UK e-retail storms ahead through recession

Malcolm Pinkerton/Verdict Research | June 02, 2009

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With internet shopper numbers at an all time high and online spending growing by £2.4 billion in 2009, e-Retail is proving to be a star performer in the recession, says Verdict Research in its latest report, UK e-Retail 2009.

In 2009, online spending by consumers on retail purchases will rise by 13.3% to £20.9 billion: a rate of growth in severe contrast to the of the overall UK retail market in the current climate. Although the internet is undoubtedly starting to slow and become a much more competitive environment, online retail is still set to reach £31.2 billion by 2013, accounting for 10.0% of total retail spending.

The key for individual retailers is to formulate two clear strategies, one for succeeding through the recession and one targeting growth beyond this, as the online channel begins to approach maturity.

In 2008 there was a 1.0% increase in internet users — to 34.4m—and an 18.1% increase in online shoppers — to 26.7 million — with each of these individuals spending an average of 5.8% more in comparison to 2007.

The major factor behind this outperformance of wider retail is the online channel’s possession of a number of counter-recessionary characteristics. Internet prices are frequently cheaper than they are in physical stores and shoppers are able to more easily search out bargains, including second-hand goods.

Moreover, as a method of shopping, it is disproportionately popular with the more affluent, and therefore more resilient, AB demographic. For this increasingly time-pressed group, making effective use of their limited leisure time is of the utmost importance. Indeed, Verdict’s report revealed that the AB group is now responsible for a massive 56.8% of all online spending.

Online market size 2003–08
	Total online spending £m	Y-o-Y growth %	As a % of total retail spending

2003	4,984	30.0	2.0
2004	6,350	27.4	2.4
2005	8,183	28.9	3.1
2006	10,917	33.4	4.0
2007	14,739	35.0	5.2
2008	18,431	25.0	6.4
e2009	20,876	13.3	7.3