Online Retailing - UK - July 2016

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
Steady, though marginally slowing growth
Figure 1: Online sales as % all retailing, 2007-16
Market size
Figure 2: Online sales by type of retailer, 2015
Forecast
Figure 3: All online sales, 2011-21
Product mix – Electricals the biggest product
Figure 4: Online sales by category, 2016 (est)
Consumer outlook positive
Companies and brands
A strong year for pureplays
Figure 5: Distribution of the revenues of the leading 25 online retailers (as ranked in 2015) by type of retailer, 2013-15
Share of total online spending
Figure 6: Share of all online retail sales for the leading online retailers, 2015
Online advertising spend
Figure 7: UK online retail: Recorded above-the-line, online display and direct mail total advertising expenditure, 2012-15
Brand research
Figure 8: Attitudes towards and usage of selected retailers, August 2015-June 2016
The consumer
Online shopping is now almost universal – for internet users
Figure 9: Devices used for online buying, May 2016
Clothing is the most bought product online
Figure 10: Buyers of products online, by proportion of device owners, May 2016
Amazon most used site
Figure 11: Retailers used, May 2014, May 2015, May 2016
Little enthusiasm for personalisation
Figure 12: Attitudes to personalisation and social media, May 2016
But people don’t want brands in their social space either
83% of people opt for the cheapest delivery option
Figure 13: Attitudes towards using click & collect services, May 2016
Excellent service is essential for a successful online business
Figure 14: Other attitudes towards buying online, May 2016
The perception that prices are lower online is still very strong
There is evidence that people who shop online spend less
Figure 15: The online shopping journey, May 2016
What we think
ISSUES AND INSIGHTS
Are there limits to growth for the pure players?
The facts
The implications
What should the pure players compete on?
The facts
The implications
Online in the retail scene
The facts
The implications
Online and social media
The facts
Implications
THE MARKET – WHAT YOU NEED TO KNOW
Steady, though marginally slowing growth
Market size
Product mix – Electricals the biggest product
Consumer outlook positive
MARKET SIZE AND FORECAST
The source data
Online share of all retailing
Figure 16: Online sales as % all retailing, 2007-16
The peak month
Total online sales and forecast
Figure 17: All online sales, 2011-21
Figure 18: All online sales, 2011-21
MARKET SEGMENTATION 
Store based vs pure player
Figure 19: Store based and pure plyer share of all online sales, 2008-16
Figure 20: Online sales by type of retailer, 2015
Pure players and all home shopping
Figure 21: Pure player share of all home shopping sales, 2008-15
Figure 22: Online retail sales, (including VAT), 2011-15
Pure players and store based retailers, sales and forecast
Store based retailers
Figure 23: Store based retailers: Online sales, 2011-21
Figure 24: Store based retailers: Online sales, 2011-21
Pure players
Figure 25: Online pure players, sales, 2011-21
Figure 26: Online pure players, sales, 2011-21
Forecast methodology
Market segmentation by product
Figure 27: Breakdown of online retail sales by major category (including. VAT), 2013-16 (est)
Figure 28: Online sales by category, 2016 (est)
Digital spending
E-books
Figure 29: The book market, 2010-15
Music and video
Games
Total market
Figure 30: Downloads and streaming, 2015
Total online market
MARKET DRIVERS
Broadband access
Figure 31: Households with broadband access, 2011-15
Devices used
Figure 32: Devices used to access the internet in the last three months, June 2014, April 2016
Figure 33: Device ownership, April 2014 and April 2016
Consumer context
Figure 34: Consumer confidence, 2009-16
Figure 35: Inflation and earnings growth, 2011-16
KEY PLAYERS – WHAT YOU NEED TO KNOW
Innovation drives Amazon sales
eBay losing market share
A strong year for pureplays
Online increasingly important to multichannel retailers
Market shares change little
Growth in payment options
Expert assistance by video
Online advertising spend increases 20.5%
Amazon stands out for trust and differentiation
LEADING ONLINE RETAILERS
Amazon’s shifting strategy
Tesco moves to a single website
Next poor performance
eBay
Figure 36: Leading online retailer’s net online revenues, 2013-15
Pureplayers gain ground on multichannel retailers
Reclassifying catalogue companies
Figure 37: Distribution of the revenues of the leading 25 online retailers (as ranked in 2015) by type of retailer, 2013-15
Online is increasingly important to multichannel retailers
Figure 38: Top 25 online retailers: proportion of total sales transacted online for the multichannel retailers, 2013-15
MARKET SHARE
Small changes
Amazon grabs share again
Figure 39: Top 25 online retailers: share of all online retail sales, 2013-15
LAUNCH ACTIVITY AND INNOVATION
Text for wine service
More online payment options
Online size comparison tool
Smart shoppers rewarded with bigger discounts
Video assistance while browsing
Last-mile fulfilment
Figure 40: Samsung Family Hub refrigerator
Championing home-grown local food producers
Tinder-like app for a more customised fashion product offering
SOCIAL MEDIA
Three-quarters are Facebook users
Figure 41: Usage of social and media networks in the last three months, 2013-16
Brand interactions remain limited
Figure 42: Interactions with brands on social/media networks, March 2016
Lack of trust inhibits direct interactions
Figure 43: Attitudes to brand interactions on social/media networks, March 2016
Harnessing the power of ‘Influentials’
Could app-convergence spell the end for websites?
