to a legacy boost for online retailing within the UK.
Nick Carroll
Associate Director of Grocery and E-commerce Research

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
  2. Executive Summary

    • Impact of COVID-19 on online retailing
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on online retailing, 2020-25
    • The market
    • Market size and forecast
      • Figure 2: All online retail sales (including VAT), market size and forecast, 2016-26
      • Figure 3: COVID-19 scenario forecasts, 2016-26
    • The pandemic will give a legacy boost to the online channel
      • Figure 4: Percentage of all retail sales accounted for by online, pre and post COVID-19 pandemic, 2015-25
    • Grocery sales soar, claiming a record share of all online spending
      • Figure 5: Estimated breakdown of all online sales, by product category, 2020
    • Leading retailers
    • Amazon grows its leading market share
      • Figure 6: Top ten online retailers within the UK by estimated market share (excluding VAT), 2020
    • Amazon brand leading on key metrics
      • Figure 7: Key metrics for selected brands, 2020-21
    • The consumer
    • 97% of consumers shop online, with over half doing more so because of the pandemic…
      • Figure 8: Changes in online shopping due to the COVID-19 pandemic, 2021
    • …increasing the frequency of shop in the online channel
    • Majority of categories see a boost in purchasing level during the pandemic
      • Figure 9: Products purchased online in the past year, 2019-21
    • Amazon the most popular retailer online, but Etsy sees biggest shift due to the pandemic
      • Figure 10: Online retailers shopped with in the past year, 2020-21
    • Nearly a third purchased from social media in the past year
      • Figure 11: Alternative platforms used in the process of shopping online in the past year, 2021
    • 60% of consumers have purchased on credit in the past year
      • Figure 12: Credit payment options used in the past year, 2021
    • Digital services grow as consumers are separated from stores
      • Figure 13: Online services/experiences used and interested in, 2021
    • Sustainability concerns grow online as more consumers engage more frequently with the channel
      • Figure 14: Attitudes towards shopping online, 2021
  3. Issues and Insights

    • The legacy of COVID-19 on online retailing
    • The opportunity for alternative platforms in the current market
    • Tapping into the new consumer opportunities brought by the pandemic
  4. The Market – Key Takeaways

    • Confidence takes a hit before rebounding, with retail benefitting from pent-up demand
    • Online sales soar 47.1% in 2020
    • Store-based retailers take a majority of online sales for the first time since 2015
  5. Market Drivers

    • Future confidence takes a significant hit, before recovering strongly…
      • Figure 15: The financial confidence index, 2015-21
    • …helped by government intervention…
      • Figure 16: Financial wellbeing index, 2015-21
    • …however some have still been hit harder than others
      • Figure 17: Changes in household finances, 2015-21
      • Figure 18: Changes in financial situation, by household income bracket, 2021
    • Retail sales stage a recovery following initial significant hit
      • Figure 19: Retail sales performance, by month non-seasonally adjusted, by major category, 2020
      • Figure 20: Detailed retail sales performance, non-seasonally adjusted, by major category, 2020-21
    • Footfall suffers significantly in the pandemic….
      • Figure 21: Google COVID-19 Community Mobility Reports, UK (national), average monthly change from baseline, 2020-21
    • …allowing online to take record high shares of sales
      • Figure 22: Estimated share of all non-food sales, by stores and non-store retail, 2020-21
  6. Market Size and Forecast

    • Online sees significant boost during the pandemic
      • Figure 23: All online retail sales (including VAT), market size and forecast, 2016-26
    • Extended online reliance will drive a legacy boost for the channel
      • Figure 24: All online retail sales (including VAT), market size and forecast, at current and constant prices, 2016-26
      • Figure 25: Percentage of all retail sales accounted for by online, pre and post COVID-19 pandemic, 2015-25
    • Market drivers and assumptions
      • Figure 26: Key drivers affecting Mintel’s market forecast, 2016-25
    • Forecast methodology
  7. COVID-19 Scenario Performance

    • Mintel’s approach to predicting the impact of COVID-19
    • Fundamental differences in how COVID-19 is affecting consumer markets
    • Extended disruption would further boost the online channel
      • Figure 27: COVID-19 scenario forecasts, 2016-26
    • Rapid recovery would mean a greater return to the high-street
      • Figure 28: COVID-19 scenario forecasts, online sales as a proportion of all retail sales, 2021-25
    • COVID-19 market disruption: risks and outcomes
      • Figure 29: Summary of Mintel scenario expectations and the impact on the online retail market, 2021
  8. Market Segmentation

    • Store-based retailers take a majority of online sales for the first time since 2015
      • Figure 30: Share of online sales, by broad type of retailer, 2016-21
    • Breakdown by type of retailer
      • Figure 31: Online sales by type of retailer, 2019-20
      • Figure 32: Estimated detailed store-based retail online market sizes, by value and as a proportion of total category sales, 2019-20
    • Detailed breakdown of online-only players
      • Figure 33: Estimated breakdown of online-only retail sales, by broad category based on top 100 players in the UK, 2019/20
      • Figure 34: Estimated breakdown of online-only retail sales, by number of retailers, 2019/20
    • Breakdown of sales by category
      • Figure 35: Estimated breakdown of all online sales, by product category, 2020
      • Figure 36: Estimated breakdown of all online sales by product category, including VAT, 2018-20
  9. Digital Spending

