Table of Contents
Executive Summary
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- The impact of COVID-19 on Online Retailing
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- 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
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- Figure 2: All online sales and forecast (including VAT), 2015-25
- Heightened demand leads to record penetration levels for online
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- Figure 3: All online sales as a percentage of all retail sales, 2015-24
- Over two thirds of demand comes from three categories
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- 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
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- Figure 5: Share of online sales, by broad type of retailer, Jan 2016-Jun 2020
- Amazon the dominant player online
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- 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
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- Figure 7: Currys PC World ShopLive, April 2020
- The consumer
- The timing of our research
- Vast majority already shopped online…
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- Figure 8: Frequency of online shopping, by age, April 2020
- …but COVID-19 will have created a higher frequency of shop
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- Figure 9: COVID-19 behaviour: Online shopping use, April-July 2020
- Smartphones continue to play an ever-greater role in online retailing
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- Figure 10: Devices used to shop online, 2018-20
- Over nine in ten online shoppers use Amazon
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- Figure 11: Online retailers shopped with in the past year, April 2020
- Convenience and cost critical online
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- Figure 12: Important factors when shopping online, April 2020
- Social media playing a bigger role than ever in online retail
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- Figure 13: Sources of inspiration/alternative purchasing platforms, April 2020
- Trust a key issue on social media
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- Figure 14: Attitudes to shopping online and on social channels, April 2020
Impact of COVID-19 on Online Retailing
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- 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
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- 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
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- 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
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- Confidence fell dramatically when COVID-19 lockdown was imposed
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- Figure 15: The financial confidence index, January 2015-July 2020
- Real wage growth dives on back of COVID-19 recession fears
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- Figure 16: Real wage growth: average weekly earnings vs inflation, Jan 2016-July 2020
- The hit to confidence significantly impacted spending patterns
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- Figure 17: confirmed and planned spending activities, Jan 18 – Jul 20
- Retail sales decline by record levels during lockdown
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- Figure 18: Annual % change in all UK retail sales (excluding fuel), by value and volume, Jan 2019-Jul 2020
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- 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
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- Figure 20: UK household broadband internet access, 2012-19
- Smartphones increasingly used to access the internet
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- Figure 21: Ownership of mobile phones, January 2012- September 2019
Market Size and Forecast
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- The impact of COVID-19 on Online Retailing
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- 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
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- 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
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- Figure 25: Online sales as a percentage of all retail sales, by broad category, October 2019 – June 2020
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- Figure 26: All online sales as a percentage of all retail sales, 2015-24
- Market drivers and assumptions
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- Figure 27: Key drivers affecting Mintel’s market forecast, 2015-24 (prepared on 14 August 2020)
- Learnings from the last recession
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- Figure 28: All online sales, 2006-12
- Forecast methodology
Market Segmentation
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- Store-based players have grown rapidly since lockdown
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- Figure 29: Share of online sales, by broad type of retailer, Jan 2016-Jun 2020
- Breakdown of sales by type of retailer
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- Figure 30: Online sales, by type of retailer, 2019
- Detailed breakdown of store-based players online
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- Figure 31: Detailed breakdown of online sales, by types of retailer, 2017-19
- Detailed breakdown of online-only players
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- Figure 32: Estimated breakdown of online-only retail sales, by top 100 online-only players in the UK, 2018/19
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- Figure 33: Estimated breakdown of online-only retail sales, by number of retailers, 2018/19
- Breakdown of sales by product category
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- Figure 34: Estimated breakdown of all online sales by product category, 2019
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- Figure 35: Estimated breakdown of all online sales by product category, including VAT, 2017-19
Digital Spending
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- Books – an equilibrium being found
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- Figure 36: Value of consumer print book and publisher UK sales of consumer digital books (net invoiced value), 2014-19
- Music - streaming now key
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- Figure 37: Spending on recorded music, 2014-18
- Video – streaming gets a boost during lockdown
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- Figure 38: The video market, 2016-18
- Gaming – physical still key but downloads growing
- The total download market
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- Figure 39: Estimated total identified digital spending, by category, 2019
The Consumer – Key Takeaways
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- 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
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- The timing of our research
- Online shopping is for all
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- Figure 40: Usage of online retailing, by age and gender, April 2020
- Almost a third shop online weekly
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- Figure 41: Frequency of online shopping, April 2020
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- Figure 42: Frequency of online shopping, by age, April 2020
- Almost a third have increased their online use in the past year
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- Figure 43: Changes in online shopping use in the past year, April 2020
Products Purchased Online
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- Fashion is the most popular online purchase
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- Figure 44: Products purchased online in the past year, May 2019 and April 2020
- Products purchased by age
