Online retail revenue grows 17% in the UK

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Retail is being impacted dramatically around the globe as a result of the Covid-19 pandemic. Since the UK government ordered the closing of all non-essential businesses on March 26, consumers have had to shift their lives and purchasing patterns overnight. As they can no longer shop, socialise or partake in well-being activities the way they once used to, they are turning to digital ways of fulfilling these needs.

Across the UK, we’ve seen innovative brands come up with new ways to connect to consumers, from restaurants offering “cook at home” kits, gyms delivering home workout content, and grocery stores becoming front line workers in the pandemic.

The Salesforce Q1 Shopping Index, powered by Commerce Cloud, analyses data from the activity of more than one billion global shoppers. This data, which is analysed on a quarterly basis, not only shows a dramatic shift from physical to digital browsing and buying, but also a change in the source and device type of consumers as more people work from home and navigate their lives.

In fact, according to the Q1 Shopping Index, the number of unique digital shoppers in the UK rose 17 per cent year-over-year (YoY). The following provides a detailed analysis regarding digital commerce in Q1 2020. (Several factors are applied to extrapolate actuals for the broader retail industry and these results are not indicative of Salesforce performance.)

Ecommerce demand rises as brick-and-mortar traffic flatlines

A month on from the ordered closure of physical stores, Q1 even outpaced what was a very strong 2019 holiday shopping season. Digital commerce highlights in ther UK for Q1 2020 compared to Q1 2019 include:

  • 17 per cent revenue growth (compared to two per cent growth in Q1 2019)
  • 15 per cent digital traffic growth
  • Seven per cent shopper spend growth (reflects average amount spent by shoppers per visit)

While digital will not come close to offsetting the massive loss from brick-and-mortar sales, with 80 per cent of revenue in 2019 from physical locations; it is helping to brace some of the fall.

The increasing adoption and use of digital will continue even as consumers transition from remaining at home to a more unencumbered environment- whatever that may look like. This is why so many traditional retailers, digitally native brands, and consumer goods manufacturers are doubling down on digital to provide a seamless experience between virtual and physical shopping journeys.

The brands that will come out of this on top are the ones that have managed to remain connected to their customers and ethos wherever possible- whilst maintaining crucial cashflow.

Essential goods purchases go digital

The Q1 Shopping Index demonstrates that demand for essential goods has spiked to unprecedented levels as consumers face financial uncertainty and grocery shortages in the UK. In fact, between March 10 and March 20, spending on essential goods via digital channels surged by a massive 200 per cent — and remained elevated for the quarter.

Shopping digitally for essential categories, such as food and personal care items, has become commonplace more than ever before.

In addition to essential products, digital spending in some notable discretionary categories grew significantly in Q1. For example, home goods experienced an unprecedented 51 per cent YoY global increase, active apparel saw a 31 per cent YoY spike, and toys and games had 34 per cent growth YoY. This is perhaps unsurprising, with many people at home finishing DIY projects, looking to entertain children or get fit and manage stress with exercise.

Globally, Covid-19 cases were a leading indicator for digital shopping 

While the first quarter started fairly consistent with prior years — with digital traffic and sales evening out after the Christmas shopping season — things quickly changed once the virus began to spread. In particular, there was a 41 per cent spike in global digital revenue during the final 15 days of the quarter.

With the increase in demand, along with the shuttering of stores and distribution centres, some retailers struggled with the pick, pack, and ship of orders. Some scrambled to accelerate and retool supply chains to offer flexible delivery options for a contactless last mile. Flexibility and building up digital connections with your customers will be key to weathering this uncertain time.

To find out more, read Salesforce’s full story on their website: salesforce.com/uk/blog/2020/04/q1-shopping-index-digital-revenue

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