Online shopping will account for more than half of all retail sales in the UK within the next 10 years, new research has predicted.
Ecommerce sales will gobble up 53% of the retail market by 2028, up from 19% currently, according to a report by Retail Economics and law firm Womble Bond Dickinson.
The research, titled The Digital Tipping Point, suggests the “digital retail-revolution is only just getting started”.
The forecast surge in online sales will be spurred by three main factors: the changing demographic of the UK adult population, the development of faster, cheaper, in-home deliveries and the declining number of physical stores.
The gen Z and millennial customer base will account for half of Britain’s adult population within the next decade, Retail Economics said. Almost two-thirds of the gen Z population – aged 16-24 – currently shop online at least once a fortnight. That compares to just 29% of those aged over the age of 65.
Millennials also spend an average of more than £42 per online transaction, and £110.45 per month.
New business models
The report added that new business models such as subscriptions and auto-replenishment services were further driving the acceleration in online shopping, as consumers seek out cheaper and faster deliveries, in addition to easier returns.
In the wake of those changes, 10% of consumers said they plan to shop less in physical stores over the next 12 months. With demand for retail property already at its lowest level since 2007, that is expected to drive further traffic online.
Despite the spike in online shopping that those factors are expected to cause, the report warned of the “risks to a digital future”.
Shoppers are becoming “increasingly aware” of the need to protect their personal data, Retail Economics said, and found that a quarter of consumers had taken steps to limit the amount of data they share with retailers.
Retail Economics chief executive Richard Lim said: “It’s no exaggeration to say that the retail industry is undergoing a period of unprecedented change. Despite concurrent waves of political and economic upheaval in our midst, our work with retailers suggests this is a mere distraction from the seismic structural shifts reshaping the retail landscape.
“Successful retailers have always had to reinvent themselves to stay relevant. However, the pace of change will inevitably prove too fast for many – as shown by the number of CVAs hitting the headlines. While the impact of future technologies and consumer acceptance is highly uncertain, it definitely feels like the digital retail-revolution is only just getting started.”
Womble Bond Dickinson head of retail Gavin Matthews added: “Online retail is being driven on apace due to a combination of factors, and early adopters in the retail market who can flex and adapt their business models quickly will rise to the top.
“However, as retailers leverage new technologies to support this growth, new risks also emerge. Consumers are increasingly conscious of the need to protect personal data and their privacy in order to reduce the risk of fraud, identity theft and misuse of their data.
“Real damage can be done to a retailer’s brand, and reputation with any data breach and loss of trust can have far-reaching consequences for any business and its bottom line.”
News Source: Retail Week