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- 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
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- Figure 46: Repertoire of product categories purchased from online in the past year, by age, April 2020
Devices Used to Shop Online
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- Half of respondents are now using mobile devices to make online purchases
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- 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
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- Figure 48: Devices used to shop online, by age, April 2020
- Browser-based mobile shopping still most popular, but app use growing
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- Figure 49: How smartphone/tablet shoppers shop when on the move, April 2020
- Smartphones driving on-the-go shopping
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- Figure 50: Engagement with shopping on the move, by age, April 2020
Retailers Shopped With Online
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- More shopped with online-only retailers in the past year
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- Figure 51: Types of retailers shopped with in the past year, April 2020
- Amazon the dominant online-only player…
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- Figure 52: Online-only retailers shopped with in the past year, April 2020
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- Figure 53: Store-based retailers shopped with online in the past year, April 2020
- … and overall the largest player in the online market
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- Figure 54: Online retailers shopped with in the past year, April 2020
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- 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
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- Figure 56: Repertoire of retailers used online, April 2020
Key Drivers to Online Patronage
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- Convenience still crucial online
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- Figure 57: Important factors when shopping online, April 2020
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- Figure 58: Returns behaviour, July 2019
- Cost key for older shoppers
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- Figure 59: Important factors when shopping online, April 2020
- While online is the growth area of online it does face challenges
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- Figure 60: Attitudes towards stores and online, April 2020
Impact of Social Media on Shopping Behaviours
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- Social media continues to grow as a platform to influence purchases
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- Figure 61: Sources of inspiration/alternative purchasing platforms, April 2020
- Younger shoppers in general more likely to be influenced by online sources
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- Figure 62: Influence on purchasing by social channels, by age, April 2020
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- Figure 63: Influence on purchasing by key sites, by age, April 2020
- The pivot from influence to direct commerce
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- Figure 64: Facebook/Instagram Shops, May 2020
- To capitalize on this opportunity social channels need to emphasize trust
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- Figure 65: Attitudes to shopping online and on social channels, April 2020
The Impact of COVID-19 on Online Shopping Behaviour
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- Concerns remain high around contracting the virus…
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- Figure 66: Level of concern regarding exposure to COVID-19, February-July 2020
- …which continues to translate into hesitancy around going in-store…
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- Figure 67: COVID-19 behaviour, time spent in-store, April – July 2020
- …and into greater online demand
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- Figure 68: COVID-19 behaviour: Online shopping use, April-July 2020
- Older shoppers rely on online during the lockdown
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- 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
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- Figure 70: COVID-19 behaviour, click-and-collect use, April – July 2020
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- Figure 71: Amazon Hub incentive, August 2020
- Learned behaviours in lockdown open up new modes of service
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- Figure 72: Currys PC World ShopLive, April 2020
- A smartphone-based physical shopping experience brings significant opportunity for online
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- Figure 73: ASOS app incentive, July 2020
Companies and Brands – Key Takeaways
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- 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
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- Amazon remains the standout performer in the online marketplace
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- Figure 74: UK: top 30 leading online retailers 2017/28 - 2019/20
Market Share
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- Amazon accounts for over a quarter of online spending
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- Figure 75: Top ten online retailers within the UK by estimated market share (excluding VAT), 2019
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- Figure 76: Top 20 online retailers within the UK by estimated market share (excluding VAT), 2017-19
Launch Activity and Innovation
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- Use of Artificial Intelligence and Augmented Reality grows
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- Figure 77: IKEA Augmented Reality feature, 2020
- Retailers are launching or expanding online offerings
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- Figure 78: Co-op delivery robots in Milton-Keynes 2020
- Online moves offline
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- Figure 79: Selfridges’ Instagram collaboration the ‘Instagram Edit, 2019’
- Online live-chat is a valuable new channel for customer engagement
Advertising and Marketing Activity
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- Advertising expenditure flat year-on-year in 2019
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- 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
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- Figure 81: Leading UK online retailers: recorded above-the-line, online display and direct mail total advertising expenditure, 2016-19
- Digital advertising dominates
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- 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
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- What you need to know
- Brand map
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- Figure 83: Attitudes towards and usage of selected brands, November 2019 – June 2020
- Key brand metrics
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- Figure 84: Key metrics for selected brands, November 2019 - June 2020
- Brand attitudes: ao.com for online service and Boots for trustworthiness
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- Figure 85: Attitudes, by brand, November 2019 - June 2020
- Brand personality: ASOS and eBay fun brands
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- Figure 86: Brand personality – macro image, November 2019 - June 2020
- Headline: Boots is perceived as reliable and welcoming
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- 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
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- Data sources
- VAT
- Abbreviations
- Consumer research methodology
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