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United Kingdom 2021 www.retailx.net United Kingdom 2021 United Kingdom 2021 Ecommerce Country Report ECommerce Country Report In partnership with €499 | March 2021 RXRUK21RP €499 I MARCH 2021 RXRUK21RP www.retailx.net UK ECOMMERCE REPORT | INTRODUCTION © 2021 retailx.net, distributed by InternetRetailing.net Introduction Welcome to the UK Ecommerce Even now, Brexit divides the nation, with many Britons, Contents Country Report, the first report in notably in English cities that drive the wider economy – 2021 in our series analysing key London, Bristol and Manchester – unreconciled to what Country profile 3 markets around the world. has happened. If Scotland becomes an independent Market context 4 state in the near future and there’s a border vote leading Partner perspective: ACI Worldwide 7 It arrives at a time when trading to a united Ireland – both distinct possibilities – Brexit Partner perspective: Asendia 9 conditions are as challenging for will have been a major factor. The UK may be a disunited Partner perspective: Attraqt 11 UK retailers as I can ever remember. The coronavirus kingdom for some time yet. Partner perspective: Nuxeo 13 pandemic has led to a series of lockdowns to prevent Partner perspective: Tealium 15 infection spreading and non-essential retailers have had to So far, so many reasons for pessimism. And yet, when Key indices 16 close their brick and mortar stores. While the government I look through the analysis and articles my team has The UK consumer 17 has stepped in, offering support for employees, freelancers compiled for this report, an underlying theme is that the Payment methods 19 and businesses, there have inevitably been gaps in the most innovative UK retailers are not only negotiating the Delivery 20 provision. Unemployment has risen and may increase issues here, but are also set to emerge as leaner and more Returns 21 once furlough schemes end in September. innovative companies. The UK, remember, has long been Product categories 22 at the forefront of ecommerce and multichannel retail. Holiday season 23 Of course, countries around the world have had to cope The early signs are that neither the pandemic nor Brexit Covid-19 26 with the pandemic, yet the UK has also been negotiating will change this. Brexit 28 the aftermath of the Brexit vote. Those leading a country The Largest 100 29 that had been one of the largest and most important As ever, we welcome your feedback and comments. The high street 31 economies within the European Union (EU) are now having Figures and sources 32 to think anew about the UK’s place in the world. Trading Ian Jindal, CEO, RetailX Conclusion 34 conditions for retailers that had grown used to being part of the Single Market have become more difficult despite the UK striking an trade agreement with the EU, in particular because of new red tape and tariffs. ON PAGE 4, WE SURVEY THE STATE OF THE UK MARKET 2 | RetailX | March 2021 UK ECOMMERCE REPORT | COUNTRY PROFILE © 2021 retailx.net, distributed by InternetRetailing.net Country profile UK country profile Area: 242,495 km2 | Capital: London | Currency: Pound Sterling (£, GBP) While the UK has one of the world’s most Official language: English | Foreign languages spoken: French, German | Nationality: British Government: Unitary parliamentary constitutional monarchy sophisticated ecommerce markets, the VAT: 20% (Most goods and services) | Reduced rate: 5% (Some goods and services, for example, children’s car seats) sector faces new trading conditions On 31 December 2020, the Brexit transition period ended. The UK, which in 2016 voted to leave the EU, ceased to be Population analysis a member of the Single Market and the Customs Union. The UK population has been steadily growing in recent years, a long-term trend that is likely to continue. However, the For the UK ecommerce sector, this represents not just a increase may not be as linear as the graph below shows. According to analysis of government data by the Economic huge change but also a challenge to long-established Statistics Centre of Excellence, 1.3m foreign-born workers may have left the UK during the Covid-19 pandemic. business models. At the most straightforward level, it is UK’s total population, in millions, 2013-2050 (f) no longer possible to send items to consumers in the EU without incurring new paperwork and/or customs fees. 80 74.08 Processing cross-border returns is even more problematic. 