    • Books – pandemic drives digital sales with impulse in print being hit
      • Figure 37: Value of consumer print books and publisher UK sales of consumer digital books and audiobooks (net invoiced value), 2015-20
    • Music – streaming key despite vinyl’s resurgence
      • Figure 38: Music industry income, by format, 2015-20
    • Video – pandemic serves to boost in-home streaming
      • Figure 39: Online audio-visual revenues, 2014-19
    • Gaming – more leisure time during pandemic boosts engagement
    • The total digital spending
      • Figure 40: Estimated total identified digital spending, by category, 2020
  10. The Consumer – Key Takeaways

    • Over half of consumers have shopped more online as a result of the pandemic
    • Store-based players see the most significant growth in customer numbers
    • Digital service use grows, while sustainability concerns remain critical
  11. Impact of COVID-19 on Online Shopping Behaviour

    • Concern is directly linked to desire to return to store…
      • Figure 41: COVID-19 Tracker: Impact on online shopping and time spent in-store, 2020-21
    • …although closure of complementary sectors has also served to limit footfall
      • Figure 42: Consumer attitudes to physical shopping, 2021
    • Flexible working is also playing into heightened online use
    • Post-pandemic intentions point to a legacy of heightened online use
      • Figure 43: Online shopping intentions post-peak of the pandemic, 2021
    • Click-and-collect has not seen the same uptick as online, but may be set for significant growth moving forward…
      • Figure 44: COVID-19 Tracker: additional click-and-collect use, 2020-21
    • …but to tap into this multi-channel retailers must better connect their channels
      • Figure 45: What consumers would like to see more of in-store once the pandemic eases, 2021
    • Although the online channel will be boosted, issues in the channel will also be inflated
      • Figure 46: Returns behaviours since the pandemic began, 2020
  12. Who Shops Online and How Frequently

    • A note on the timing of the research
    • 97% of internet users shop online
    • Over half of online shoppers have done more online shopping as a result of COVID-19
      • Figure 47: Changes in online shopping due to the COVID-19 pandemic, 2021
    • The pandemic has served to significantly increase the frequency with which consumers shop online
      • Figure 48: Frequency of online shopping, 2019-21
    • Significant uptick in frequency of online shopping among older generations
      • Figure 49: Frequency of online shopping, by age, 2019 and 2021
  13. Products Purchased Online

    • Almost all categories receive a boost from higher levels of online engagement
      • Figure 50: Products purchased online in the past year, 2019-21
    • Average age of online shopper edges older, and more affluent, in the past year
      • Figure 51: Products purchased online in the past year, 2019-21
    • Repertoires broaden as consumers rely on the online channel more
      • Figure 52: Repertoire of types of products purchased online in the past year, 2019-21
      • Figure 53: Repertoire of types of products purchased online in the past year, by select age groups, 2019-21
  14. Retailers Shopped With

    • More shopped with online-only retailers in the past year
      • Figure 54: Types of retailers shopped with in the past year, 2021
    • Etsy sees significant growth in engagement
      • Figure 55: Online-only retailers shopped with in the past 12 months, 2019-21
    • Boots sees a big jump in shopper numbers online
      • Figure 56: Store-based retailers shopped with online in the past year, 2019-21
    • Amazon the most popular retailer overall
      • Figure 57: Online retailers shopped with in the past year, 2020-21
    • Most retailers see shift in demographic profile as consumers rely on online channel more
      • Figure 58: Leading online-only retailers, average shopper base by age and household income, 2019 and 2021
      • Figure 59: Leading store-based retailers, average shopper base by age and household income, 2019-21
  15. Alternative Platforms Used

    • Nearly one in five have made a purchase linked to Facebook
      • Figure 60: Alternative platforms used in the process of shopping online in the past year, 2021
    • Alternative marketplaces and peer-to-peer sites set for significant growth
    • Alternative routes to market speak more directly to a youth audience
      • Figure 61: Alternative platforms and leading online-only retailers used in the past year, 2021
    • Drive to second-hand a major boost for alternative platforms
      • Figure 62: Online behaviours related to second-hand and independent shopping, 2021
  16. Use and Attitudes towards Credit and Cashback

    • 60% of online shoppers have bought on credit in the past year
      • Figure 63: Credit payment options used in the past year, 2021
    • New platforms have a strong youth audience…
      • Figure 64: Credit payment options used in the past year, by age, 2021
    • …and a slightly more affluent audience
      • Figure 65: Credit payment options used in the past year, by household income, 2021
    • Over half of 16-34s have been encouraged by credit to make impulse purchases
      • Figure 66: Impact of credit on impulse purchasing, 2021
    • A quarter have used Top Cashback before purchasing
      • Figure 67: Cashback sites used in the past year, 2021
  17. Digital Services Used and Interested In

