Spending behaviour of UK consumers has been changed dramatically
by the financial crisis, perhaps forever. Losers are retailers who
ply their trade in the high street and shopping malls. Winners are
those retailers that have effectively harnessed the power of the
internet.
This message comes through strongly in a study conducted for PayPal
UK by market analytics specialist Experian, the PayPal UK Online
Retail Report.
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In assessing consumer attitudes towards shopping Experian concluded
that a “mood of considered consumption” is now well established
among UK adults, with shoppers now scrutinising every purchase
before committing to spending money.
A desire to make the most of their money is also driving consumers
online where they believe they will find the best deals, stressed
Experian.
Based on a consumer survey conducted in April 2009, Experian found
that nearly 4 in 10 online shoppers – 8.7 million adults – now
believe that it is easier for them to budget by purchasing items
online rather than the high street, while 47 percent (10.8 million)
believe their money goes further online.
In addition, 62 percent of online shoppers (14.2 million) believe
that the best deals are only available online.
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By GlobalDataEstimates extrapolated from the survey are based on the UK’s
official adult population of 48.77 million of which, according to
Experian’s own research conducted in March 2009, 47 percent (22.9
million) had shopped online during the previous six months. Of the
total online shoppers 8.6 million shop online at least once a
week.
Searching for the best deals is reflected in major online purchases
which tend to be focused on areas where consumers want to compare
prices, noted Experian.
The biggest spending was on travel, with 14.7 million online
shoppers having spent an average of £940 each in the six months to
March 2009.
Travel was followed by financial services with 7.1 million online
shoppers having done all or most of their financial services
shopping online in the six month period. The average spent online
was £764 per shopper.
Third in line in terms of spending were major electronic purchases
such as fridges and freezers, with 9.7 million shoppers having
spent an average of £495 during the six months.
Experian believes the survey’s findings indicate that growth in UK
online sales will continue to be robust despite the continuing
economic recession, which it expects to only begin showing signs of
ending in 2011.
Indeed, while Experian anticipates that high street retail sales
will remain in the doldrums until some time in 2011, it forecasts
that online shopping sales will increase from £8.9 billion in 2008
to £14.4 billion based on conservative assumptions and as much as
£21.3 billion based on optimistic assumptions.
The conservative estimate represents a CAGR of 17.4 percent while
the optimistic estimate represents a CAGR of 33.7 percent.
The latter growth rate would take annual online spending to the
equivalent of some £430 for every UK adult.
Forecast growth in online shopping is in sharp contrast to
performance of overall retail sales, which Experian anticipates
will fall from £287.4 billion in 2008 to £283.4 billion in both
2009 and 2010 before recovering by a marginal 1.6 percent in 2011
to £287.9 billion.
Adding momentum to the growth in online shopping, Experian
believes, is growing penetration of broadband internet access
throughout the UK.
Indicatively, data from the Office for National Statistics shows
that of a total of 25.3 million households in the UK, 16.1 million
have internet access – of which 15 million are currently connected
via broadband.
The Office of National Statistics’ (ONS) most recent data – for
March 2009 – supported Experian’s somber view of total sales and
optimistic outlook for online sales.
According to the ONS, while average weekly value for all retail
sales in March increased by only 1.6 compared with the same period
in 2008 to £5.03 billion, the weekly average of online surged 17.2
percent to £147 million.
This increased online retailers’ share of total retail spending
from just under 3 percent in March 2008 to 3.4 percent in March
2009.
A continuation of this trend, which is in line with Experian’s
conservative forecast, would see online sales equal about 5 percent
of all retail sales by 2011.
