UK consumer e-commerce trends

Our first report on UK consumer e-commerce covers the largest e-tailing market in Europe. Although the share of e-commerce in UK retail sales is just below 10%, the influence of online is much wider, including reducing shop trips (along with superstore and mall development), which rising fuel costs are bound to intensify as a trend. In the context of the consumer recession that started in Q4 2010, bargain-hunting online has again become a more important driver of consumer interest in consumer e-commerce. Retail sales value and volume data reveal that online retailers are delivering low prices to consumers, in contrast to offline retailing, where consumers face price inflation. As e-commerce grows its share of mind in a converged internet experience, the pressure on offline retailing will intensify, driving out weaker retailers; we think superstore and mall retailing will fare better than the high street, as consistent with a single trip to access a larger choice of goods/outlets (London being the exception). In electricals, the leading online category in the UK (ahead of food and clothing), specialist retailers are suffering the most from the consumer recession and the pressure of online on prices and margins.