    • Video service jumps into the mainstream
      • Figure 68: Impact and expected legacy of COVID-19 on digital forms of service, 2021
    • Samples important to support the greater role for online in BPC and F&D
      • Figure 69: Online services/experiences used and interested in, 2021
    • Younger shoppers far more engaged in digital tools and services
      • Figure 70: Online services/experiences used in the past year, by age, 2021
    • Hesitancy could provide a problem for retailers looking to continue to engage older shoppers online
      • Figure 71: Future interest in using online services/experiences, by age, 2021
  18. Attitudes to Shopping Online Sustainably

    • Sustainability now a critical issue in the online market
      • Figure 72: Attitudes towards shopping online sustainably, 2021
    • Drive for more accountability on sustainability coming from the youth market
      • Figure 73: Attitudes towards shopping online sustainably, 2021
  19. Leading Retailers – Key Takeaways

    • Amazon now accounts for 28% of online sales
    • Significant development in delivery methods as operators look to meet heightened demand
    • Amazon spends big in 2020 to capitalise on demand in the market
  20. Leading Online Retailers

    • Leading online-only players see sales soar during the pandemic
    • Grocers lead the way on the store-based side of the market
      • Figure 74: Top 30 leading online retailers, 2018/19-2020/21
  21. Market Share

    • Amazon strengthens its hold on the UK market
      • Figure 75: Top ten online retailers within the UK by estimated market share (excluding VAT), 2020
      • Figure 76: Top 30 online retailers within the UK by estimated market share (excluding VAT), 2018-20
  22. Advertising and Marketing Activity

    • Total sector advertising up 16% year-on-year in 2020
      • Figure 77: UK online retail: recorded above-the-line, online display and direct mail total advertising expenditure, 2016-20
    • Amazon the UK’s biggest online retail advertising spender
    • eBay pushes sustainable shopping and hero resilience of COVID-19 impacted sellers
    • Shein door drop campaign to support online fashion show ‘Walk Your Wonderful’
    • Moonpig ‘Mental Health Awareness’ campaign
    • Ocado the biggest online-only supermarket advertising spender
    • Gumtree radio advertising campaign targeting second-hand car buyers
    • Loaf debut TV advertising campaign
    • Notonthehighstreet champions small businesses during COVID-19 crisis
      • Figure 78: Leading UK online retailers: recorded above-the-line, online display and direct mail total advertising expenditure, 2016-20
    • Near-50% of all sector advertising spend channelled through digital media
      • Figure 79: UK online retail: recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2020
    • Nielsen Ad Intel coverage
  23. Launch Activity and Innovation

    • Ultra-rapid home deliveries in as little as 10 minutes
      • Figure 80: Getir, advertising at IMAX Waterloo, London, 2021
    • Royal Mail launches easy and convenient parcel collection and delivery service
      • Figure 81: Royal Mail Parcel Collect, 2020
    • Augmented and virtual reality try-on innovations help lessen the risk of buying online
      • Figure 82: Pinterest AR Try eyeshadow, 2021
    • Livestream shopping services offer a dynamic online experience
    • An increased focus on sustainability prompts explosion of fashion re-sale platforms
      • Figure 83: Resellfridges: The Wedding, at Selfridges Corner Shop, 2021
    • Amazon powers ahead with bricks-and-mortar rollout
      • Figure 84: Amazon Fresh, Ealing, London, March 2021
    • New online marketplace for local retailers
  24. Brand Research

    • Brand map
      • Figure 85: Attitudes towards and usage of selected brands, 2020-21
    • Key brand metrics
      • Figure 86: Key metrics for selected brands, 2020-21
    • Brand attitudes: Amazon seen to provide a great online service
      • Figure 87: Attitudes, by brand, 2020-21
    • Brand personality: Ocado associated with being exclusive
      • Figure 88: Brand personality – Macro image, 2020-21
    • Boots perceived as reliable
      • Figure 89: Brand personality – Micro image, 2020-21
    • Brand analysis
    • Amazon: a trusted retailer and seen to provide great online service
    • JD Williams: should do more to increase awareness
    • Boots: seen as ethical
    • Asos: seen as the most stylish of brands
    • eBay: innovative and fun
    • Boohoo: need to do more to mitigate perceptions of being unethical
    • John Lewis: accessible but expensive
    • Ocado: exclusive
    • Currys PC World: associated with being reliable and good customer service
    • Argos: trusted retailer and seen to provide good value
    • Very: offers great online service
    • Littlewoods: should focus on differentiating itself
    • Reading word clouds
  25. Appendix – Data Sources, Abbreviations and Supporting Information

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

    • Market forecast and prediction intervals
      • Figure 90: All retail sales, including VAT, best and worst case forecast, 2021-26
    • Market drivers and assumptions
      • Figure 91: Key drivers affecting Mintel’s market forecast, 2016-25
    • Forecast methodology
  27. Appendix – COVID Scenario Performance Methodology and Assumptions

    • Scenario performance
      • Figure 92: All retail sales, including VAT, scenario forecast, 2016-26
    • Rapid COVID recovery, central and extended COVID disruption scenarios outline
    • Scenario 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.

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