Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Online retail continues to grow in the double-digits
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- Figure 1: All online sales and forecast, 2013-23
- Online retail accounts for just a sixth of all retail, leaving much room to grow
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- Figure 2: Online as a % of all UK retail sales, 2008-17
- Pure players growing a little faster than store-based online sales
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- Figure 3: Online pure players’ and store-based retailers’ share of all online sales, 2008-18 (May)
- Fashion the largest category
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- Figure 4: Online sales by product, 2017
- Leading retailers
- Amazon dominant…
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- Figure 5: Leading retailers’ share of all online sales, 2017
- …and its brand is in rude health
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- Figure 6: Key metrics for selected brands, November 2017-May 2018
- The consumer
- Nine in 10 purchased products online in the past year
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- Figure 7: Change in online shopping use, by age and gender, April 2018
- Almost half of online shoppers collected products in the past year
- Clothing, footwear and accessories most popular online
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- Figure 8: Products purchased online in the past year, April 2018
- Smartphone purchasing growing, particularly amongst 16-34s
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- Figure 9: Devices used to shop online in the past 12 months, by age, April 2018
- Voice commerce has potential but needs to avoid the ‘gimmick’ tag
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- Figure 10: Attitudes towards voice commerce, April 2018
- More shop with online-only retailers than multi-channel retailers
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- Figure 11: Retailers shopped with in the past 12 months, April 2018
- Convenience driving online use, but consumers know this comes at a cost
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- Figure 12: Attitudes towards online’s effect on the high street, April 2018
- Amazon is fostering an ecosystem through Prime and its consumer electronics
- Wide range and low prices staples of online retailing
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- Figure 13: Importance of factors when choosing where to shop online, April 2018
- Majority are concerned about the level of data collected by retailers
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- Figure 14: Attitudes towards data collection and shopping online, April 2018
- What we think
Issues and Insights
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- The changing retail landscape: Online and the high street
- The facts
- The implications
- The Amazon ecosystem is thriving, but are there any ways to combat it?
- The facts
- The implications
- Voice commerce: VR 2.0 or the next leap in customer interaction?
- The facts
- The implications
The Market – What You Need to Know
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- Market conditions fertile for online growth
- Online retail continues to grow in the double-digits
- Pure players growing a little faster than store-based online sales
- Digital downloads worth £4.7 billion
Market Drivers
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- Internet access at near universal levels
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- Figure 15: UK household internet access, 2008-17
- Four fifths own a smartphone
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- Figure 16: Ownership of mobile phones, January 2012-December 2017
- Real incomes begin to climb once more
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- Figure 17: Real wage growth: average weekly earnings vs inflation, January 2015-May 2018
- Confidence takes a hit in 2017
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- Figure 18: Mintel Financial Confidence Tracker, January 2016-June 2018
- Retail sector continues to grow during a tough period
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- Figure 19: Annual % change in all UK retail sales (ex-fuel), by value and volume, Jan 2016-April 2018
Market Size and Forecast
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- Further double-digit growth for the online sector in 2017
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- Figure 20: All online sales and forecast, 2013-23
- Figure 21: All online sales and forecast, at current and constant prices, 2013-23
- Online accounts for a sixth of UK retail
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- Figure 22: Online as a % of all UK retail sales, 2008-17
- Online claims its greatest share in November
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- Figure 23: Online retail sales as % of all retail sales, non-seasonally adjusted, January 2015-Apr 2018
- Whilst share peaks in November, sales peak in December
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- Figure 24: Average weekly value of retail sales online, non-seasonally adjusted, January 2015-April 2018
- Forecast methodology
Market Segmentation
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- Online sales – Stores vs online pure players
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- Figure 25: Online pure players’ and store-based retailers’ share of all online sales, 2008-18 (May)
- Figure 26: Online pure players’ and store-based retailers’ share of all online sales, 20014-18 (May)
- Online sales by type of retailer chart
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- Figure 27: Online sales by type of retailers, 2017
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- Figure 28: Online share of major retail sectors, 2017
- Home shopping
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- Figure 29: Online sales as proportion all non-store retailers’ sales, 2008-17
