UK consumers spent £38 billion shopping online in 2009, representing almost a third of total European sales

Online retailing is one of the fastest growing markets in the UK. Worth £14 billion in 2003, it grew by 171% to £38 billion last year. E-commerce sales continued to perform strongly in 2009, growing by 12.4% and representing 9.5% of total retail sales. UK consumers were also the biggest spenders in Europe, accounting for 30% of total European online sales. In 2010, online retail will continue to thrive with sales set to rise by £4.7 billion or 12.4% – more than seven times the predicted growth for the entire retail sector (1.7%).

Monday 1st February 2010 As the UK officially emerges from the recession, new figures issued today reveal UK consumers spent £38 billion shopping online in 2009, accounting for 30% of total European internet sales; making the UK the largest online retail market in Europe. Even in the current tough economic climate, online retailing continues to be one of the fastest growing markets in the UK. Online sales grew by 12% in 2009, and now account for 9.5% of total UK retail trade.

The report, commissioned by Kelkoo and carried out by the Centre for Retail Research, provides some of the first available estimates of online sales in 2009 across 12 European countries, and reveals the online retail forecast for 2010. The report concludes that by the end of the year, the online retail market in the UK will continue to thrive with sales expected to grow by £4.7 billion or 12.4%to a total of £42.7 billion, equivalent to 10.5% of all retail spending in the UK. European online retailing is also set to increase by £25.1 billion (19.6%) from £127.7 to £152.8 billion, accounting for 5.5% of overall European retail sales in 2010.

UK leads European online retail
Between them, the UK (£38 billion), Germany (£29.7 billion) and France (£22 billion) account for 70% of total online sales in Europe. The countries with the lowest overall online spend in 2009 were Poland (£2.2 billion), Finland (£2.3 billion) and Norway (£2.9 billion). The rankings of the ?big online three’ (UK, Germany and France) have not changed since 2003, although during this period online sales in France have grown by 244%, compared to 171% in the UK and 183% in Germany.
In 2009, the online market in the UK also represented the largest proportion of overall retail sales at 9.5%, followed by Germany (6.9%), and the Nordics (Norway 6.3% and Denmark 6.1%). The countries with the lowest online share of overall retail sales were Italy (0.8%), Spain (1%) and Poland (2%). This is caused by several factors; including the fact that online retailing has only begun to obtain significant scale in Italy and Spain relatively recently. There are also proportionately fewer households with internet connections in these countries, and significantly lower levels of consumer ownership of PCs. Across Europe as a whole, internet retail sales accounted for a 4.7% share of total retail trade in 2009. This figure is expected to rise to 5.5% in 2010.
Every year since 2000, online retail sales have grown many times faster than retail sales through physical stores in every country. Traditional UK retailers with e-commerce platforms are thought to derive between 10% and 20% of their total turnover from direct internet sales. A UK retailer whose online sales are a typical 16% of retail turnover, and whose internet sales are expected to grow at 20% per annum (compared to 2% through physical stores), should achieve more than one-quarter (26.7%) of its sales online by 2014, more than 40% by 2018, and almost 50% by 2020.
Online Shopping Spending Trends
On average, European online customers spent £774 each in 2009 on e-retail, and purchased an average of 20 items, with an average cost per item of £39. UK online shoppers had the highest average individual spend in Europe (£1,102) followed by Denmark (£1,079) and Norway (£979). On average UK consumers purchased the greatest number of items in 2009 (37), whereas the Polish bought the least (10). At £44, the average cost per item in France was 48% higher than in the UK, which at £30 was the lowest in Europe. Norway had the highest spend per item at £75.

When taken in the context of each individual country’s population, UK online sales per capita were £628, just behind those in Denmark (£636) which has a smaller population, but just ahead of Norway (£617). In the UK and Denmark, where online retail accounts for a substantial share of overall retail trade, the average per capita online spend was double the European average of £318.

Bruce Fair, Managing Director of Kelkoo UK, comments: “2010 is when we will really start to see online sales achieving a significant share of overall retail trade in the UK. While the retail industry is showing slow signs of recovery, the online shopping sector bucked the trend in 2009 delivering double-digit growth, and is expected to continue to perform strongly in 2010. There is also evidence that online shoppers’ confidence is increasing. In the last year, the proportion of UK shoppers prepared to spend £1,000 or more online on a single transaction rose from 12% to 25%. Additionally, the proportion of shoppers who would cap their online spending at £250 fell from 48% to 32% in 2009.”

 As of 2009, an average of 64% of European households had internet access, and 52% had access to broadband connections. A total of 38% of European households have bought goods over the internet, with Norway having the highest share (63%), followed by Denmark (59%). The UK was not far behind with 57% of consumers having made online purchases – almost 20% higher than the European average (38%).
Online Retail Outlook in 2010
While the global recession has undoubtedly had a massive impact on the retail sector, contributing to an overall fall in GDP of -4.3% across Europe in 2009, growth is expected to resume in 2010 with leading commentators forecasting an average upswing of +1.2% and growth of 2.5% – 2.8% by 2011.

Whereas UK retail sales as a whole are expected to rise by 1.7% in 2010 (only slightly higher than the EU average of 1.4%) , in sharp contrast UK online sales are expected to grow by £4.7 billion or 12.4% in the same period. Across Europe online sales are forecast to grow by £25.1 billion (19.6%) to £152.8 billion. The forecast is based on a general continuation of current online sales trends, alongside the improving economic fortunes of most countries throughout Europe.

The UK will continue to be the largest online retail market in Europe with a sales forecast of £42.7 billion for 2010, followed by Germany (£34.8 billion) and France (£28.9 billion). The UK will also be the first European country to achieve online sales representing 10% of the total retail sector, although it will still experience the lowest year on year growth (12.4%) in Europe. The main reasons for this are the UK’s late emergence from the recession, concerns surrounding its fiscal imbalance, and the recent slowdown in the rate of online sales growth due to the ?maturity’ of its online market. At the other extreme, Poland (36%) and France (31%) are set to be the fastest growing online retail markets in 2010.

Bruce Fair, Managing Director of Kelkoo UK, concludes: “We do not see consumers’ appetite for online shopping showing signs of abating anytime soon. In these hard times it is no surprise that shoppers are turning to the internet rather than the high street, especially when you consider that purchasing items online can result in savings of 20% or more. The recession helped to boost the appeal of online retailing, making UK consumers more determined than ever to make every penny count. Online retailers in the UK will continue to reap the benefits in 2010, enjoying an average rise in sales of over 12% – what in other retail sectors would be regarded as an unachievable rate of growth in the current economic climate.”

Online Sales by Country 2009 & Forecast for 2010