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UK Online Retailing: Inc Impact of COVID-19 market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Online Retailing: Inc Impact of COVID-19 - UK market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Online demand soared during the COVID-19 lockdown in the UK, with online sales growing by year-on-year 33.1% in April and 59.0% in May. Of course, concerns around the virus and constrains on consumer movement were the major driver of this, but equally the mass closure of non-essential stores also played into this heightened online demand. However surprisingly with stores now open, this demand has not eased – with online sales growing 73.4% year-on-year in June.

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Expert analysis from a specialist in the field

Written by Nick Carroll, a leading analyst in the eCommerce sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The online channel was already the growth area in UK retail prior to the COVID-19 pandemic and the outbreak will only accelerate this growth in the short and long term. The prolonged period of heightened online demand during the lockdown period will cause a longer-term expansion of the repertoire and frequency of products purchased online bringing opportunities for established online players and those who are putting the channel at the forefront of their strategy Nick Carroll
eCommerce Analyst

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What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • COVID-19: Market context
          • Economic and other assumptions
          • Executive Summary

              • The impact of COVID-19 on Online Retailing
                • Figure 1: Expected impact of COVID-19 on the online retail market, short, medium and long-term, 12 August 2020
              • The market
                • COVID-19 to drive significant growth for the online channel
                  • Figure 2: All online sales and forecast (including VAT), 2015-25
                • Heightened demand leads to record penetration levels for online
                  • Figure 3: All online sales as a percentage of all retail sales, 2015-24
                • Over two thirds of demand comes from three categories
                  • Figure 4: Estimated breakdown of all online sales by product category, 2019
                • Companies and brands
                  • Online-only players grew their dominance in 2019, but COVID-19 has reversed this trend
                    • Figure 5: Share of online sales, by broad type of retailer, Jan 2016-Jun 2020
                  • Amazon the dominant player online
                    • Figure 6: Top ten online retailers within the UK by estimated market share (ex-VAT), 2019
                  • The challenges of COVID-19 bring new services that can break down barriers for online
                    • Figure 7: Currys PC World ShopLive, April 2020
                  • The consumer
                    • The timing of our research
                      • Vast majority already shopped online…
                        • Figure 8: Frequency of online shopping, by age, April 2020
                      • …but COVID-19 will have created a higher frequency of shop
                        • Figure 9: COVID-19 behaviour: Online shopping use, April-July 2020
                      • Smartphones continue to play an ever-greater role in online retailing
                        • Figure 10: Devices used to shop online, 2018-20
                      • Over nine in ten online shoppers use Amazon
                        • Figure 11: Online retailers shopped with in the past year, April 2020
                      • Convenience and cost critical online
                        • Figure 12: Important factors when shopping online, April 2020
                      • Social media playing a bigger role than ever in online retail
                        • Figure 13: Sources of inspiration/alternative purchasing platforms, April 2020
                      • Trust a key issue on social media
                        • Figure 14: Attitudes to shopping online and on social channels, April 2020
                    • Impact of COVID-19 on Online Retailing

                      • The Market
                        • Confidence and spending take a significant hit during lockdown
                          • Online to account for a record percentage of retail in 2020
                            • Longer-term opportunities exist in the broadening of the repertoire and frequency of shop
                              • The consumer
                                • Vast majority are already online shoppers, but COVID-19 may drive greater frequency
                                  • Mobile purchasing continues to climb
                                    • COVID-19 may bring a step-change for social platforms in terms of true commerce
                                      • Companies and brands
                                        • COVID-19 brings greater online penetration for store-based players
                                          • COVID-19 may give peer-to-peer platforms a boost
                                            • COVID-19 has forced technological innovation which will have longer term consequences
                                            • Issues and Insights

                                              • The long-term impact of COVID-19 and reshaping of UK retailing
                                                • The opportunity for new platforms in a post COVID-19 world
                                                  • A starker light will be shone on the ethics of online retailing
                                                  • The Market – Key Takeaways

                                                    • Confidence and spending take a significant hit during lockdown
                                                      • Online to account for a record percentage of retail in 2020
                                                        • Longer-term opportunities exist in the broadening of the repertoire and frequency of shop
                                                          • A record year of store-based players online
                                                          • Market Drivers

