One in three retail sales: Shoppers to spend record £120bn online this year
Following a surge in online sales in 2020 thanks to Covid-19 and three strict lockdowns, UK shoppers are expected to further increase their spending as new data forecasts £120.5bn in online purchases this year alone.
Online sales in the UK saw an increase of 46.5 per cent in 2020, with British consumers spending £110.6bn online as physical stores were forced to close during long periods of lockdown.
Despite physical stores re-opening in April 2021, a further increase of £10bn, a rise of 9 per cent, is expected for online sales this year, according to research by VoucherCodes, carried out by Centre of Retail Research (CRR), shared with City A.M. today.
The CRR examined the impact of the pandemic on both online and offline retailing. It also looked ahead to 2021 and 2022 to understand how online sales will be impacted as the UK slowly recuperates from Covid.
More online than ever
Probably the main conclusion is that UK consumers are buying more goods online than ever and by the end of 2021, online sales will make up almost a third (30.2 per cent) of overall retail spending. This is 11 per cent more than the share in 2019, pre-pandemic.
Looking ahead to next year, total online spend will begin to level out, marginally increasing by 0.1 per cent to £120.6bn.
However, the CRR expects the share of online sales as a proportion of total retail spend will fall to 28.1 per cent as people get back to shopping at a mix of online and offline retailers.
In terms of the performance of physical outlets during the pandemic, total sales in bricks and mortar stores fell by a colossal £35.3bn when comparing the period 2019-2020 to 2020-2021.
However, the report shows a steady recovery for the year ahead, with a forecasted increase of £3.9bn (a modest rise of 1.4 per cent) in physical sales in 2021.
Food vs non-food
Despite the rise in physical store sales, it is expected that there will be a large disparity between food and non-food stores.
Non-food sales in physical stores are expected to rise by 10 per cent (£12.5bn) between 2020 and 2021, reaching £137.1bn as people return to the shops after long periods of closure.
Food sales on the other hand will see a 5.4 per cent decline from 2020 to the 2021 forecast as life returns to normal and people spend less time eating and drinking at home.
UK online and physical retail sales: 2018-2020 actuals and 2021-2022 forecasts in £billions
| Year | Total online sales | Total sales in physical stores | ||||
| Total | Food | Non-food | Total | Food | Non-food | |
| 2018 | £68.4 | £9.0 | £59.4 | £312.2 | £154.2 | £158.0 |
| 2019 | £75.4 | £9.0 | £66.4 | £318.1 | £158.6 | £159.5 |
| 2020 | £110.5 | £16.2 | £94.2 | £284.2 | £159.5 | £124.6 |
| 2021 forecast | £120.4 | £19.3 | £101.1 | £288.0 | £150.9 | £137.1 |
| 2022 forecast | £120.6 | £20.4 | £100.2 | £308.3 | £154.6 | £153.7 |
Despite the upward projections, nearly two thirds (60.5 per cent) of consumers think they will spend less online than they did during lockdown.
Almost a quarter (23 per cent) say they will spend just as much as they did during periods of lockdown, and 16.5 per cent say they will spend more online.
“The pandemic has acted as a catalyst for many changes in the retail industry, especially the migration of more consumers to online shops and people relying more heavily on online retailers than in the past,” commented Anita Naik, lifestyle editor at VoucherCodes.
“Despite a difficult economic period, it’s encouraging for the UK’s retail industry to see that shoppers are still keen to spend money in-store as well as online. Whilst physical stores have struggled over the past year, it’s great to see a real desire from consumers to get back to shopping in-store,” Naik concluded.