E-commerce retail spend expected to dip in 2021 as consumers head back to the high street
The latest research by Butter, the UK’s only Buy Now Pay Later (BNPL) travel agency, has found that while the e-commerce sector continues to go from strength to strength globally, an easing of lockdown restrictions in Europe is expected to see online retail sales account for fewer purchases across the retail space in 2021.
The latest data shows that the e-commerce sector accounts for 18% of all retail sales, up 4.4% in one year alone. However, this is expected to climb to 19.5% in 2021 and as high as 20.4% by 2022.
When looking at the UK e-commerce market, it’s clear that the pandemic has had a notable impact, with lockdown restrictions preventing many from transacting in a real-world environment.
In 2019, over £76bn was spent via the online retail space in the UK, accounting for 19.4% of total retail spend.
The pandemic caused this to increase considerably in 2020, with e-commerce sales estimated to hit £99.3bn, accounting for 26.2% of all retail sales – a 6.8% uplift on the previous year.
However, with life gradually returning to normality in 2021, an apparent eagerness to reconnect with the real world is expected to cause a decline in e-commerce sales. Across the UK the percentage of total retail sales attributed to the e-commerce sector is forecast to fall to 24.3% – a 1.9% decline.
Despite this decline, the e-commerce sector will still account for a greater percentage of retail sales in 2021 when compared to pre-pandemic levels in 2019.
This trend hasn’t be confined to the UK, with France, Germany, Spain and Italy all seeing a pandemic spike in e-commerce during 2020, followed by a forecast drop in 2021 but remaining above the levels seen in 2019.
Timothy Davis, co-founder and CEO of Butter, commented: “It’s clear that as consumers we value the ease, convenience and variety provided by the e-commerce sector, which is why we’ve seen the proportion of retail sales attributed to e-commerce continue to grow for some time now, and this was massively accelerated by the pandemic and the long stint of lockdown restrictions over the past year and a half.
That said, 2021 is actually estimated to see the level of e-commerce retail spending decline. Whilst this may seem like a negative on the face of it, really it’s just a natural readjustment, and e-commerce spending is still seeing strong growth when compared to pre-pandemic levels.
We expect the huge levels of growth seen in 2020 to remain as nothing more than a positive anomaly in an otherwise stable upwards trend as e-commerce players continue to evolve their consumer offerings.
We’ve already seen the BNPL sector lead the way in this respect, proving that consumers are keen for alternative methods to transact when shopping online.
Not only can you now spread the cost of a purchase, but you can do it across any website regardless of whether they have a BNPL partner built into their checkout software or not. We’re also now starting to see BNPL tech make its way into physical retail spaces and this will continue to improve the offering the sector provides to the consumer.”
| Global retail e-commerce sales (USD trillions) | |||
| Year | Retail e-commerce sales | e-com as % of total retail sales | Change 2019 to 2020 |
| 2019 | $3.354 | 13.6% | 4.4% |
| 2020 | $4.280 | 18.0% | |
| 2021 est | $4.891 | 19.5% | |
| 2022 est | $5.424 | 20.4% | |
| Source: VisionMonday.com | |||
| Table shows the total spend via online retail sales (£ billions) and the percentage of total percentage of retail spend this accounts for | ||||||||
| Location | 2019 (bns) | Sales share 2019 | 2020 (bns) | Sales share 2020 est | 2021 (bns) | Sales share 2021 est | Change 2019 to 2020 est | Change 2020 to 2021 est |
| United Kingdom | £76.04 | 19.4% | £99.31 | 26.2% | £92.27 | 24.3% | 6.8% | -1.9% |
| France | £46.69 | 10.9% | £59.34 | 14.3% | £58.09 | 13.8% | 3.4% | -0.5% |
| Germany | £68.48 | 15.9% | £83.69 | 19.9% | £80.68 | 18.7% | 4.0% | -1.2% |
| Spain | £14.11 | 5.4% | £24.68 | 9.9% | £23.62 | 9.3% | 4.5% | -0.6% |
| Italy | £10.14 | 3.7% | £15.46 | 6.0% | £15.03 | 5.8% | 2.3% | -0.2% |
| Data sourced from retailresearch.org | ||||||||
