Online: UK, Europe & N. America 2020 estimates

A note to our readers. The figures for online retailing in the UK and Western Europe have been updated to inlcude our new estimates for 2020, including the  dramatic boost in online sales resulting from the coronavirus pandemic. We provide forecasts (as at July 2020) of the 2020 and 2021 online results for the UK, France, Germany, Italy, Spain and The Netherlands. Obviously these are estimates, based on our understanding of what may occur in the UK and Western Europe. Our previous forecast for UK online sales in the 12 months of 2019 was £76.096bn, made in June 2019. This total was on the high side, but only 0.1% out (an error smaller than the ONS figures, June 2020), which shows that our data can be pretty reliable. 

European Online Growth

E-commerce is the fastest growing segment of the retail market in Europe and North America.

Combined ecommerce sales in Western Europe (UK, Germany, France, Netherlands, Italy and Spain) were £152.20bn in 2015 and reached £224.425bn in 2019 (+47.5% growth). Taking into account the boost given by the lockdown of non-essential stores in the six main Western European countries we expect online sales by the end of 2020 to equal £294.192bn against our original forecast of £249bn. This represents growth of +31.1% in a single year- an average online share of total retail sales of 16.2% in 2020..

However, we expect the recession of 2020-21 will reduce total retail spending. Online retailers are expected to find that although their sales are higher than two years ago, they have not held on to all the customers and e-commerce sales seen in 2020. What the coronavirus pandemic has done is to bring forward the higher levels of online sales that we expected in 2021 (or 2025 in some cases) to 2020, but we expect online sales to dip in 2021 to a combined figure of £281.131bn (down -4.4%). Online sales should rise in in 2022 as economic growth produces more consumer spending and the normally higher growth rate of e-commerce will drive greater revenues.

These estimates are based upon (a) continual reductions in coronavirus, with lockdowns of local importance, (b) a serious recession lasting into 2021-22, balanced by government efforts to stimulate the economy, (c) shoppers' enthusiasm for physical stores tempered by the need for masks and social distancing for some months and (d) spending by households that have lost income during the lockdowns or have become redundant afterwards is not balanced by additional spending made by the professional classes which have saved money as a result of the lockdowns.   

The totals in Table 1 are dominated by the UK, Germany and France.  Table 1 shows that these three countries are expected to make up 82.4% of Western Europe’s ecommerce in 2020 (compared to 85.6% in 2018). Britain had the largest online retail sector, whose retail share is expected to grow from 19.2% in 2019 to 25.3% in 2020, and to fall back to 24.3% in 2021 in a more normal year. 

Table 1
Total Online Retail Sales 2019-2021 (estimate)
Currency values are Sterling (£) billions

 

2019

2020 2021

Sales Share

2019

Sales Share

2020 (F)

Sales Share

2021 (F)

 
UK £76.036 £99.308 £92.266 19.4% 26.2% 24.3%  
France £46.688 £59.340 £58.088 10.9% 14.3% 13.8%  
Germany £68.484 £83.693 £80.680 15.9% 19.9% 18.7%  
Spain £14.111 £24.684 £23.623 5.4% 9.9% 9.3%  
Italy £10.140 £15.464 £15.031 3.7% 6.0% 5.8%  
Netherlands  £8.964 £11.653 £11.443 9.9% 13.1% 12.5%  
Totals £224.425 £294.142 £281.131 12.0% 16.2% 15.3%  

[source: estimates by CRR]    (F) forecast results.

What is, and is not, retail? Note that these estimates relate only to sales of retail merchandise and exclude gambling, fast food, vehicle sales and repair, casual dining, banks and insurance. We use the same definition of ‘retail’ as the ONS, the OECD and the Oxford Dictionary, ie the sale of merchandise to the final consumer. We also exclude the sale of vehicle fuel, which is not readily supplied online.

Online Growth in North America 

Online sales in the U.S. have grown from $349.25 bn [£269.46 bn] in 2015 to $695.50 bn [£555.92 bn] in 2019. U.S observers generally assess the U.S. online share of retail as somewhere around 14%, but our estimate is 16.5% for 2019. We have no quarrel with the value of U.S. retail sales but we have recalculated online sales using the UK and European definitions of ‘retail’. The U.S. Census counts cooked food, auto sales/repair, and vehicle fuel as part of retail, which understates the U.S. online share of retail compared the European estimates.

The Research

The Centre for Retail Research has forecast the trends in online retail sales in Europe and the U.S. for more than ten years. It is based on consumer surveys of 5,500 shoppers in each country plus interviews with retail businesses that account for more than 20% of retail sales. This independent study carried out in 2020 has been made by CRR.

Figure 1
The Increase in Online Shares of Retail Trade 2012-2019 Europe and U.S. 

[source: CRR]

Main Results: Regular and Unceasing Growth (so far)
The 2008 recession induced many shoppers to switch to cheaper retailers, and this often involved buying online rather from traditional stores. The fact that internet search is comparatively easy and predictable has made online retailing attractive for a wide range of products. The widespread use of debit and credit cards in the UK and France (and direct debit systems in Germany and Scandinavia) combined with strong legal protection for buyers has supported the increased use of online retailing.

Recent trends include: 

  • the coronavirus pandemic and its lockdowns has accelerated the rate of growth of online retail, particularly in grocery/food e-commerce;
  • the rapid takeup of mobile ecommerce: by 2019 mobile accounted for 47% of UK online sales, 45% of German online sales and 40% online sales in The Netherlands;
  • the growth of the ecommerce arms of traditional bricks-and-mortar retailers in competition with pure-play online retailers;
  • the expansion of ‘click and collect’ as an alternative to home delivery.

 Mobile commerce is discussed further in our webpage Mobile Retailing

Proportion of Population that Shops Online
Even by 2019 only an average of 61.1% of the population of Western Europe shopped online at least once in 12 months. However this figure is skewed by the low figures of some countries. The numbers of eShoppers as a percentage of the population in the UK, Germany, The Netherlands and France all exceed 70.0% and the current rapid growth of ecommerce in Spain and Italy should mean that soon these countries should hit the 70% figure in three or four years’ time.

Table 2
Number of eShoppers as Percentage of Population (Updated)

 

2019

2020   (e)

UK

75.8% 76.9%

France

68.5% 72.4%

Germany

70.2% 76.4%

Spain

42.1% 51.2%

Italy

37.7% 49.6%

Netherlands

72.2% 76.1%

Averages

61.1% 67.1%

[source: estimates by CRR]


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