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.
This report comes in PPT.
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, 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.
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.
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.
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.
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.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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