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Online Takes a Greater Share of Retail Sales in the UK

Majority of music, video and book sales happen online

The online retail category has been a winner in the UK since the earliest days of ecommerce, and its share of the total retail pie continues to grow. According to a report from SAS and Verdict Research, retail ecommerce sales passed 10% of total retail sales last year in the UK, and will climb to 11.7% this year, for total sales of £35.3 billion ($56 billion).

eMarketer estimates that total UK B2C ecommerce sales will grow 13.4% this year, to reach $141.5 billion.

Compared with the US, the UK is out ahead in the percentage of retail sales happening online. In February 2012, the US Department of Commerce estimated that 6.6% of US retail sales happened online in 2011. That’s compared with SAS and Verdict Research’s estimate of 9.3% for the UK that year.

Music and video, a shrinking retail category overall, will post the greatest share of UK sales going to ecommerce this year. More than four out of five music and video purchases will be made over the internet, and more than half of book sales will also happen online.

Consumers will still mostly purchase consumer packaged goods (CPG) categories like the food and grocery segment and health and beauty products offline. Only 5.5% of sales in each category will happen on the web this year, even as the UK has been a leader in CPG ecommerce adoption.

The biggest driver of online retail sales growth will come from the older generation of consumers. Younger consumers have been faster to adopt ecommerce, and they are also struggling with the weakened economy. These two factors will limit growth in online buyers among this age group.

Those ages 55 and over, though, have been less affected by the economic downturn, and the number of online buyers in that age category is expected to rise by 6.5% this year. The number of online buyers in this age group will continue to grow faster than any other through 2016.


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