                                                            • Confidence fell dramatically when COVID-19 lockdown was imposed
                                                              • Figure 15: The financial confidence index, January 2015-July 2020
                                                            • Real wage growth dives on back of COVID-19 recession fears
                                                              • Figure 16: Real wage growth: average weekly earnings vs inflation, Jan 2016-July 2020
                                                            • The hit to confidence significantly impacted spending patterns
                                                              • Figure 17: confirmed and planned spending activities, Jan 18 – Jul 20
                                                            • Retail sales decline by record levels during lockdown
                                                              • Figure 18: Annual % change in all UK retail sales (excluding fuel), by value and volume, Jan 2019-Jul 2020
                                                              • Figure 19: Percentage change in value retail sales, by category, in the first half (Jan-Jul) 2020
                                                            • UK household broadband internet access nearing saturation level
                                                              • Figure 20: UK household broadband internet access, 2012-19
                                                            • Smartphones increasingly used to access the internet
                                                              • Figure 21: Ownership of mobile phones, January 2012- September 2019
                                                          • Market Size and Forecast

                                                            • The impact of COVID-19 on Online Retailing
                                                              • Figure 22: Expected impact of COVID-19 on the online retail market, short, medium and long-term, 12 August 2020
                                                            • Lockdown
                                                              • Re-emergence
                                                                • Recovery
                                                                  • Prior to COVID-19 growth was slowing in the channel…
                                                                    • …however COVID-19 will drive the sector to record levels
                                                                        • Figure 23: All online sales and forecast (including VAT), 2015-25
                                                                        • Figure 24: All online sales and forecast, 2015-25
                                                                      • Online to account for a quarter of all retail sales in 2020
                                                                        • Figure 25: Online sales as a percentage of all retail sales, by broad category, October 2019 – June 2020
                                                                        • Figure 26: All online sales as a percentage of all retail sales, 2015-24
                                                                      • Market drivers and assumptions
                                                                        • Figure 27: Key drivers affecting Mintel’s market forecast, 2015-24 (prepared on 14 August 2020)
                                                                      • Learnings from the last recession
                                                                          • Figure 28: All online sales, 2006-12
                                                                        • Forecast methodology
                                                                        • Market Segmentation

                                                                            • Store-based players have grown rapidly since lockdown
                                                                                • Figure 29: Share of online sales, by broad type of retailer, Jan 2016-Jun 2020
                                                                              • Breakdown of sales by type of retailer
                                                                                • Figure 30: Online sales, by type of retailer, 2019
                                                                              • Detailed breakdown of store-based players online
                                                                                • Figure 31: Detailed breakdown of online sales, by types of retailer, 2017-19
                                                                              • Detailed breakdown of online-only players
                                                                                • Figure 32: Estimated breakdown of online-only retail sales, by top 100 online-only players in the UK, 2018/19
                                                                                • Figure 33: Estimated breakdown of online-only retail sales, by number of retailers, 2018/19
                                                                              • Breakdown of sales by product category
                                                                                • Figure 34: Estimated breakdown of all online sales by product category, 2019
                                                                                • Figure 35: Estimated breakdown of all online sales by product category, including VAT, 2017-19
                                                                            • Digital Spending

                                                                                • Books – an equilibrium being found
                                                                                  • Figure 36: Value of consumer print book and publisher UK sales of consumer digital books (net invoiced value), 2014-19
                                                                                • Music - streaming now key
                                                                                  • Figure 37: Spending on recorded music, 2014-18
                                                                                • Video – streaming gets a boost during lockdown
                                                                                  • Figure 38: The video market, 2016-18
                                                                                • Gaming – physical still key but downloads growing
                                                                                  • The total download market
                                                                                    • Figure 39: Estimated total identified digital spending, by category, 2019
                                                                                • The Consumer – Key Takeaways

                                                                                  • Vast majority are already online shoppers, but COVID-19 may drive greater frequency
                                                                                    • Mobile purchasing continues to climb
                                                                                      • COVID-19 may bring a step-change for social platforms in terms of true commerce
                                                                                      • Who Shops Online and How Frequently They Shop

                                                                                        • The timing of our research
                                                                                          • Online shopping is for all
                                                                                            • Figure 40: Usage of online retailing, by age and gender, April 2020
                                                                                          • Almost a third shop online weekly
                                                                                            • Figure 41: Frequency of online shopping, April 2020
                                                                                            • Figure 42: Frequency of online shopping, by age, April 2020
                                                                                          • Almost a third have increased their online use in the past year
                                                                                              • Figure 43: Changes in online shopping use in the past year, April 2020
                                                                                          • Products Purchased Online

                                                                                            • Fashion is the most popular online purchase
                                                                                                • Figure 44: Products purchased online in the past year, May 2019 and April 2020
                                                                                              • Products purchased by age
                                                                                                  • Figure 45: Products purchased online in the past year, by age, April 2020
                                                                                                • Product repertoire is broadest among 35-44 year olds and the most affluent
                                                                                                  • Figure 46: Repertoire of product categories purchased from online in the past year, by age, April 2020
                                                                                              • Devices Used to Shop Online

