1 in 4 retail purchases made in the UK are online

eCommerce remains resilient as overall sales decline.

Narrative IndustriesThoughts

The figures are in for 2023 and, when combined with ONS report for December 2023, it’s pretty clear that consumers continue to spend an increasing percentage of their retail budgets online.

Good news for eCommerce as over 1 in 4 UK retail purchases were made online in 2023

Despite a general decline in retail sales volumes, attributed to the cost of living crisis, the proportion of online sales as a part of total retail sales remained high. In December 2023, the proportion of online sales rose to 27.1%, slightly above the average of the preceding 12 months (26.5%) and substantially above the levels before the COVID-19 pandemic (19.7% in February 2020).

The pandemic lockdowns between 2020-2021, and the associated restrictions on physical retail, skewed the figures, so so it would be interesting to explore where we might be if we ognore 2020 & 2021, and make some estimates based on the data between 2007 and 2019.

If we take that spike out, & assume that the trend observed between 2007 and 2019 would have continued in a similar manner (without the pandemic), based on the linear regression model the figures would have looked more like this:

2020 would have been about 19.88% online sales percentage
2021 would have been about 21.16%. online sales percentage
2022 would have been about 22.44%. online sales percentage
2023 would have been about 23.73%. online sales percentage

In reality, 2023 hit 26.6%, showing that UK consumers did not all flood back to the physical stores after the pandemic, opting to favour online retail instead.

This indicates that online retail has become an even more significant component of the retail sector, even when overall sales volumes are fluctuating.

Something else to consider is the ONS report also highlighted a decrease in sales volumes across various retail sectors, including food and non-food stores. However, non-store retailing (which includes online sales) was less affected by the decline compared to physical stores, suggesting the resilience of ecommerce in challenging economic conditions.

This particularly poignant as online continued to take larger slice of the available retail pie – in 2024 the percentage of UK retail purchases made online could hit 29%, nearly a third.

The continuous growth in the proportion of online sales, the resilience of ecommerce during economic downturns, and the sustained UK consumer shift towards online shopping, all point towards the strategic importance of investing in ecommerce. Businesses looking to adapt to changing consumer behaviors and market conditions would benefit from strengthening their online presence and capabilities.