Online retail is on track to double its retail market share, equating to over £30 billion by 2012, according to payment provider research
Online retail is on track to double its retail market share, equating to over £30 billion by 2012, according to payment provider research
Online retail is expected to be the hero amid sluggish growth for the retail sector overall according to the second annual PayPal Online Retail Report, undertaken by Experian.
Against bleak growth prospects for the wider economy online retail is set to benefit significantly from improved internet access and shoppers’ belief that the internet can save them money, it said.
Online shopping has grown much faster than the broader retail sector and is set to continue to punch above its weight by posting the largest growth in British retailing by the end of 2012. Experian predicts the internet retail sector to grow by £8 billion, a leap of 36% from its current value to be worth £30.6 billion by the end of the UK’s Olympic year. This is almost equivalent to the total £32 billion worth spending cuts announced in the recent Budget or a quarter of the UK budget deficit, as announced in last week’s coalition government emergency budget.
One in every £10 will be spent online
If online retail grows as predicted then it will double its market share of total retail sales by 2012 to 10.4%, meaning one in every £10 spent will be spent on the internet.
Carl Scheible, managing director of PayPal UK, said: “Online retail is booming even in the current economic uncertainty because shoppers turn to the internet when they are trying to be thrifty. Two thirds of online shoppers are now convinced their money goes further online compared to less than half who believed it last year, an increase of 8.5 million people. The success of online retail really is the silver lining in the economic crisis.”
Online retailing is set to grow by £8 billion by the end of 2012 compared to store retail, which is only forecast to grow by £3.3 billion or just 1%.
Internet spend has already almost tripled as a share of total retail spend since the end of 2006. According to this year’s PayPal UK Online Retail Report, this growth shows few signs of slowing. Online shopping is predicted to grow by at a rate of at least 22% through 2010 and 18% through 2011. This is much faster than overall retail sales, which are only set to grow at a rate of 0.4% this year and 1.6% in 2011.
Online growth outstrips High Street value
The report suggests that almost four million more online shoppers than last year think the best deals are available online (71% or a total of almost 24.4 million people compared to 62% in 2009) and nearly four million more online shoppers than last year also say that buying online makes it easier to manage what they spend (38% last year increasing to 48% or 16.5 million people this year).
Scheible added: “The growth of online shopping is not just about saving money, it’s also about saving time. In the last year we’ve seen an 11% increase in the number of online shoppers who say buying online does just that. And payment options such as PayPal make it even quicker to check out from websites.”
