UK online sales to level out at 25% of all retail sales

UK online sales will settle at around £12.8 billion annually, as ecommerce’s 25% market share becomes the ‘new normal’, according to the latest research from home delivery expert ParcelHero.

As shoppers continue to return to the high street, online sales have fallen for four months in a row, with Amazon and Etsy reporting a marked slowdown in growth.

ParcelHero’s Head of Consumer Research, David Jinks, said: “Our figure of 25% is a significant fall from the 36.1% of all retail sales that online grabbed last February at the height of lockdown. However, it’s still a huge increase on the 19% share online used to take, before the pandemic permanently shook up retail.

“For some months now, retailers have been trying to guess what the new normal will look like. We believe the picture has now become a lot clearer. The cash registers have certainly been ringing more frequently in stores ever since non-essential shops returned to life on 12 April, but ParcelHero’s own research shows that 46% of consumers have no intention of returning to their pre-COVID, high street spending levels. Indeed, July saw a decrease in retail footfall compared to June.

“Online sales fell 4.7% in June compared to May, and they have been falling every month since March, but not at such a rate as to indicate shoppers have abandoned their new online spending habits. As a result, everyone has been trying to assess the new ‘natural order’ and it’s looking like online will permanently secure around a quarter of all retail spending.

“We’ve looked at data from the smallest online marketplace traders to the largest retail behemoths such as Amazon. There’s no doubt the growth in online spending has slowed dramatically, but any retailer trusting that things will return to how they were pre-pandemic will be sadly mistaken.

“At the peak of the pandemic, Amazon was experiencing growth of 41%. In contrast, its gross revenues are expected to grow at ‘just’ 10% to 16% next quarter. That’s a big slowdown but, significantly, the continued projected growth indicates that post-COVID shoppers will keep the online habit.

“Ultimately, the fight between online and in-store sales must end in a draw. An omnichannel sales strategy, embracing both shop and online sales, with both services complementing the other, is the only way forward as retail claws its way back from the clutches of the Coronavirus.”