Total online expenditure

Total online expenditure is expected to increase at a compound annual rate of 0.5% to reach £129.6 billion over the five years through 2025-26. The expansion of online sales has been remarkable, driven by the internet's associated ease of access and relative convenience. This has also attracted many consumers to purchase their products from online retailers. With technology increasingly crucial in consumer lifestyles over the past five years, shopping habits progressively gravitate towards online purchases. Technological advancements and the growing penetration of internet services and internet-enabled devices have increased the convenience and speed with which consumers can purchase items, as almost any product or service can be bought anywhere and at any time. Purchase times are reducing in line with improvements in delivery systems. Moreover, the growing presence of auction sites and marketplaces allowing consumers to sell items to each other has further contributed to the expansion of the online market.

Online spending has also been buoyed by the click-and-collect trend, allowing consumers to purchase their products online and collect from their closest store. Click-and-collect was estimated to be worth approximately £6.7 billion in 2018, expected to rise to over £10 billion by 2023, according to GlobalData. The development of portable music and video players has led to a number of retailers specialising in digital media, such as the Music Downloading and Streaming Services industry (see IBISWorld report SP0.018) or the Video Downloading and Streaming Services industry (see IBISWorld report SP0.017). The rising popularity is expected to have pushed the total online expenditure throughout the period. With the development of digital media, online advertising has also blossomed considerably. Search engines like Google have capitalised on this with new products for retailers aiming to divert traffic to their sites. This, coupled with the rise of social media, is ensuring that more and more transactions are being made online.

Growth in the past five years has been inflated by 64.1% increase in 2020-21, propelled by the economic and social environment caused by the COVID-19 (coronavirus) pandemic. The government imposed strict restrictions to stymie the spread of coronavirus by closing many retail stores and encouraging consumers to purchase online to avoid spreading the disease. Although lockdown measures were eased somewhat in the summer, rising infection rates led to further local and national restrictions in November 2020 and January 2021, encouraging more online spending. According to the ONS, in 2020-21, 31.3% of the value of all retail sales were made online, up from 19.4% in the previous year. In 2025-26, online retailing is still expected to remain far above pre-pandemic levels as many consumers are expected to continue to use the convenience and ease of online shopping. This trend is expected to be supported by more people working from home during the year.