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Retail in Transition: Future E-Commerce Opportunities in Western Europe

June 2021

The digital revolution has been rewiring retail for years. The COVID-19 pandemic accelerated this transition as e-commerce became the default setting for many homebound consumers. The crisis-inspired surge in e-commerce is leading to a permanent shift in retail, creating both new challenges as well as new opportunities for retailers and consumer brands alike. This report explores those opportunities and challenges in Western Europe.

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Key findings

COVID-19 ignited an e-commerce surge across Western Europe

As a result of government-imposed restrictions on non-essential store-based retailing in most countries across the region at several points in 2020, consumers shifted to e-commerce. This led to a considerable surge in online sales in Western Europe, however, due to relatively limited e-commerce readiness, it was less extreme compared to other regions in the world.

The UK is dominant in a region with considerable differences in e-commerce penetration

The UK, which already was the most advanced country in terms of e-commerce size before the pandemic, showcased its e-commerce readiness during the pandemic by posting the highest absolute value growth in 2020. Countries in the region with particularly low e-commerce penetration were among the fastest growing in 2020.

Food and drink e-commerce posts the strongest growth amid pandemic impact

Although grocery retailers remained open in the region in 2020, recommendations to stay at home and general health concerns led to a widespread shift towards food and drink e-commerce. With only limited demand before the pandemic, food and drink e-commerce recorded the fastest growth among all categories following its outbreak.

Apparel and footwear will be a key driver of e-commerce growth going forward

In Western Europe, the apparel and footwear product category is projected to be the strongest growing category during the 2020-2025 forecast period due to the industry being particularly hard hit by the pandemic in 2020, and due to heavy investment from retailers in online sales and experiences.

Older consumers emerging as new group of online shoppers with staying power

As the region in the world with the highest share of consumers aged 65+, it was particularly notable that the pandemic led to the adoption of e-commerce among a significant share of this age group. Behind a digitalisation push ignited by the pandemic, older consumers are expected to become more influential in e-commerce.

Growing shift online among consumers and merchants fuels e-commerce prospects

With a higher number of consumers showing a growing preference for e-commerce as a result of the pandemic and many retailers shifting their business at least partly online, the COVID-19 pandemic has fundamentally improved conditions and therefore growth prospects for e-commerce in Western Europe in the years ahead.

 

Introduction

About the report
Key findings

E-Commerce Emerges as the Default Setting

E-commerce in Western Europe posts average growth at a global level
The UK continues to drive overall e-commerce growth in Western Europe
Case study: Otto Group’s marketplace push fuels merchant interest
Category spotlight: food and drink e-commerce skyrockets in 2020
Case study: Tesco’s online strategy boosts its competitive position

How Shopping Behaviours Continue to Evolve

Digital purchases rose across most categories in the region
Western Europeans turned to mobile more for purchases during COVID-19
Consumer spotlight: young consumers drive smartphone purchases
Shopping behaviours also evolved in other ways as a result of the crisis
From necessity to preference: older consumers fuel e-commerce growth
Case study: Rewe enhances click and collect as older cohort shifts online

Identifying E-Commerce Growth Opportunities

Identifying the markets most primed for sustained e-commerce growth
E-commerce growth possible through optimisation rather than expansion
Fresh food holds the greatest unmet potential in value terms
Fresh food accounts for a third of unmet opportunity in France
Case study: carrefour benefits from pre-existing omnichannel vision
E-commerce market is expected to expand by USD1 trillion by 2025
Future e-commerce growth to be driven by apparel and footwear
Case study: Zara blends online and offline capabilities to boost sales

How to Win in Western Europe

Three countries to watch in Western Europe for e-commerce development
Key opportunities
Key challenges still to overcome
Key takeaways about e-commerce in Western Europe
Recommendations for how to win in retail’s digital-first era
What to consider when evaluating your e-commerce strategy
Learn more about how to win in the digital-first era

Appendix

About the survey methodologies
About the E-Commerce Readiness Model
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