The retail and eCommerce landscape in the UK is changing. It’s not entirely because of the COVID-19 pandemic.

The political scenario, the rise of online marketplace stores, changing consumer demands, and Gen Z Consumer Activism, all have a hand in dictating new trends. As a retail business owner, it is imperative to consider these trends to keep winning despite their impact.

Our blog discusses the top 5 trends that would disrupt eCommerce beyond 2020. We’ll also discuss the challenges and opportunities they provide to help you align your business to the changing market.

Before we get into the trends, let’s have a look at UK’s retail eCommerce market scene in 2019 to understand the changes happening, better:

UK retail sales in 2019 grew 3.4%, reaching £394 billion, despite the uncertainty of Brexit and contentious elections. Over the past 10 years, online sales have grown by an impressive 324% and now account for 19% of total retail sales, making the UK the third-largest online market in the world and the biggest in Europe.

Such a strong eCommerce market that has seen tremendous growth year-over-year has been tested by multiple challenges like the pandemic, Brexit, to name a few. And more challenges are adding up.

#1 COVID-19

On the evening of March 23, Boris Johnson announced lockdown measures as an attempt to stem the spread of COVID-19.

Panic buying and stockpiling ensued immediately. As per a survey conducted by Blacktower Financial Management Group, shopping in the UK increased by £361.4 per week. However, the boon was short-lived. The British Retail Consortium (BRC) estimated that the lockdown meant a hefty £1.8 billion in lost sales each week for non-food shops, and warned that many might be shut permanently.

However, the long term impact is expected to be in favor of online retailers. Many who traditionally resisted e-commerce now have no choice in the matter. A survey by Retail Economics found that two-thirds of UK shoppers said they had switched to purchasing products online that they have always purchased in-store before the pandemic.

#2 Brexit

For decades UK retailers enjoyed free access to shoppers across Europe, but those sales will face new constraints as a result of Brexit. To begin, sellers will need to adhere to EU standards and wider trade policies and regulations.

Differences in UK-EU policies and standards will almost certainly increase compliance costs and product lead times for UK retailers, which in turn, may make them less competitive. They’ll also need to address issues with EU labeling.

On the other hand, research on long term impact suggests that Brexit will boost online sales. Markets and Research report – eCommerce, which already accounts for 19% of total retail in the UK, will see a boost as a result of Brexit. The report says, by 2023, more than one-quarter of the UK’s overall retail sales could be online.”

#3 The Rise of Online Marketplaces

According to GlobalData’s UK Online Marketplace Retailing 2019-2024 report, spending via online marketplaces, such as Amazon and eBay, reached £26.2 billion in 2019 and will climb another £13.1 billion over the next five years.

Amazon sales in the UK are particularly strong, outperforming the rest of the retail market in 2019.

Though this appears to be a challenge for retailers, they can turn it to their favor by creating a marketplace strategy. For many consumers, product discovery begins on Amazon. So, starting to sell on Amazon could prove to be an excellent strategy for retailers to acquire more new customers.

Also, brands can provide a limited selection of their product catalog on the marketplace, luring audiences to check out more on their exclusive online stores.

#4 eCommerce Dominance

The lockdown has cemented the dominance of eCommerce in retail sales. According to the Office of National Statistics, online sales in May 2020 accounted for an astonishing 30% of total retail sales.

As fears of second and third waves of the virus mount, consumers are likely to continue favoring the online channel, and ultimately change their behavior permanently.

eCommerce retailers are also innovating at a rapid pace to provide all the convenience that consumers experience in in-store shopping while buying online. With advanced marketing tools, AI-powered recommendation engines, chatbots, mobile wallets, and flexible payment models, both personalization and buying convenience have significantly improved, blurring the lines between online and offline shopping.

#5 Consumer Activism

From green manufacturing to fair wages paid to factory workers, consumers are demanding more from a brand than just selling quality products.

74% of British consumers say brands should take responsibility for the practices their suppliers engage in when manufacturing their products. Half of all UK consumers say they’d pay more for a product if it avoids plastic packaging.

Gen Zers and millennials are those who are leading such activism largely.

The implications of consumer activism on brands is real and urgent. When critics of the Black Lives Matter movement threatened to boycott Yorkshire Tea, the brand responded by asking them to stop buying their tea and tweeted its stand on racism.

Retailers will feel pressure to ensure the wellbeing and economic practices of their supply chains, as well as make them more transparent for consumers.

Final words

UK consumers are shifting towards online sales, and their mindset is changing. In May 2020, UK’s online sales spiked from 20% to 30%. In parallel, stories of racial injustice, appalling conditions in factories, cruel treatment of animals, among many other social issues, are prompting shoppers to “vote with their pounds.”

The successful brands and retailers in the next five years will be those that can provide shoppers with a personalized and engaging shopping experience, along with transparency into the supply chains and sustainability practices.

If you are a retail brand curious to spruce up your eCommerce presence, Ziffity can help. Talk to our eCommerce consultants to plan your roadmap.