UK e-commerce market: statistics, challenges and outlook for e-retail in 2022

By Philipp Denisov, CEO of BRANDQUAD

With its 27% growth, the UK e-commerce market has significantly contributed to the global growth rate of the industry. A growth that should continue over the coming years.

With a turnover of around 105 billion dollars in 2020, the United Kingdom is the fourth largest e-commerce market. Those figures place it ahead of Germany and behind Japan. Following the increase in online sales fuelled by the 2020 lockdown, British consumers are expected to further increase their spending. Indeed, new data forecasts £ 120.48 billion in online purchases by the end of 2021 and the first quarter of 2022. 

During the turbulent 2020, online sales in the UK have seen a significant increase of 46.5%, with UK consumers spending £ 110.6 billion online. Despite the reopening of physical stores in April 2021, a further increase of £ 10 billion (9%) is expected for online sales in 2022.

Analysis of the UK retail market: a growing market 

The biggest player in the UK e-commerce market is The online store achieved US $ 14.7 billion in sales in 2020. It is followed by with US $ 7.6 billion in sales, and with a turnover of 5.4 billion US dollars. In total, the top three stores account for 25% of UK online sales.

This store ranking is based on each store that generates revenue in the UK. These stores can either have a national focus and sell only in their primary country, or operate globally. For this assessment, only income generated in the UK was taken into account. is one of the fastest growing stores in the UK market. The store achieved sales of approximately 2.6 million US dollars in 2020. Its revenue growth was 431% higher than the previous year, notably thanks to the increased interest in ethical products that have clear and up-to-date product information on digital shelves: benefits, product details, nutritional information, origins, and more.

Further evolutions are expected  in the UK retail market over the next few years, as shown in Statista’s Digital Market Outlook. The compound annual growth rate (CAGR 20-24) for the next four years is predicted to be 6%, compared to the 27% year-over-year growth.This decline suggests a moderately flooded market. Another indicator of market saturation is the 82% of online penetration in the UK. In other words, 82% of the UK population bought at least one product online in 2020.

According to our statistics, fashion is the largest segment in the UK and accounts for 31% of its e-commerce revenue. Next come toys, hobbies and DIY with 19%, electronics and media with 18%, food and personal care with 17% and furniture and appliances making up the remaining 15%.

By 2022, the  total online spending should begin to stabilize, edging up 0.10% to £ 120.6 billion. However, it is estimated that the share of online sales in total retail spending will drop to 28.1% as people resume shopping both with online and offline retailers.

Sustainability and PXM: the main challenges for e-commerce in 2022

Digitization has completely changed the way UK consumers shop. Currently, the UK is the fourth largest e-commerce market in the world. But the development challenges faced by the British market are very different to the ones encountered by the American and Chinese markets. 

If brands wish to sell their products to British consumers, it is crucial to make a more global effort towards sustainable development. According to a report by Deloitte published in 2021, British consumers are the most likely to make sustainable or ethical purchases in categories they deem essential. Ethics and sustainability issues are a key factor with almost a third of consumers having stopped buying the products of some brands due to ethical concerns.

Sustainability is therefore a key element in the purchasing decision process for UK consumers. They are always on the lookout for information on sustainability and how their products are made and shipped. They expect greater transparency and up-to-date product information. According to statistics from the retail sector, 62% of UK online shoppers even say they would reconsider their purchases if brands communicated better on their environmental impact. Moreover, more than 60% of consumers would stop buying the products from a brand because of its negative impact on the environment.

The availability of product information is therefore the biggest challenge for British brands. They must provide updated information for their products on the digital shelf, hence the reason companies are turning to PXM (Product Experience Management) solutions.  A powerful PXM helps brands manage product experiences on every purchasing platform by streamlining  product content management for engaging online experiences as well as comprehensive analytics to ensure content optimization.

PXM has become important for brands, e-merchants and nearly every stakeholder in the retail businesses during an age when product information is spread across several different channels. PXM is essential to bringing digital shelf experiences to the level expected by UK consumers.

According to Brandquad statistics, brands that have invested in PXM systems see up to 40% less returns and a 4-fold conversion rate. 

Key challenges facing the UK retail industry 

Creating omnichannel shopping experiences

According to US research firm Gartner, 64% of consumers believe that customer experience is now more important than price when choosing a brand or a store. Consumer expectations have never been higher, especially with the advent of omnichannel commerce. The objective is now to create multiple modes and channels of shopping experience for users and to provide a unified and transparent shopping experience for users across these different touchpoints. 

The main issue facing UK retailers is the integration of the online shopping experience into desktop and mobile apps. Every retailer must be able to offer a consistent shopping experience across all channels to their customers. To better develop marketplaces and e-retail, British brands must invest more in the customer experience to make it as rich and personalized as possible. 

Today, a quality PXM platform is necessary for powerful customer experiences because up to date, consistent product information is critical for digital retail.Concretely, it allows brands to improve the quality of their product data, to analyze data upstream or create dashboards, to provide contextual information directly on digital shelves, and to increase their conversion rate or reduce the rate of return of their products.

Responding to changing customer needs

Retailers must pay close attention to the ever-changing customer expectations regarding experience. Rapid changes in consumer buying habits are forcing retailers to invest in innovative technology solutions such as cognitive AI solutions, GPS, Beacons and personalized notifications to create an online shopping experience in real time, together with personalized discounts for assisted purchases. The challenge for retailers is to identify aspects of their business that can leverage the potential of digital retail transformation and integrate it seamlessly into their store. 

As UK brands increasingly rely on this information to manage their digital retail channels, finding a way to solve these problems is becoming a priority. A PXM plays a critical role by offering a 360° product experience that is complemented with compliance reports, benchmarks, trend analysis, and product page reviews that allows brands to be informed live on the performances and status of their products on digital shelves.