What they’re talking about
Figure 44: Number of mentions for selected leading clothing retailers, June 2015-May 2016
Figure 45: What they are saying online in relation to H&M, June 2015 to May 2016
Figure 46: What they are saying online in relation to Primark, June 2015 to May 2016
Figure 47: What they are saying online in relation to M&S, June 2015 to May 2016
Figure 48: What they are saying online in relation to Topshop/Topman, June 2015 to May 2016
Figure 49: What they are saying online in relation to ASOS, June 2015 to May 2016
Up-and-coming social media networks
ADVERTISING AND MARKETING ACTIVITY
Online retail advertising spend up 20.5% in 2015
Figure 50: UK online retail: Recorded above-the-line, online display and direct mail total advertising expenditure, 2012-15
Amazon.co.uk is the biggest advertising spender
Figure 51: Recorded above-the-line, online display and direct mail total advertising expenditure by leading UK online retail operators, 2012-15
59.4% of total advertising spend channelled through TV
Figure 52: UK online retail: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2012-15
Nielsen Media Research coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 53: Attitudes towards and usage of selected retailers, August 2015-June 2016
Key brand metrics
Figure 54: Key metrics for selected retailers, August 2015-June 2016
Brand attitudes: Online pureplays lead on innovation and value
Figure 55: Attitudes, by retailer, August 2015-June 2016
Brand personality: Littlewoods struggles with a tired image
Figure 56: Brand personality – Macro image, August 2015-June 2016
Boohoo and ASOS trendsetting and cutting-edge
Figure 57: Brand personality – Micro image, August 2015-June 2016
Brand analysis
Amazon and eBay
Online only retailers
Multichannel fashion retailers
Food retailers
Multichannel GM retailers
AMAZON.COM
What we think
Marketplace
AWS
Prime
Food
Where next?
