Even in the current economic climate, online retailing continues to be one of the fastest growing markets in Europe. Today, a new study reveals online sales grew by 19.4% or €27.9 billion in 2010 to reach a total of €171.9 billion, representing 5.9% of overall European retail trade. The report, commissioned by Kelkoo and carried out by the Centre for Retail Research, provides the first available estimates of online sales across 11 European countries in 2010. It also reveals online retail forecasts for 2011. The report suggests that by the end of the year, the online retail market in Europe will be worth an estimated €202.9 billion, an 18% increase on 2010, and equivalent to 6.9% of all retail spending in Europe.
Online Retail Landscape in Europe
Between them, the UK (€ 52.1bn), Germany (€39.2bn) and France (€31.2bn) accounted for 71% of total online sales in Europe in 2010. The countries with the lowest overall online purchasing were Poland (€3.4bn), Norway (€4bn) and Denmark (€4.5bn). Over the last ten years internet sales have grown much faster than in retail stores, with sales from 2008 to 2010 alone increasing on average by 42% across Europe - although during this period online sales in France grew by 68%, compared to 33% in Germany and 30% in the UK. The rankings of the ‘big online three' (UK, Germany and France) have not changed since 2003, but growth in these mature markets is inevitably slowing down.
However, if we look at sales in the context of each individual country's population, online sales per capita were highest in the UK (€861.65), Norway (€851.61) and Denmark (€816.75), where online retail accounts for a substantial share of overall retail trade. At the other end of the scale, there was low take-up of online retailing per capita in Poland (€87.65), Italy (€173.94) and Spain (€176.94), where per capita spending was considerably lower than the European average of €429 - reflecting the lower penetration of the online retail sector in these markets.
Internet shopping in Europe accounted for a 5.9% share of total retail sales in 2010, and this figure is expected to rise to 6.9% in 2011. The countries with the highest online market shares as a proportion of all retail trade in 2010 were the UK (10.7%), Germany (8%), Switzerland (7.4%) and Denmark (7%). The countries with the lowest online share of overall retail sales were Italy (3.3%), Spain (3%), and Poland (2.5%), due to factors such as comparatively low internet penetration in these countries and immature online retail markets. However, online sales in less mature countries are growing exponentially; in fact Poland saw the highest level of online sales growth (35%) between 2009 -2010.
Consumer Online Spending Trends
European consumers spent on average €1,072 each in 2010 shopping online, and purchased 25 items, at an average cost of €42.88 each. UK online shoppers, who were the biggest spenders in Europe in 2009, were knocked off the top of the online spending table by Danish consumers in 2010, who spent an average of €1,652 each last year, compared to €1,516 in the UK, and €1,435 in Norway. Consumers in Poland (€367), the Benelux countries (€736) and Spain (€795) spent the least.
On average UK consumers purchased the greatest number of items online in 2010 (41), whereas the Polish bought the least (16). At €46.50, the average cost per item in France was 26% higher than in the UK, which at €36.96 was one of the lowest in Europe. Norway, which ranked second from bottom in terms of overall sales (€4.88bn) had the highest per item spending average at €79.75, while Poland had the lowest at €22.90.
Online sales per Online Shopper and Sales per Capita 2010
Kelkoo CEO Richard Stables comments: "European online retail sales now exceed those in the US and are expected to continue to grow at a much faster rate over the coming years. 2011 will see online sales achieving a significant share of retail trade in most European countries, with an average 7 cents per €1 spent. While the retail industry is showing slow signs of recovery, the online shopping sector bucked the trend in 2010, delivering double-digit growth, and is expected to continue to perform strongly in 2011. There is also evidence that online shoppers' confidence is increasing, with consumer spending set to rise by almost 15% in 2011."
Online Retail Outlook in 2011
Whereas traditional retail sales in Europe are expected to increase on average by 2.5% in 2011 (2.7% in Germany, 1.4% in the UK, and 2.2% in France), online sales are likely to grow significantly more in comparison, increasing by 18% or €30.95bn, to €202.86bn. The forecast is based on a general continuation of current online sales trends, alongside the improving economic fortunes of most countries, and the advantages that online retailers have in Spain, Italy and Poland now that these countries are increasingly starting to embrace the online marketplace.
Internet shoppers are expected to spend an average €1,226 each online in 2011, a 14.3% increase over 2010. The UK is expected to continue to hold its position as the largest online retail market in Europe with a sales forecast of €59.4bn for 2011, followed by Germany (€45.1bn) and France (€38.7bn). The UK is also expected to remain the only European country with online sales representing over 10% of total retail spending, and an estimated 12% in 2011.. That said, the UK is expected to experience the lowest year-on-year growth (14%) in Europe, which is mainly due to the maturity of its online market as well as the uncertainty of the UK economy, the recent increase in VAT and reductions in public spending .
At the other end of the spectrum, Poland (33%) and France (24%) are set to be the fastest growing online retail markets in 2011 with sales rising from €3.37bn to €4.51bn and from €31.2bn to €38.7bn respectively, in all likelihood due to the high numbers of first time customers. High rates of growth are also expected in Sweden and Norway (22%), the Benelux countries (20%), Italy (20%) and Spain (19%) .
Online Sales by Country and 2011 Forecast
Richard Stables, CEO at Kelkoo, concludes: "Over the last 5 years internet retailing has improved substantially thanks to the use of affordable ‘always-on' internet connections, simple and secure payment systems, and the growth of mobile-based retail sites. All of these factors helped to attract an additional 5 million new online shoppers across Europe last year, and should help online retail sales to continue to thrive.
"We don't see consumers' appetite for online shopping showing signs of abating anytime soon. In the current climate it's no surprise that shoppers are turning to the internet rather than the high street, especially as they can find savings of 20% or more off the recommended retail price. It is widely acknowledged that the recession has boosted the appeal of online retailing and European consumers are more determined than ever to make every penny count. We predict that European online retailers will enjoy an average rise in online sales of 18% this year - which in other retail sectors would be regarded as an unrealistic rate of growth."