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Online shopping to be over half of UK retail sales by 2028

Jul '19
Pic: Womble bond Dickinson
Pic: Womble bond Dickinson
Online shopping will account for more than half of retail sales in the United Kingdom—up from 19 per cent at present—in the next ten years, according to a report released recently. Commissioned by law firm Womble Bond Dickinson (WBD), the report titled ‘The Digital Tipping Point’, reveals that this growth will be powered by three primary factors.

The factors are the changing demographics of the UK adult population, the development of faster, cheaper, in-home deliveries and fewer physical stores.

However, there are potential risks ahead for retailers that do not prioritise data security when embracing new technologies needed to thrive in a digital future, according to a press release from WBD.

As the UK adult population evolves over the next decade the shopping habits of younger groups will become more dominant. The research conducted by Retail Economics showed that 62 per cent of 16-24 year olds (Gen Z) shop online at least every fortnight compared with just 29 per cent aged over 65, averaging around three online purchases per month.

Millennials also spend the highest proportion online currently (22.1 per cent), averaging £42.32 per online transaction and spending £110.45 online each month.

Over half (53 per cent) of Gen Z consumers said smartphones influenced them most in terms of 'awareness’ of new retailers or brands compared with just 3 per cent of those aged over 65. This reveals how much more online marketing impacts younger adults.

However, almost a quarter of Gen Zs also said they are more likely to do shopping in high streets and shopping centres highlighting the complexity of the customer journey and the importance of shopping experiences for these younger consumers.

The top three factors that would accelerate online shopping for consumers are cheaper (47 per cent) and faster (26 per cent) delivery and easier returns (26 per cent), all of which are key areas of investment for retailers looking to own more of the digital market.

Again easier returns are more important for Gen Z (28 per cent) and millennials (30 per cent) than any other age group highlighting their significance as dominant consumers in the future. In addition to this there is a rising trend of in-home deliveries (deliveries while homeowners are out) which is expected to grow.

Also driving the acceleration of online shopping are emerging business models like subscriptions and auto-replenishment which are powered by online and further increase in online penetration rates for repeat purchases.

There have been five consecutive years of net closures of retail stores and with dwindling levels of footfall across high streets, shopping centres and retail parks this trend seems set to continue. Indeed 10 per cent of consumers say they will shop less in physical stores in next 12 months outweighing those who suggested they will shop more frequently in-store.

With more consumers turning to online for even mundane purchases, demand for retail property is at its lowest since 2007 and the role of the store has become polarised with flagship 'destination' stores continuing to attract sustainable levels of footfall, while other secondary locations with dwindling levels of footfall remain under pressure, added the report. (DS)

Fibre2Fashion News Desk – India

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