The UK Online Retailing Market Report identifies consumers’ attitudes towards the convenience and value of shopping online, leading retailers and the impact of the cost of living on the online retail market. This report covers the online retail market size, market forecast, market segmentation and industry trends in the UK online retail market.
Click here to view the German version of our Online Retailing Market Report 2022.
Current Landscape of the Online Retail Market
Soaring inflation and the income squeeze will likely have a mixed impact on the online retail market. Four-fifths of sales in the online channel are from non-foods, and the majority of this is discretionary, and therefore any wider contraction in nonessential demand is likely to hit sales.
However, the online retail market continues to have a positive price perception, with many consumers viewing online prices as ‘cheaper’ than in-store comparatives. So even during this period of financial uncertainty, the online channel will likely see a net boost in engagement in the short to medium term as consumers hunt for the best prices, helped by major discounting events such as Black Friday or Amazon Prime Day.
UK Online Retail Market Share and Key Industry Trends
Consumers are scrutinising all buying decisions more closely based on ethical and environmental credentials, and both areas represent a threat to the online retail market. Over 40% of online shoppers are concerned about the environmental impact of shopping online, therefore, online retailers must continue to invest in greener operations and communicate moves made in this area to consumers.
- 39% of UK adults shop online at least once a week.
- 64% of UK consumers have bought clothing, footwear or accessories online in the last 12 months.
- 33% of online shoppers have purchased items using their credit card.
- 78% of online shoppers agree that shopping online is more convenient than shopping in-store.
Future Trends in the UK Online Retail Market
However, Mintel’s online retail market research identifies that online will remain a channel with significant long-term opportunities, particularly in home and garden retailing. Online sales penetration rates for home and garden retail are still under-index and will continue to grow rapidly.
Growth in the online retail market is expected to be positive. However, competition continues to be fierce, with a greater role for marketplaces, social media and peer-to-peer selling since the routes to purchase online continue to evolve.
Read on to discover more about the UK Online Retailing Market Report 2022, read our UK Retail Ranking Market Report 2022, or take a look at our other Retail Market Research.
Quickly Understand
- Explores the impact of the cost of living on the online retail market size, including forecasts through to 2027.
- The breakdown of the online retail market by category and the pandemic’s impact on online penetration of total sales.
- Explores who shops online, how frequently and what products are purchased online.
- Outlines leading retailers, key brand metrics and online retail market share.
- Ownership of delivery passes/schemes, such as Amazon Prime.
- Use of credit and cashback sites when shopping online.
- Awareness and attitudes towards NFTs.
- Attitudes towards the convenience and value of shopping online, the interplay with stores and sustainability concerns around shopping online.
Covered in this Report
Products: Retail shopping: store-based and online trade-only stores.
Brands: Amazon, The Very Group (Littlewoods), Ocado, Dixons Carphone, Asda, Next, John Lewis, Tesco, Sainsbury’s, eBay, Amazon, Boohoo/Boohoo Men, Pretty Little Thing, JD Williams (Jacomo, Simply Be), Etsy, Argos, Marks & Spencer, Currys, ASOS, IKEA, Sports Direct, AO.com, Not on The High Street, Missguided, Debenhams, Depop, StockX, Boots, Klarna, Clearpay, PayPal Credit, Laybuy, Back Market, Jaeger, Nobody’s Child, Waitrose, Benefit, Dyson, Iceland Foods, Morrisons, Kingfisher (Screwfix, B&Q), N Brown Group, The Hut Group, Studio Retail Group, Buy It Direct, HelloFresh, Direct Wines, Gousto, Otto, Victorian Plumbing, Ebuyer.
Expert Analysis from a Specialist in the Retail Sector
This report, written by Nick Carroll, a leading analyst in the retail sector, delivers in-depth commentary and analysis to highlight current trends in the UK online retail market and add expert context to the numbers.