                                                                                                • Half of respondents are now using mobile devices to make online purchases
                                                                                                  • Figure 47: Devices used to shop online, 2018-20
                                                                                                • Middle-aged shoppers as likely to shop using a smartphone than with a desktop or laptop
                                                                                                  • Figure 48: Devices used to shop online, by age, April 2020
                                                                                                • Browser-based mobile shopping still most popular, but app use growing
                                                                                                  • Figure 49: How smartphone/tablet shoppers shop when on the move, April 2020
                                                                                                • Smartphones driving on-the-go shopping
                                                                                                  • Figure 50: Engagement with shopping on the move, by age, April 2020
                                                                                              • Retailers Shopped With Online

                                                                                                • More shopped with online-only retailers in the past year
                                                                                                  • Figure 51: Types of retailers shopped with in the past year, April 2020
                                                                                                • Amazon the dominant online-only player…
                                                                                                    • Figure 52: Online-only retailers shopped with in the past year, April 2020
                                                                                                    • Figure 53: Store-based retailers shopped with online in the past year, April 2020
                                                                                                  • … and overall the largest player in the online market
                                                                                                    • Figure 54: Online retailers shopped with in the past year, April 2020
                                                                                                    • Figure 55: Leading online retailers, by age and household income, April 2020
                                                                                                  • Repertoire of online-only retailers used narrower than that of store-based shoppers
                                                                                                    • Figure 56: Repertoire of retailers used online, April 2020
                                                                                                • Key Drivers to Online Patronage

                                                                                                  • Convenience still crucial online
                                                                                                    • Figure 57: Important factors when shopping online, April 2020
                                                                                                    • Figure 58: Returns behaviour, July 2019
                                                                                                  • Cost key for older shoppers
                                                                                                    • Figure 59: Important factors when shopping online, April 2020
                                                                                                  • While online is the growth area of online it does face challenges
                                                                                                      • Figure 60: Attitudes towards stores and online, April 2020
                                                                                                  • Impact of Social Media on Shopping Behaviours

                                                                                                    • Social media continues to grow as a platform to influence purchases
                                                                                                      • Figure 61: Sources of inspiration/alternative purchasing platforms, April 2020
                                                                                                    • Younger shoppers in general more likely to be influenced by online sources
                                                                                                      • Figure 62: Influence on purchasing by social channels, by age, April 2020
                                                                                                      • Figure 63: Influence on purchasing by key sites, by age, April 2020
                                                                                                    • The pivot from influence to direct commerce
                                                                                                        • Figure 64: Facebook/Instagram Shops, May 2020
                                                                                                      • To capitalize on this opportunity social channels need to emphasize trust
                                                                                                          • Figure 65: Attitudes to shopping online and on social channels, April 2020
                                                                                                      • The Impact of COVID-19 on Online Shopping Behaviour

                                                                                                          • Concerns remain high around contracting the virus…
                                                                                                            • Figure 66: Level of concern regarding exposure to COVID-19, February-July 2020
                                                                                                          • …which continues to translate into hesitancy around going in-store…
                                                                                                            • Figure 67: COVID-19 behaviour, time spent in-store, April – July 2020
                                                                                                          • …and into greater online demand
                                                                                                            • Figure 68: COVID-19 behaviour: Online shopping use, April-July 2020
                                                                                                          • Older shoppers rely on online during the lockdown
                                                                                                              • Figure 69: COVID-19 behaviour: Online shopping use, by age, April-July 2020
                                                                                                            • Early peak in demand did create bottlenecks
                                                                                                              • Click-and-collect uplift limited, but there are significant opportunities in the second half
                                                                                                                • Figure 70: COVID-19 behaviour, click-and-collect use, April – July 2020
                                                                                                                • Figure 71: Amazon Hub incentive, August 2020
                                                                                                              • Learned behaviours in lockdown open up new modes of service
                                                                                                                  • Figure 72: Currys PC World ShopLive, April 2020
                                                                                                                • A smartphone-based physical shopping experience brings significant opportunity for online
                                                                                                                    • Figure 73: ASOS app incentive, July 2020
                                                                                                                • Companies and Brands – Key Takeaways

                                                                                                                  • Amazon the dominant player
                                                                                                                    • COVID-19 may give peer-to-peer platforms a boost
                                                                                                                      • COVID-19 has forced technological innovation which will have longer term consequences
                                                                                                                      • Leading Online Retailers

                                                                                                                          • Amazon remains the standout performer in the online marketplace
                                                                                                                              • Figure 74: UK: top 30 leading online retailers 2017/28 - 2019/20
                                                                                                                          • Market Share