- High street vs online
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- Figure 30: Growth in sales, non-store retailers vs store-based retailers, 2008-17
- Forecasts
- Store-based retailers
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- Figure 31: Store based retailers: online sales and forecast 2013-23
- Figure 32: Store-based retailers: online sales and forecast (inc VAT), in current and constant prices, 2013-23
- Pure players
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- Figure 33: Online pure players: sales and forecast, 2013-23
- Figure 34: Online pure players: sales and forecast (inc VAT), in current and constant prices, 2013-23
- Market segmentation by product
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- Figure 35: Online sales by product, 2017
- Digital spending
- Books – A return to hard copy
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- Figure 36: The book market, 2013-18
- Figure 37: E-books as a proportion of all book sales, 2013-18
- Music – Growth from streaming rather than digital
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- Figure 38: Spending on recorded music, 2012-17
- Figure 39: Spending on recorded music, by format, 2012-17
- Video another sector switching to streaming
- Games
- The total download market
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- Figure 40: The digital download market, 2017
The Consumer – What You Need to Know
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- Nine in 10 purchased products online in the past year
- Almost half of online shoppers collected products in the past year
- Clothing, footwear and accessories most popular online
- Smartphone purchasing growing, particularly amongst 16-34s
- Voice commerce has potential but needs to avoid the ‘gimmick’ tag
- More shop with online-only retailers than multi-channel retailers
- Amazon is fostering an ecosystem through Prime and its consumer electronics
- Wide range and low prices staples of online retailing
- A majority are concerned about the level of data collected by retailers
Who Buys Online and Who is Driving Growth?
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- Nine in 10 bought online in the past year
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- Figure 41: All online retail users, by age, April 2018
- Market being driven by encouraging users to bring more of their shopping online
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- Figure 42: Change in online shopping use, April 2018
- Young males most likely to have increased their levels of online shopping
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- Figure 43: Change in online shopping use, by age and gender, April 2018
Products Purchased Online
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- Fashion the most popular online purchase
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- Figure 44: Products purchased online in the past year, April 2018
- Demographic comparisons
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- Figure 45: Products purchased online in the past year, by gender, April 2018
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- Figure 46: Products purchased online in the past year, by age, April 2018
- Female online shoppers have a wider repertoire of purchases online
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- Figure 47: Repertoire of product categories purchased online in the past year, by age and gender, April 2018
Devices Used to Purchase Online
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- Laptops/desktops remain the most used devices, but smartphones are catching up quickly
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- Figure 48: Devices used to shop online in the past 12 months, April 2018
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- Figure 49: Trend data: devices used to shop online, April 2017 and April 2018
- Younger consumers far more likely to shop by mobile
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- Figure 50: Devices used to shop online in the past 12 months, by age, April 2018
Interest in and Attitudes towards Voice Commerce
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- One in 10 households have a personal assistant
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- Figure 51: Ownership of smart voice-controlled speakers, March 2018
- Amazon has a clear first-mover advantage
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- Figure 52: Brand ownership of smart voice-controlled speakers, March 2018
- There is work to be done to overcome the ‘gimmick’ label
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- Figure 53: Attitudes towards voice-commerce, April 2018
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- Figure 54: Attitudes towards voice commerce, April 2018
How They Receive Online Purchases
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- Almost half of online shoppers have collected purchases
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- Figure 55: Delivery methods used in the past 12 months, April 2018
- Younger consumers more likely to collect
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- Figure 56: Detailed delivery methods used in the past 12 months, April 2018
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- Figure 57: Detailed delivery methods used in the past 12 months, by age, April 2018
- Most consumers stick to one delivery method
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- Figure 58: Repertoire of delivery methods used in the past 12 months, by age, April 2018
Online and the High Street
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- More online shoppers use online-only retailers than those with stores
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- Figure 59: Type of retailer shopped with online in the past year, April 2018
- The effect of online growth on the high street
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- Figure 60: Attitudes toward online’s effect on the high street, April 2018