The online market is now in a period of rebalancing, as more store-based shopping comes into the mix, but there is no doubt the channel will receive a legacy boost as a result of the events of 2020 and 2021. The cost-of-living crisis presents both opportunity and threat to the online channel. With the majority of sales in the channel being discretionary there will be concern about how slowing discretionary demand will impact sales, but the positive price perception of the channel will also bring shoppers online in the hope of the best possible price.”
Nick Carroll
Category Director – Retail Insights
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Overview
- Key issues covered in this Report
- Market context
- Products covered in this Report
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Executive Summary
- The five-year outlook for online retailing
- Figure 1: Category outlook, 2022-27
- The market
- Online market expected to dip 12% in 2022 as the market rebalances
- Figure 2: Market size for online retailing (including VAT), 2017-22
- Online retail market forecast to grow by 29.1% between 2022 and 2027
- Figure 3: Market forecast all online retail sales (including VAT), 2017-27
- Online penetration will fall, but remain at inflated levels
- Figure 4: Online sales as a percentage of all retail sales, 2017-27
- Food and drink accounts for a fifth of online spending
- Figure 5: Estimated breakdown of all online sales, by product category, 2021
- All categories see a significant jump in online penetration
- Figure 6: Store-based retailers’ online sales, as a percentage of total sales, 2019 and 2021
- Leading retailers
- Amazon’s share of the market hits new heights in 2021
- Figure 7: Top 10 online retailers within the UK, by estimated market share (excluding VAT), 2021
- Heightened online demand helps to boost Etsy awareness
- Figure 8: Key metrics for selected brands, 2022
- The consumer
- 97% of consumers shop online
- Frequency of shop dips as restrictions ease
- Figure 9: Frequency of shopping online, 2019-22
- Peak penetration is falling back for most categories online
- Figure 10: Products purchased online in the past 12 months, 2019-22
- Boots now the fifth most shopped with online retailer
- Figure 11: Online retailers shopped with in the past year, 2021 and 2022
- 56% of consumers are members of a delivery pass scheme
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- Figure 12: Subscription delivery passes held, 2022
- 57% have purchased online products via credit in the past year
- Figure 13: Use and types of credit used to purchasing products online, 2021 and 2022
- Half of consumers have some awareness of NFTs
- Figure 14: Attitudes towards NFTs and digital products, 2022
- Online thrives on convenience and cost
- Figure 15: Attitudes towards online shopping, 2022
- The five-year outlook for online retailing
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Issues and Insights
- How online demand will fare in the face of the cost-of-living crisis
- Value is still on the side of online…
- …and it has the retailers and platforms to tap into growing trends
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Market Drivers
- Inflation is the key concern for consumers and brands…
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- Figure 16: Inflation: overall index (CPI) and core categories, October 2021-July 2022
- …and will weigh down the post-COVID recovery
- Consumer spending power will be curbed
- The conflict in Ukraine is hurting the UK economy in a number of ways
- Employment has held up better than expected
- Consumers’ financial wellbeing has fallen from the highs of 2021…
- Figure 17: Household financial wellbeing index, 2016-22
- …and most people are feeling the effects of price rises
- Figure 18: Factors experienced in the past two months, 2022
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- Figure 19: Expected reactions to price increases, 2022
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Market Size and Performance
- Online market expected to dip 12% in 2022 as the market rebalances
- Figure 20: Market size for online retailing (including VAT), 2017-22
- Figure 21: Market size for online retailing, at current and constant prices, 2017-22
- Grocery and home drivers of decline in 2022
- Figure 22: Online retail sales growth, total sales, 2021-22
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- Figure 23: Online retail sales growth, by major category, 2021-22
- A shift back to stores, but online remains elevated
- Figure 24: Estimated share of all non-food sales, by stores and non-store retail, 2020-22
- Online market expected to dip 12% in 2022 as the market rebalances
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Market Forecast
- Online demand to rebalance in 2022 before growth returns
- Figure 25: Online retailing, category outlook, 2022-27
- Online retail market forecast to grow by 29.1% between 2022 and 2027
- Figure 26: Market forecast all online retail sales (including VAT), 2017-27