                                                                                                                            • Amazon accounts for over a quarter of online spending
                                                                                                                              • Figure 75: Top ten online retailers within the UK by estimated market share (excluding VAT), 2019
                                                                                                                              • Figure 76: Top 20 online retailers within the UK by estimated market share (excluding VAT), 2017-19
                                                                                                                          • Launch Activity and Innovation

                                                                                                                            • Use of Artificial Intelligence and Augmented Reality grows
                                                                                                                                • Figure 77: IKEA Augmented Reality feature, 2020
                                                                                                                              • Retailers are launching or expanding online offerings
                                                                                                                                • Figure 78: Co-op delivery robots in Milton-Keynes 2020
                                                                                                                              • Online moves offline
                                                                                                                                • Figure 79: Selfridges’ Instagram collaboration the ‘Instagram Edit, 2019’
                                                                                                                              • Online live-chat is a valuable new channel for customer engagement
                                                                                                                              • Advertising and Marketing Activity

                                                                                                                                • Advertising expenditure flat year-on-year in 2019
                                                                                                                                  • Figure 80: UK online retail: recorded above-the-line, online display and direct mail total advertising expenditure, 2016-20
                                                                                                                                • Amazon once again the UK’s biggest online retail advertising spender
                                                                                                                                  • eBay campaign flags up fast delivery and convenience benefit
                                                                                                                                    • Net A Porter runs first sneaker campaign
                                                                                                                                      • Ocado commitment to service campaign
                                                                                                                                        • Convenient Christmas shopping with Moonpig
                                                                                                                                          • Shop Direct Home Shopping digital out-of-home Black Friday campaign
                                                                                                                                            • Boohoo and Pretty Little Thing adverts banned
                                                                                                                                              • Figure 81: Leading UK online retailers: recorded above-the-line, online display and direct mail total advertising expenditure, 2016-19
                                                                                                                                            • Digital advertising dominates
                                                                                                                                              • Figure 82: UK online retail: recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2019
                                                                                                                                            • Nielsen Ad Intel coverage
                                                                                                                                            • Brand Research

                                                                                                                                                • What you need to know
                                                                                                                                                  • Brand map
                                                                                                                                                    • Figure 83: Attitudes towards and usage of selected brands, November 2019 – June 2020
                                                                                                                                                  • Key brand metrics
                                                                                                                                                    • Figure 84: Key metrics for selected brands, November 2019 - June 2020
                                                                                                                                                  • Brand attitudes: ao.com for online service and Boots for trustworthiness
                                                                                                                                                    • Figure 85: Attitudes, by brand, November 2019 - June 2020
                                                                                                                                                  • Brand personality: ASOS and eBay fun brands
                                                                                                                                                    • Figure 86: Brand personality – macro image, November 2019 - June 2020
                                                                                                                                                  • Headline: Boots is perceived as reliable and welcoming
                                                                                                                                                    • Figure 87: Brand personality – micro image, November 2019 - June 2020
                                                                                                                                                  • Brand analysis
                                                                                                                                                    • Amazon: ubiquitous with excellent customer experience
                                                                                                                                                      • ao.com: a great service and accessible
                                                                                                                                                        • Argos: well-known and used, but lacking excellent shopper experience
                                                                                                                                                          • John Lewis: expensive but worth paying more for
                                                                                                                                                            • ASOS: fun and a great online experience
                                                                                                                                                              • Boots trustworthy and reliable
                                                                                                                                                                • Ocado low on trust and usage
                                                                                                                                                                  • eBay trusted, recommended and a great service
                                                                                                                                                                    • JD Williams: reliable
                                                                                                                                                                      • Boohoo/Boohoo Man: low awareness and usage
                                                                                                                                                                        • Littlewoods: well-known but lowest for recommendations
                                                                                                                                                                          • Very: good awareness and accessibility
                                                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                            • Data sources
                                                                                                                                                                              • VAT
                                                                                                                                                                                • Abbreviations
                                                                                                                                                                                  • Consumer research methodology

                                                                                                                                                                                  About the report

                                                                                                                                                                                  This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                                                                                                  • The Consumer

                                                                                                                                                                                    What They Want. Why They Want It.

                                                                                                                                                                                  • The Competitors

                                                                                                                                                                                    Who’s Winning. How To Stay Ahead.

                                                                                                                                                                                  • The Market

                                                                                                                                                                                    Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                                                                                                  • The Innovations

                                                                                                                                                                                    New Ideas. New Products. New Potential.

                                                                                                                                                                                  • The Opportunities

                                                                                                                                                                                    Where The White Space Is. How To Make It Yours.

                                                                                                                                                                                  • The Trends

                                                                                                                                                                                    What’s Shaping Demand – Today And Tomorrow.

                                                                                                                                                                                  Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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