Retailers Used
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- Nine in 10 online shoppers used Amazon in the past year
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- Figure 61: Online-only and multi-channel retailers shopped with online in the past year, April 2018
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- Figure 62: Retailers shopped with in the past 12 months, April 2018
- Newer entrants to the market appealing to younger consumers
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- Figure 63: Retailers shopped with in the past 12 months, by age and socio-economic group, April 2018
- Multi-channel shoppers show a broader repertoire
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- Figure 64: Repertoire of online-only and multi-channel retailers shopped with in the past year, April 2018
Amazon: Prime and Consumer Electronics
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- A quarter of consumers are now Amazon Prime members
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- Figure 65: Membership of Amazon Prime, March 2017-18
- Two thirds of 16-34s have some experience with Prime
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- Figure 66: Membership of Amazon Prime, March 2017-18
- The Amazon ecosystem
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- Figure 67: Amazon services used in the past year, March 2018
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- Figure 68: Amazon device ownership, by Prime membership status, March 2018
- Prime membership translates into greater purchasing
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- Figure 69: Purchases made via Amazon, by Prime membership status, March 2018
What is Important When Choosing Where to Shop?
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- Wide range a must for those trading online
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- Figure 70: Importance of factors when choosing where to shop online, April 2018
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- Figure 71: Select factors which were selected as being “extremely important”, by age, April 2018
- Free returns drive appeal
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- Figure 72: TURF analysis – Online retailing, May 2018
Attitudes towards Data and Buying Online
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- Half of consumers feel the level of data retailers collect is a concern
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- Figure 73: Attitudes towards data collection and shopping online, April 2018
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- Figure 74: Agreement with statements around data collection and shopping online, by generation, April 2018
- Clear communication about the use of data could ease concerns
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- Figure 75: Attitudes towards data sharing, December 2017
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- Figure 76: Companies consumers would share more data with in exchange for incentives, December 2017
Key Players – What You Need to Know
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- Amazon dominant
- eBay second, but the gap with Amazon is widening
- Tesco downsizing
- Not as big as rumour would suggest
- Amazon brand in rude health
- Online players continue to look to make the shopping experience ‘frictionless’
Leading Online Retailers
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- Amazon and eBay
- Tesco and Sainsbury’s
- John Lewis
- Mail order companies
- Fast-growing pure players
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- Figure 77: UK: Top 30 leading online retailers, 2015/16-2017/18
Market Shares
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- Amazon accounts for just under a quarter of online retail in the UK
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- Figure 78: Leading retailers share of all online sales, 2017
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- Figure 79: Leading retailers: share of all online sales, 2015-17
Brand Research
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- What you need to know
- Brand map
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- Figure 80: Attitudes towards and usage of selected brands, November 2017-May 2018
- Key brand metrics
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- Figure 81: Key metrics for selected brands, November 2017-May 2018
- Brand attitudes: innovation driving ASOS
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- Figure 82: Attitudes, by brand, November 2017-May 2018
- Brand personality: Amazon, eBay and Ikea lead in the fun stakes
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- Figure 83: Brand personality – Macro image, November 2017-May 2018
- Premium position for John Lewis
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- Figure 84: Brand personality – Micro image, November 2017-May 2018
- Brand analysis
- Amazon: excelling in the experience stakes
- ao.com: low usage impacting perceptions
- Argos: universally known but work needed on the experience
- ASOS: younger consumers driving a positive brand image
- Boots: high trust levels
- Currys PC World: lacking trust and customer experience
- Debenhams: improvement needed in the customer experience
- eBay: seen as innovative and trustworthy
- Ikea: brand perception strongest with younger consumers
- John Lewis: a premium position despite the price match
- M&S: a strong brand that has lost its cutting edge
- Next: accessible but fun
- Shop Direct – Very & Littlewoods: a tale of two halves
Launch Activity and Innovation
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- Returns and deliveries
- Making returns as convenient as deliveries
- Amazon poised to launch its own delivery service
- Bus depots as delivery hubs
- Amazon and Volvo in unique test drive initiative
- Sainsbury’s trialling zero emission bikes for grocery deliveries
- New e-commerce venture
- Lidl to launch online grocery service in the UK?