- Online penetration will fall, but remain at inflated levels
- Figure 27: Online sales as a percentage of all retail sales, 2017-27
- Learnings from the last income squeeze
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- Figure 28: All online retail sales (including VAT), market size and growth, 2009-18
- Forecast methodology
- Online demand to rebalance in 2022 before growth returns
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Market Segmentation
- Online-only players regain majority share of the market in early 2022
- Figure 29: Share of online sales, by broad type of retail operation, 2018-22
- Breakdown by type of retailer
- Figure 30: Online sales, by type of retailer, 2019-22
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- Figure 31: Estimated detailed store-based retail online market sizes, by value and as a proportion of total category sales, 2019-21
- Detailed breakdown of online-only players
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- Figure 32: Estimated breakdown of online-only retail sales, by number of retailers, 2021
- Breakdown of sales by category
- Figure 33: Estimated breakdown of all online sales, by product category, 2021
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- Figure 34: Estimated breakdown of all online sales, by product category, including VAT, 2018-21
- Online-only players regain majority share of the market in early 2022
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Who Shops Online and How Frequently
- 97% of consumers shop online
- Frequency of shop dips as restrictions ease
- Figure 35: Frequency of shopping online, 2019-22
- Peak frequency comes from those aged 25-44
- Figure 36: Frequency of shopping online, by age, 2022
- Legacy of the pandemic will be a more engaged older demographic, but warning signs among those younger
- Figure 37: Percentage point change in the frequency of online shop, by age, 2019-22
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- Figure 38: Frequency of shopping online, 2022
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Products Purchased Online
- Peak penetration is falling back for most categories online
- Figure 39: Products purchased online in the past 12 months, 2019-22
- Demographic shifts in category purchasing showing stickiness
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- Figure 40: Products purchased online in the past year, by average age and household income, 2019 and 2022
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- Figure 41: Percentage point change in online purchasing, by category and age, 2019-22
- Range of products purchased online eases back
- Figure 42: Repertoire of product categories purchased from online, 2019-21
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- Figure 43: 1-2 and 4+ product categories purchased from, by age, 2019-21
- Peak penetration is falling back for most categories online
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Retailers Shopped with Online
- Nine in 10 have shopped with retailers without stores in the past year
- Figure 44: Types of online retailer shopped with in the past year, 2022
- Etsy retains its pandemic boost while others see some move away
- Figure 45: Online-only retailers shopped with in the past year, 2019-22
- Some demand has shifted back to store for leading store-based players
- Figure 46: Store-based retailers shopped with online in the past year, 2019-22
- Boots now the fifth most shopped with online retailer
- Figure 47: Online retailers shopped with in the past year, 2021 and 2022
- Nine in 10 have shopped with retailers without stores in the past year
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Ownership of Delivery Passes
- 56% of consumers are members of a delivery pass scheme
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- Figure 48: Subscription delivery passes held, 2022
- Delivery pass ownership skews younger and more affluent across the board
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- Figure 49: Average age and household income of delivery pass owners and retailers shopped with, 2022
- Opportunity for schemes to grow in the face of the cost-of-living crisis
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- Figure 50: Attitudes towards shopping online, by delivery pass ownership status, 2022
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Credit and Cashback Use
- 57% have purchased online products via credit in the past year
- Figure 51: Use and types of credit used to purchase products online, 2021 and 2022
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- Figure 52: Use and types of credit used to purchase products online, by age and household income, 2022
- A third have used cashback sites in the past year
- Figure 53: Use of cashback sites in the past year, 2021 and 2022
- 57% have purchased online products via credit in the past year
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Attitudes to Price, Convenience and Sustainability
