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Shoppers are expected to spend more than £120bn online this year

by LLB Finance Reporter
2nd Aug 21 7:56 am

Following a surge in online sales in 2020 thanks to Covid-19, UK shoppers are predicted to further increase their spending as new data forecasts £120.48bn of online purchases in 2021.

The VoucherCodes.co.uk Life after Covid: Prospects for online retailing, physical stores, and how we pay report, carried out by the Centre of Retail Research (CRR), examines the impact of the pandemic on both online and offline retailing. It also looks ahead to 2021 and 2022 to understand how online sales will be impacted as the UK recuperates from Covid.

Despite a turbulent year, during 2020 online sales in the UK saw a significant increase of 46.5%, with British consumers spending £110.6bn online as physical stores were forced to close during long periods of lockdown. Despite physical stores re-opening in April 2021, a further increase of £10bn (9%) is expected for online sales this year.

UK consumers are buying more goods online than ever and by the end of 2021, online sales will make up almost a third (30.2%) of overall retail spending. This is 11% more than the share in 2019, pre-pandemic.

Looking ahead to 2022, total online spend will begin to level out, marginally increasing by 0.10% to £120.6bn. However, it is estimated that the share of online sales as a proportion of total retail spend will fall to 28.1% as people get back to shopping at a mix of online and offline retailers.

In terms of the performance of physical outlets during the pandemic, total sales in bricks and mortar stores fell by a colossal £35.3bn when comparing the period 2019-2020 to 2020-2021. However, the report shows a steady recovery for the year ahead, with a forecasted increase of £3.9bn (1.4%) in physical sales in 2021.

Despite the rise in physical store sales, it is expected that there will be a large disparity between food and non-food stores. Non-food sales in physical stores are expected to rise by 10% (£12.5bn) between 2020 and 2021, reaching £137.1bn as people return to the shops after long periods of closure. Food sales on the other hand will see a 5.4% decline from 2020 to the 2021 forecast as life returns to normal and people spend less time eating and drinking at home.

UK online and physical retail sales: 2018-2020 actuals and 2021-2022 forecasts in £billions

Year Total online sales Total sales in physical stores
Total Food Non-food Total Food Non-food
2018 £68.455 £9.052 £59.403 £312.247 £154.237 £158.010
2019 £75.478 £9.058 £66.421 £318.167 £158.640 £159.528
2020 £110.58 £16.293 £94.282 £284.213 £159.569 £124.644
2021 forecast £120.489 £19.366 £101.123 £288.099 £150.939 £137.160
2022 forecast £120.625 £20.411 £100.215 £308.392 £154.663 £153.729

Despite the upward projections, nearly two thirds (60.5%) of consumers think they will spend less online than they did during lockdown. Almost a quarter (23%) say they will spend just as much as they did during periods of lockdown, and 16.5% say they will spend more online.

Anita Naik, Lifestyle Editor at VoucherCodes.co.uk said, “The pandemic has acted as a catalyst for many changes in the retail industry, especially the migration of more consumers to online shops and people relying more heavily on online retailers than in the past.

“Despite a difficult economic period, it’s encouraging for the UK’s retail industry to see that shoppers are still keen to spend money in-store as well as online. Whilst physical stores have struggled over the past year, it’s great to see a real desire from consumers to get back to shopping in-store.

“That said, it’s important for people to remember to purchase within their means and shop around for the best deals.”

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