Although online retail sales are still growing, new research from Mintel has revealed that growth is slowing quite rapidly. The online retail sector expanded by about 50 percent in 2008, but last year growth slowed down to just 15 percent. However, this is still much better than the rest of the retail sector and it means the UK online retail sector will double by 2018, with double-digit growth rates.
On the other hand, the slowdown means new players will have a much harder time gaining market share. Established operations only need to maintain their lead, which was gained with little or no competition. The next big frontier is mobile retail.
Mintel retail analyst John Mercer believes online only retailers have possibly picked all the “low hanging fruit,” so new outfits will have to get more creative. However, he notes that the market is still very dynamic.
“In a low growth market [for retailers generally], double digit growth [in online sales] is nothing to be sniffed at,” he said.
Although online-only outlets seem to have grabbed an early lead, they are about to face a lot more challenges. They currently account for less than half of all online sales, but Mintel believes they won’t see much more growth, as high street retailers enter the online space, reports the Financial Times.
New services like click and collect, coupled with new POS and payment technologies might help the high street gain a competitive edge over online-only retailers. After all, many people still like to touch and feel products before they pull the trigger and this is something the convenient online channel simply can’t deliver.