- Income squeeze should provide a boost to the online channel…
- Figure 54: Attitudes towards price and shopping online, 2022
- Shoppers will become savvier as pressure builds
- Figure 55: Attitudes towards price and shopping online, 2022
- Convenience in favour of online, but same-day faces a battle to connect
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- Figure 56: Attitudes towards convenience and shopping online, 2022
- Environmental concerns a greater barrier for younger generation
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- Figure 57: Attitudes towards convenience and shopping online, 2022
- Income squeeze should provide a boost to the online channel…
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Awareness and Attitudes towards NFTs
- Over half have some awareness of NFTs
- Figure 58: Awareness of NFTs, 2022
- Interest exists around NFT purchasing but there are obstacles to overcome
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- Figure 59: Attitudes towards NFTs and digital products, 2022
- Over half have some awareness of NFTs
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Leading Online Retailers
- Leading players adjust after rapid growth in 2020
- Grocers remain in an elevated position
- Leading store-based players look to leverage their brand equity into platforms
- Very annualises a strong 2020 in 2021
- Figure 60: Top 30 leading online retailers, 2019/20-2021/22
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Market Share
- Top 10 players account for 72% of the market
- Figure 61: Top 10 online retailers within the UK, by estimated market share (excluding VAT), 2021
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- Figure 62: Top 30 online retailers within the UK, by estimated market share (excluding VAT), 2019-21
- Top 10 players account for 72% of the market
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Brand Research
- Brand map
- Figure 63: Attitudes towards and usage of selected brands, 2022
- Key brand metrics
- Figure 64: Key metrics for selected brands, 2022
- Brand attitudes: Speed of delivery key for Amazon service perceptions
- Figure 65: Attitudes, by brand, 2022
- Brand personality: Premium associations still apparent for the Ocado brand
- Figure 66: Brand personality – macro image, 2022
- Unique range from sellers gives Etsy a stylish association
- Figure 67: Brand personality – micro image, 2022
- Brand analysis
- Amazon: High trust built on delivering on promises
- eBay: Value credentials are strong, but competition in the C2C market is stronger than ever
- Etsy: independent and SME sellers give a differentiated position
- Boohoo: core users loyal but wider brand perspective needs work
- Ocado: a premium operator
- Very/JD Williams: a tale of two halves
- Brand map
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Launch Activity and Innovation
- Same-day services grow, despite Q-commerce retailers scaling back
- Social media continues to experiment with commerce
- Figure 68: M&S Live shopping, 2022
- Primark makes its first foray into online retailing
- A rush to the marketplace
- Experiments in the ‘metaverse’ continue
- Figure 69: Horizon Worlds, in-world purchase, 2022
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- Figure 70: Kronans Apotek, Pharmaverse, 2022
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Advertising and Marketing Activity
- Total sector advertising jumps by over a third in 2021
- Figure 71: UK online retail: Total recorded above-the-line, online display and direct mail advertising expenditure, 2018-21
- Amazon the biggest above-the-line spender
- Figure 72: Leading UK online-only businesses: Total recorded above-the-line, online display and direct mail total advertising expenditure, 2018-22
- Amazon looked to spread Kindness for festive 2021
- Shein launches show to find talent fashion designers
- Q-commerce grocers spend big to find audience
- Figure 73: Gorillas, door drop, 2021
- Figure 74: Gopuff, London Underground Advertisement, 2022
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- Figure 75: Getir dark store, central London, 2022
- Digital spending accounts for the majority of spend
- Figure 76: UK online retail recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2021
- Nielsen Ad Intel coverage
- Total sector advertising jumps by over a third in 2021
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Appendix – Data Sources, Abbreviations and Supporting Information
- Data sources
- VAT
- Abbreviations
- Consumer research methodology
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Appendix – Forecast Methodology
- Market forecast and prediction intervals
- Figure 77: All online retail sales, market size and forecast, at current and constant prices, 2017-27
- Figure 78: All online retail sales, current price prediction intervals, 2022-27
- Market drivers and assumptions
- Figure 79: Key economic drivers, 2016-26
- Forecast methodology
- Market forecast and prediction intervals
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