The online retail sector has come a long way since it first emerged during the early 1990s. In the UK alone, consumers spent £60.43 billion pounds online in 2016, a figure which demonstrates the enormous contribution the sector brings to the retail industry as a whole. We have become a nation of avid e-shoppers – with 72% of Brits now shopping online on a regular basis, considerably higher than the European average of 52%.
This is a trend looks set to continue as Britons are forecast to spend 38% more per head online than our European counterparts this year, totalling £67.38 billion. In the UK, it’s anticipated that online spending will account for 17.8% of total retail trade during 2017 – growth of 11.5% year-on-year.
Without a doubt, ecommerce expansion in recent years has been spearheaded by the rise in popularity of mobile device; fuelled by the emergence of the iPhone (2007), iPad (2010), Samsung Galaxy Tab (2011), and the widespread rollout and adoption of 3G and 4G technology. These developments have enabled consumers to browse and shop online via their smartphone or tablet at any time, from pretty much anywhere. As a result, retailers today find themselves operating in a world of tech-savvy consumers, who expect their buying experience to be seamless across mobile, web and in-store.
We recently partnered with the Centre for Retail Research to publish a report investigating the proliferation of mobile usage across Europe. The report found that smartphone usage in the UK outstrips the European average, with almost 76% of the population in possession of a device, far greater than the average on the continent of 63.7%. This trend is also reflected in the predicted rise of mobile spending in 2017 - which is set to hit £27 billion in the UK this year. The average Brit now spends £1,428 each year on mobile devices, compared to the European average of £1,003 per person. This reveals the huge advancement of mobile as a retail channel in the UK, which now represents the fastest-growing area within the entire retail industry.
Whilst desktop remains the most popular method of online shopping, accounting for an average of 72% of all online shopping in Europe, our report found that the use of mobile devices for purchases is set to soar in 2017. In the UK, it is forecast there will be a 22% increase in sales via tablets and a 28% increase via smartphone, this growth is even greater across Europe as a whole – with average increases of 32% on tablet and 31% on smartphone.
In the UK, companies are also implementing retail technology developments from the USA more than ever before. An example of this can be found in the adoption of geo-fencing technology, a tool used to enable location-based personalisation. This technology originated in the US, and VoucherCodes.co.uk was the first brand to geo-fence every shopping destination in the UK, including all shopping centres and every high street. Geo-fencing allows us to send our customers location-relevant offers via mobile push notifications based on the brands that they have previously indicated they love in the area. Such innovations are gradually spreading across the continent, as an increasing number of retailers and marketers embrace this technology.
In Europe, the online retail sector can be broken down into three broad markets – mature, mid-range online, and immature online. The ‘mature markets’ are currently led by the UK and Germany, who have had comparatively active ecommerce retail structures for almost two decades now. These mature markets produce millions of online retail sales each year, and our research demonstrates that the rise in consumers choosing to shop via a mobile is largely driving continued online growth – thanks in part to retailers’ optimisation of the omnichannel experience, and the increased personalisation of marketing communications.
The ‘middle markets’ include the likes of France and The Netherlands. These European nations have the necessary technology and an established ecommerce market, but currently have relatively less spend at present in the online sector. The immature online markets are found in the likes of Italy and Poland, where in 2016 online retail spending accounted for just 3%, and 3.7% respectively – compared to the UK’s 16.8%.
Mobile lies at the heart of continued expansion of online spend, retailers in these middle and immature market nations can further encourage the growth of mobile retailing by embracing omnichannel strategies – offering a consistent price and customer experience, integrating data across consumer touchpoints and improving their payment offerings, particularly with the introduction of smartphone payment systems such as Apple Pay. These offerings will encourage consumers to shop online and on mobile devices, which will in turn tap into this growth.
As we move forward, a common theme across online industries is the increase in data and the improvement in relevancy and personalisation this facilitates. It is vital that retailers keep pace, harnessing this increasing omnichannel data, embracing the developments in retail technology that are on offer and integrating data across all consumer touchpoints to deliver a personalised, omnichannel shopping experience to meet consumer demand - and to reflect the shifting nature from bricks and mortar to online.
Paul Lewis is senior director of marketing at VoucherCodes.co.uk