Company background
Company performance
Figure 58: Amazon.com Inc: Group financial performance, 2010/11-2014/15
Retail offering
AO WORLD
What we think
Dutch online store
ao.de sales building momentum, but loss-making
Web enhancements aimed at making shopping online for electricals simpler
Partners with CollectPlus to widen delivery options
Targeting the computer market
Company background
Company performance
Figure 59: AO World Plc: Group financial performance, 2011/12-2015/16
Retail offering
ARGOS
What we think
What the Sainsbury’s deal means for Argos
Fast Track market-leading home delivery and store collection service
Product availability
Partnerships helping attract new customers
Company background
Company performance
Figure 60: Argos: Group financial performance, 2011/12-2015/16
Figure 61: Argos: Outlet data, 2011/12-2015/16
Retail offering
ASOS
What we think
Click-and-collect and next-day delivery options extended
Investment in distribution to meet increased order demand
Updated app driving m-commerce orders
Rewarding loyal customers
Customised shopping experience
Engagement through increased social media activity
A smart new way to shop ASOS
Tailored product range with on-trend appeal
Company background
Company performance
Figure 62: ASOS: Group financial performance, 2011/12-2014/15
Retail offering
DEBENHAMS
What we think
Local content and local currency payment options
Improved website design
Click-and-collect
Driving incremental in-store sales
New chief executive brings a wealth of online experience
Acceleration in online sales via mobile
Company background
Company performance
Figure 63: Debenhams: Group financial performance, 2010/11-2014/15
Figure 64: Debenhams: Outlets, 2010/11-2014/15
Retail offering
DIXONS CARPHONE
What we think
Using stores to support online
Website consolidation less obvious
Destination of choice for independent advice
Company background
Company performance
Figure 65: Dixons Carphone: Group financial performance, 2013/14-2015/16
Figure 66: Dixons Carphone: Outlet data, 2013/14-2015/16
Retail offering
EBAY
What we think
Company background
Company performance
Figure 67: eBay Inc.: Group financial performance, 2013-15
JOHN LEWIS
What we think
Investing £500m in its online shopping service
Store presence driving online sales
Click-and-collect fee
New app loaded with digital loyalty scheme
Plans to roll out e-commerce website to more international markets
Company background
Company performance
Figure 68: John Lewis: Financial performance, 2011/12-2015/16
Figure 69: John Lewis: UK outlet data, 2011/12-2015/16
Retail offering
NEXT DIRECTORY
What we think
Extended delivery options
Recent m-commerce enhancements boost sales conversion by mobile devices
Retaining and recruiting new customers
Overseas order fulfilment speeded up
Company background
Company performance
Figure 70: Next Group: Financial performance, 2011/12-2015/16
Figure 71: Next Group: Outlet data, 2011/12-2015/16
Retail offering
OCADO LTD
What we think
Sales per customer
Figure 72: Sales per customer, 2011-15
Waitrose
Cash flow
Where next
Company background
Company performance
Figure 73: Ocado Ltd: Group financial performance, 2010/11-2014/15
Retail offering
SHOP DIRECT GROUP
What we think
Very
Littlewoods
Looking forward
Company background
Company performance
Figure 74: Shop Direct Group: Group financial performance, 2011/12-2014/15
Retail offering
THE CONSUMER – WHAT YOU NEED TO KNOW
Online shopping is now almost universal – for internet users
Clothing is the most bought product online
Amazon most used site
Little enthusiasm for personalisation
But people don’t want brands in their social space either
83% of people opt for the cheapest delivery option.
Excellent service is essential for a successful online business
The perception that prices are lower online is still very strong
There is evidence that people who shop online spend less
SHOPPING ONLINE
DEVICES USED FOR ONLINE SHOPPING
Figure 75: Devices used for online buying, May 2016
Figure 76: Profile of online buyers by device used and where it is used, May 2016
WHAT THEY BUY
Figure 77: Buyers of products online, by proportion of device owners, May 2016
Figure 78: Buyers of products online by device, by proportion of total sample, May 2016
Who buys what
Figure 79: Age and socio-economic profile of product buyers, May 2016
Numbers of products bought
Figure 80: Numbers of different products bought on a laptop or home computer, May 2016
Figure 81: Numbers of different products bought on a smartphone or tablet, May 2016
RETAILERS USED
Figure 82: Retailers used, May 2014, May 2015, May 2016
Figure 83: Profile of online shoppers through any device, May 2016
Number of shops used
Figure 84: Number of different retailers bought from in the last 12 months, May 2016
PERSONALISATION AND SOCIAL MEDIA
Figure 85: Attitudes to personalisation and social media, May 2016
Figure 86: Influence of social media by age, May 2016
Figure 87: Profile of those who agree with the personalisation and social media attitude statements, May 2016
CLICK & COLLECT AND SHOPPING ONLINE
How important is click & collect?
Cost vs convenience
Figure 88: Attitudes towards using click & collect services, May 2016
Figure 89: Profile of attitudes to Click & Collect, May 2016
Multi-channel
Services
Figure 90: Other attitudes to buying online, May 2016
PRICES AND ONLINE
Price matching
Profits
HOW PEOPLE SHOP ONLINE
Passing trade
Figure 91: The online shopping journey, May 2016
Credit
Marketing
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Fan chart forecast
VAT
Financial definitions
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast Methodology