Clothes and footwear tipped to top £68.8 billion

The UK e-commerce market is forecast to rise 35 per cent over the next five years reaching £68.8 billion by 2022, according to business information and analytics firm, GlobalData.

The company’s latest report found that although clothing & footwear will be the biggest contributor to growth, sectors that have traditionally experienced low online penetration such as health & beauty and furniture & floorcoverings, will rise significantly during the same period shopping via smartphone will continue to be consumers’ channel of choice as mobile spend rises 112 per cent over the next five years.

According to GlobalData, this rising trend will be driven by improvements in retailers’ own mobile functionality together with the prominence of a ‘see now, buy now’, instant gratification consumer mentality.

In the last 12 months 78 per cent of the UK population have shopped online the prime drivers being convenience and  the lure of lower prices.

The report found online shopper penetration for 16-34 year olds above 90 per cent, affirming the importance of the online channel for younger consumers.

“Online pureplays including Amazon and ASOS continue to innovate introducing new technology and driving up consumer expectations of delivery and user experience, requiring multi-channel players to quickly follow suit to maintain their relevance,” said Sofie Willmott, senior retail analyst at GlobalData.

Despite low online penetration in 2017, the health & beauty sector is forecast to experience the highest growth in the next five years with sales set to rise by 66.2 per cent.

“Market leaders Boots and Superdrug are well placed to benefit from the shift to online, with strong brand and delivery lead time propositions in place,” said Willmott. “However they remain under threat from online pureplays such as Lookfantastic.com and ASOS as well as the department stores which have rapidly improved their beauty propositions, – making brands and exclusives far more accessible.”

Online returns are forecast to grow at practically the same rate as online spend over the next five years with clothing & footwear dominating the channel, accounting for 70 per cent of all online returns by 2022.

“Despite the online channel providing a lifeline to bricks & clicks retailers experiencing tough offline sales, e-retail still imposes significant challenges, including the management of returned stock,” said Willmott. “Online returns will continue to rise over the next five years as consumers become more experienced and confident in managing the free and simple returns processes, combined with increased availability of online delivery saver schemes.”