- Innovative app
- Cashing in on unwanted clothes
- Augmented and virtual reality
- Nike using Facebook Messenger’s new AR try-and-buy tool
- Argos launches augmented reality feature on its mobile app
- Purchasing options
- Try before you buy
Advertising and Marketing Activity
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- Online retail advertising spend up for a third consecutive year in 2017
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- Figure 85: UK online retail: recorded above-the-line, online display and direct mail total advertising expenditure, 2014-17
- eBay rebranding itself into a shopping destination
- Amazon puts fashion and delivery in the spotlight
- Notonthehighstreet Christmas campaign
- Ocado the leading online supermarket/grocer/food retail advertiser
- Pretty Little Thing nationwide taxi TV advertising campaign
- Party with the Porters
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- Figure 86: Leading UK online retailers: recorded above-the-line, online display and direct mail total advertising expenditure, 2014-17
- Over half of total advertising spend channelled through TV
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- Figure 87: UK online retail: recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2014-17
- Nielsen Ad Intel coverage
Amazon.com
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- What we think
- Geographical expansion
- Prime
- Marketplace
- AWS
- Profitability
- What next?
- Food
- Clothing
- Electricals and others
- Company background
- Company performance
- Published sales and total sales volumes
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- Figure 88: Amazon: sales breakdown by source of income, 2015-17
- Figure 89: Amazon: sales breakdown by source of income, 2017
- First quarter 2018
- Gross merchandise volume (GMV)
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- Figure 90: Amazon: estimated group gross merchandise volume, 2015-17
- GMV by country
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- Figure 91: Amazon.com Inc: group financial performance, 2013-17
- UK sales by product
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- Figure 92: Amazon UK: estimated sales by product, 2017
- Retail offering
AO World
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- What we think
- New markets on the horizon?
- New categories for all markets
- Addressing the growth in m-commerce
- Recycling facility provides competitive edge
- Company background
- Company performance
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- Figure 93: AO World Plc: group financial performance, 2013/14-2017/18
- Figure 94: AO World Plc: UK turnover breakdown by segment, 2016/17 and 2017/18
- Retail offering
Argos
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- What we think
- Argos in Asda supermarkets
- Bolstering tech team to keep ahead of the competition
- Beefed up market-leading Fast Track home delivery service
- Local Sainsbury's collection points
- Co-branded ventures bringing Argos and Sainsbury’s closer together
- Company background
- Company performance
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- Figure 95: Argos: group financial performance, 2013/14-2017/18
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- Figure 96: Argos: outlet data, 2013/14-2017/18
- Retail offering
ASOS
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- What we think
- Positive and empowering approach
- Try before you buy
- Expansion and innovations
- Leisurewear launches
- Mobile coming to the fore
- Seamless service
- Company background
- Company performance
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- Figure 97: ASOS: group financial performance, 2012/13-2016/17
- Retail offering
Dixons Carphone
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- What we think
- A shift in focus towards delivery
- Reducing barriers to online purchasing
- Extending online ranges
- Company background
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- Figure 98: Dixons Carphone: retail brands, by country, 2018
- Company performance
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- Figure 99: Dixons Carphone: group financial performance, 2013/14-2017/18
- Online performance
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- Figure 100: Dixons Carphone: estimated online sales, 2013/14-2016/17
- Figure 101: Dixons Carphone: estimated online sales, by channel, 2013/14-2016/17
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- Figure 102: Dixons Carphone: outlet data, 2013/14-2017/18
- Retail offering
eBay
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- What we think
- Marketplace
- No longer a fast-growing business
- Progress in 2017
- Shortcomings vs Amazon
- What next?
