Ecommerce forecasts 2021: Pandemic shifts remain for now
Goods ecommerce accelerated in 2020 by four years above trend to reach 28% of retail sales (excl. fuels) from 19% in 2019. We anticipate that ecommerce in 2021 will remain in the same share range of 27-29%.
Food and drink grew faster than any online category in 2020, doubling to over 10% of associated sales. Aside from food and drink, the agony of zero sales on the shuttered high street continued, with over half of all sales being online in 2020, likely persisting in Q1 2021.
Offline retailing will recover due to deconfinement and the share of ecommerce will edge down in Q2 2021 and thereafter, but these new shopping habits will be sticky and anchored by persistent work-from-home, driving all retailers that are left standing to massively adopt online channels and associated advertising media.
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We expect online advertising to outperform other media, and for platforms to further gain share. But with a very few exceptions, this health and economic disaster is good for nobody.
Amazon advertising grew by 52% in 2020, growing at a faster rate than Google and Facebook, with even more headroom to expand in 2021.
Amazon is poised to benefit from another pandemic year after investing heavily in warehouse safety and aggressively expanding its logistics capabilities.
Expansion in groceries is likely in 2021, while Amazon's brand-focused strategy takes a back seat. Clarity over regulations in India will drive long-awaited expansion.
Global Britain is born: Post-Brexit muddle
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The UK’s initial vision of Global Britain via a pact on trade, security and defence with the US, rather than the EU, is not a priority now for President Biden, who also has a stake in the open border on the island of Ireland
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The City of London is emblematic of the potential for outsourced GVA creation under WFH. Its skilled and highly paid staff are too valuable to employers to risk exposure to the virus. WFH, largely preserving GVA, will anchor the future of work.
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Lockdown 1.0 in March-April-May 2020 reduced mobility in London to 65% of its pre-pandemic baseline, swelling time spent at home. London’s mobility tracked a similar decline to Paris and New York City, all hugely reliant on public transport
Easing lockdowns and good weather slowly led to a mobility recovery through the summer and early autumn, but it sharply declined again after November’s Lockdown 2.0. The mobility decline was greatest in the City of London, which is more acutely affected by working from home
Each nation in the UK diverged slightly from September due to varying local policies adopted by England, Wales and Scotland to address their public health crises. Notably however, Lockdown 2.0 did not cause mobility to fall to the same degree as late March
Surging online retail: Record growth during lockdown
2 September 2020Over Q2, the value of online sales (excl. fuel) grew by 55%, whilst offline sales (excl. fuel) declined by 22%. Three months of lockdown has accelerated ecommerce by four years and households will spend more than ever before online, post-lockdown.
The rapid shift to ecommerce poses lofty challenges to UK retailers who have historically been timid in their approach to ecommerce. Integration between sales channels will become more important than ever before, but very few have managed to perfect this approach.
As more retail activity takes place online, ad products from the likes of Google, Amazon and Facebook stand to benefit greatly, pulling spend from other ad and marketing budgets that were aimed at driving in-store behaviours.
Online advertising during the lockdown
20 April 2020In response to COVID-19 and the associated lockdown and economic crash, advertisers have slashed budgets. Online budgets are not immune.
This has clarified features of the online ad market: it is demand-driven, relies heavily on SMEs and startups, and is built on direct response campaigns.
We expect online advertising to outperform other media, and for platforms to further gain share. But with a very few exceptions, this health and economic disaster is good for nobody.