Online retail sales in Europe will reach €171.9bn (£145.8bn) a year by 2016, according to a new report. That’s growth equivalent to a compound annual growth rate of 12% from the €96.7bn (£82.0bn) spent online in 2011.
In the UK, online sales will see a compound annual growth rate of 11%, the report predicts, growing from £30.1bn in 2011, out of a total retail market of £266.8bn, to £51.0bn in 2016, out of total retail market of £305.6bn.
But how well individual retailers will fare depends on the category they are trading it, according to the online retail forecast for 2011 to 2016 from research company Forrester, which covers 17 European Union countries.
Report author Martin Gill said more shoppers were turning to the internet “to find deals and offers and to save money” as the technology becomes mainstream across the continent.
Grocery sales, for example, will pass the €9bn (£7.6bn) mark in the UK by 2016, making this by the biggest market for online groceries in Europe. The report says there will also be strong growth in the category in other European markets, “as retailers in France, the Netherlands and Germany look to the UK to work out how to achieve similar success.”
Clothing will be a strong category across Europe, with growth above market averages. “Emerging technologies such as virtual fitting rooms and augmented reality are primitive today but will evolve over the next five years,” predicts the report. “More immediately, retailers will use online product reviews, social outfitting, and product videos to help customers evaluate style and fit more effectively. These tools will continue to erode the barriers to buying clothing online.”
But the report finds that online growth in the largest markets will increasingly cannibalise high street sales, making up 14% of UK sales by 2016 and more than 10% of sales in Germany. “This level of growth cannot be sustainably incremental,” it says. “For these more mature online economies, ecommerce growth will inevitably come through the shift of spend away from traditional retail channels.”
At the same time, there will be growth of online spending both in southern Europe but in Scandivia, where to date, says the report, shoppers have not believed that the internet gives them competitive prices, the rate of growth will slow.
The report found that online shoppers made up 75% of the UK’s online population in 2011, a figure forecast to rise to 85% by 2016. That’s only surpassed in Sweden, where in 2011 72% of the online population shopped online, likely to rise to 86% by 2016.
Online sales will also continue to grow faster than offline sales, while mobile is set to grow in importance as a channel that bridges online and offline sales. Currently, says the report, some 8% of European consumers have bought by mobile phone but that is set to rise. “Web users will use retail sites to keep informed on the latest trends, to research their purchases, and to find great bargains,” says the Forrester report, “and, increasingly, they will do this on the move as mobile becomes a reality. Retailers that can deliver sophisticated location- and context-aware mobile experiences will find that their online presence will extend onto the high street.”
Despite overall growth, however, European online retailers will work in an increasingly competitive market. “The days when just having a web shop was enough to guarantee sales are gone,” said the report, “as wallet share shifts online and a tight overall economic climate persists, retailers will increasingly view the Web as a source of key strategic growth.”
The report predicts that online growth will fall short of the EU ambition to double online sales by 2015, and that cross-border growth will be a key strategic priority for traders.
The report comes as Forrester also releases its five-year predictions for the US, where online sales are set to reach $327bn (£206bn) by 2016, when they will make up 9% of total retail spend.