73.35 +1.00% 72.49 +1.19% 71.55 +1.31% These kinds of operational issues lead inevitably to 70.49 +1.51% 69.27 +1.75% strategic questions. Should UK retailers set up companies 67.89 +1.77% 67.14 +0.53% 70 66.30 +0.62% that trade only within the EU? Should they just focus on the 64.61 +0.66% domestic market? Should EU-based companies still look to +0.76% expand into the UK? Looking ahead, will retailers currently (millions) Population 67.53 68.07 66.73 +0.58% +0.27% 65.86 +0.65% based in the UK move their head offices to Europe? 64.13 +1.93% 60 2014 2016 2018 2020 2025 (f) 2030 (f) 2035 (f) 2040 (f) 2045 (f) 2050 (f) Answers to these will emerge over the next few months 2013 2015 2017 2019 2021 (f) but for now, it’s worth emphasising that the UK represents Source: worldometers an advanced economy with the fifth-largest GDP in the [1] [2] [1] www.thetimes.co.uk/article/britain-is-fifth-largest-economy-in-world-again-after-leapfrogging-india-wccxxxcqr [paywall] world and a predicted growth rate of 5.5% in 2021. [2] www.theguardian.com/business/2021/jan/26/imf-downgrades-forecast-for-uk-economic-recovery FOR MORE ON BREXIT AND UK ECOMMERCE, SEE PAGE 28 3 | RetailX | March 2021 UK ECOMMERCE REPORT | MARKET CONTEXT © 2021 retailx.net, distributed by InternetRetailing.net GDP in billion £ (Sterling) and growth Market context Exchange rate £ to €, 2013 to 2021 (f) rate, 2013 to 2021 (f) 1.5 1.359 -8% 1.287 The UK retail market is undergoing 1.203 4.7% 2.8% 3.9% 4.1% 3.3% 1.172 1.172 1.182 1.25 1.125 1.114 1.108 profound changes. What kind of industry 3.0% £2,117 £2,181 will emerge from this turbulence? £1,969 £2,049 -49% 1.0 £1,844 £1,895 2013 2014 2015 2016 2017 2018 2019 2020 2021 (f) £1,761 Source: xe.com In January 2017, Britain’s then prime minister, Theresa £1,106 £1,013 May, gave a major policy speech. Promising to break free of the EU’s economic structures, she declared that “no UK exporters over new red tape. Figures from the Office deal” would be “better than a bad deal for Britain”. With for National Statistics (ONS) suggest a 40.7% drop in the [2] the benefit of hindsight, the chances of the UK negotiating export of goods from the UK to the EU in January 2021. 2013 2014 2015 2016 2017 2018 2019 2020 2021 (f) a soft Brexit with the EU receded at the same time as the Source: quandl.com; International Monetary Fund, RetailX, Office for National statistics likelihood of fierce political wrangling increased. In short, the consequences of the British government’s bare-bones deal with the EU appear to have been GDP in billion € (Euro) and growth rate, One result of this recent history was that the UK entered immediate. To borrow the terminology employed by those 2013 to 2021 (f) 2021 buffeted not just by Covid-19, but by the longer- who think it was an error for the UK to leave the EU, the 8% -10% -8% term political and economic fallout from the Brexit country has imposed sanctions on itself. This is reflected 12% vote. This can be seen in foreign direct investment (FDI) in key economic indicators such as the value of sterling. 8% 0% 2% figures.[1] In 2019, the value of net foreign direct investment In 2015, £1 would buy €1.36. In 2021, that figure is €2,575 €2,556 -49% (FDI) into the UK was £35.6bn, down from £65.9bn in 2018, predicted to be €1.11. €2,373 €2,306 €2,306 €2,358 €2,119 a large drop even allowing for volatility in the statistics. As for the direct effects of the pandemic, they are evident in Despite the daunting macroeconomic factors at play, it’s €1,307 GDP figures, which dropped by 49% in 2020. worth highlighting that a combination of Covid-19 and an €1,197 associated switch to ecommerce is hitting the retail sector A country once seen as a gateway to the EU has to redefine in every country – and will continue to do so. When trying its place in the world. There is evidence it is not well [1] https://commonslibrary.parliament.uk/research-briefings/cbp-8534/ 2013 2014 2015 2016 2017 2018 2019 2020 2021 (f) prepared for this task. There are ongoing complaints from [2] www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/uktrade/january2021 Source: quandl.com; International Monetary Fund, RetailX, Office for National Statistics FOR MORE ON THE UK ECONOMY, SEE OVERLEAF 4 | RetailX | March 2021 UK ECOMMERCE REPORT | MARKET CONTEXT © 2021 retailx.net, distributed by InternetRetailing.net to gauge the overall state of the British retail market, this is B2C turnover in billion € and growth worth bearing in mind. The UK market is going through rate, 2013 to 2021 (f) What is E-GDP? changes that other markets will face in the near future. 20.0% 13.1% 14.7% 29.7% 11.2% 30.0% E-GDP is defined here as the value of business-to- Indeed, research from PwC and The Local Data Company, 4.5% €312.77 consumer (B2C) ecommerce sales as a percentage 18.8% which showed 17,532 stores closed down in 2020, against €260.24 of overall gross domestic product.
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