The Impact of COVID-19 on UK Ecommerce & Online Retail in 2020

2020 has been dominated by COVID-19 everywhere you look. All the news stories revolve around the pandemic, everyone is discussing the latest measures with family and friends, and everyday life has fundamentally changed.

Whatever your walk of life or outlook on COVID – it’s likely you’ve seen the impact. You may have self-isolated for months, or you may have been acting as normal but had to adhere to social distancing, travel bans and mask-wearing.

But one area that COVID-19 has pushed forwards is ecommerce and online retail. More of the UK public have been shopping online than ever before, and exploring what online avenues can replace traditionally offline purchases.

Food, gifts, toiletries, hobbies, entertainment – you name it, more people have been buying these online instead of going out and browsing numerous shops.

What’s the impact of COVID-19 on UK Ecommerce & Online Retail?

Back in May 2020, UK ecommerce grew 25% YOY, and COVID is set to add £5.3 billion to UK ecommerce in 2020. The prediction was upgraded from £73.6bn to £78.9bn due to COVID-19.

Online sales have exceeded expectations due to the pandemic – initial predictions were for 11% growth, which is now expected to be 19% in 2020. Which would hit an overall £78.9 billion up from £66.3 billion in 2019.

Which retailers have been affected?

While most businesses have been impacted to some degree (whether positively or negatively), there are some more notable examples from household brands.

One company which has benefitted from the pandemic is Amazon, to no-ones surprise. Amazon is set to add an extra £2 billion in UK sales – up to £31.1 billion.

UK retail prices dropped by 2.4% in May 2020 as non-essential retailers wanted to get more shoppers to purchase products.

Ocado is now the most valuable food retailer ahead of Tesco – despite the fact it is an online food retailer. Ocado has a valuation of £21.7 billion compared to the £21.1 billion of Tesco.

Tesco is also set to generate the most revenue, as forecasted gross sales rose by £1.7 billion. Sainsbury’s are also expected to gain an extra £0.6 billion by the end of 2020.

Bazaarvoice found that due to lockdowns, 39% of global consumers purchased from brands they had not tried previously, due to value, convenience or availability.

As for department stores, growth is set to decline from an expected -1.1% to -17.8%.

Boots reported a store sales decline over the last quarter – group sales dropped 16.7% for the 3 months to August despite online growth. Boots has since said it lost market share in all of its categories aside from beauty over the quarter. However – the online sales saw a 155% growth in the fourth quarter, following a 78% growth in the previous quarter.

Hugo Boss also recorded a 74% rise in online sales despite the fact many of the stores were closed during Q2 of 2020. European sales fell by 59%, but there was double-digit growth online in Europe, America and Asia-Pacific.

Royal Mail stated that during the first 5 months of the year, there was a shift in business from letters to parcels – a reported 34% increase in parcel volumes. 71% of British firms have changed their business model to adapt to COVID. 5% of businesses launched takeaway or click-and-collect options for customers. When it comes to retail, 1/5 retail businesses introduced a delivery option for their products, and 23% of retail businesses have chosen to sell more products or services online. 1 in 10 retail businesses moved to solely trade online.

Milton Keynes has also hit the headlines as a vision of the future with over 100 delivery robots making food delivery much simpler. These autonomous robots deliver via an app for 40 companies including Co-op. While this is a very specific example, it shows how ecommerce in general also leads to innovation outside of how we shop online on a PC or phone. The way we receive goods is changing, and 2020 could see these huge changes get accelerated across the UK.

COVID consequences

COVID-19 has not only accelerated the adoption of ecommerce and online sales growth – it’s accelerated innovation within retail. Retailers had already been struggling with decreasing footfall in town centres, and were hard-pressed to maintain store footprints and profitability.

It seems that COVID-19 isn’t necessarily the reaper of retail – but it has simply pushed industries to adapt or die. Those which have adapted to the “new normal” will likely continue to prosper with the new innovations and technologies in place long after COVID is a thing of the past. Though no doubt, new innovations and behaviours will dominate our future, too.

It seemed inevitable then, that retailers which were already struggling and did not swiftly adapt for lockdowns quickly kicked the bucket. The loss of revenue and paying customers in-store was too much, and the lockdown was a simple death knell.

On the ecommerce front, COVID simply accelerated many retailer plans to move online. Before COVID, many retailers will have known that they need to move online at some point somehow, but were yet to figure out the plan. COVID simply forced their hand and made it pivotal for survival.

Consumer habits have changed drastically, and retailers needed to evolve along with this. Even if lockdowns are lifted, we hit herd immunity and COVID is nothing but something to be studied in future history books – consumer behaviour has fundamentally and irrevocably changed for the near future.

If you are looking to move your retail business online, or perhaps start-up your own ecommerce venture, you can read more about our custom ecommerce solutions or get in touch with the team to discuss your goals and requirements.