- Company background
- Company performance
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- Figure 103: eBay: group gross merchandise volume, 2013-17
- Figure 104: eBay: major markets, estimated growth in GMV in local currency, 2014-17
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- Figure 105: eBay Europe: sales, excluding VAT, 2015-17
- Retail offering
John Lewis (Department Store)
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- What we think
- A need for more flexible fulfilment options
- Enhancements to app reflect steady shift to m-commerce
- Home Solutions broaden range of services offered
- JLAB helps keep finger on technology pulse
- Company background
- Company performance
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- Figure 106: John Lewis Plc (department store): group financial performance, 2013/14-2017/18
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- Figure 107: John Lewis Plc (department store): outlet data, 2013/14-2017/18
- Retail offering
Next Group
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- What we think
- Clawing back lost ground
- Next follows the trend towards personalisation
- Increasing range of payment options aims to drive sales growth
- Company background
- Company performance
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- Figure 108: Next Group: group financial performance, 2013/14-2017/18
- Figure 109: Next Group: outlet data, 2013/14-2017/18
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- Figure 110: Next Group: average active customers, 2016/17 and 2017/18
- Retail offering
Ocado Group
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- What we think
- Ocado and Waitrose
- Putting it in perspective
- Capacity
- Solutions – The second growth arm
- What next?
- Company background
- Company performance
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- Figure 111: Ocado Group plc: group financial performance, 2011/12-2016/17
- Retail offering
Otto Group (Multichannel Retail)
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- What we think
- Marketplace development widening product choice and attracting new customers
- ABOUT YOU doubles sales
- ‘Conversational commerce’
- Sports lifestyle hub
- Parcel shops, micro depots and trunk delivery
- Using augmented reality technology to make choosing the right product easier
- Otto Now expanded to include over 100 products
- Company background
- Company performance
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- Figure 112: Otto Group (Multichannel Retail): group sales performance, 2013/14-2017/18
- Figure 113: Otto Group: major brands within the Multichannel Retail segment, 2017/18
- Retail offering
Shop Direct Group
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- What we think
- Change at the top
- Where next for Littlewoods?
- Very restricting its appeal
- What next?
- Company background
- Very vs Littlewoods
- Company performance
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- Figure 114: Shop Direct Group: group financial performance, 2012/13-2017/18
- Retail offering
Tesco
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- What we think
- Closing its non-food website
- Same-day delivered groceries
- Tackling wastage through over ordering
- Exploring new delivery methods
- Company background
- Company performance
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- Figure 115: Tesco Plc: group financial performance, 2013/14-2017/18
- Figure 116: Tesco Plc: outlet data, 2013/14-2017/18
- Retail offering
YNAP Group
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- What we think
- Richemont takeover completed
- YNAP focuses on m-commerce…
- …and expands product range
- Sustainability commitments
- Company background
- Company performance
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- Figure 117: YNAP Group: group financial performance, 2014-17
- Retail offering
Zalando
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- What we think
- Complementary beauty category offering
- Pop-up an opportunity to raise awareness of the online style advisory service
- Growing role of personalisation
- Scaling up logistics network and order fulfilment options
- Rising fulfilment costs a sign of things to come?
- Local and regional-specific payment options boosting basket size and conversion rates
- Company background
- Company performance
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- Figure 118: Zalando: group financial performance, 2013-17
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- Figure 119: Zalando: key metrics, 2015-Q1 2018
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- VAT
- Financial definitions
- Abbreviations
- Consumer research methodology
- TURF analysis – Methodology
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- Figure 120: Table - TURF analysis – Online retailing, May 2018
Appendix – Market Size and Forecast
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- Forecast methodology
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