The Retail Report - what does the UK retail landscape look like in 2022?
The retail industry is (and continues to be) one of the most affected by the sudden changes brought on by the pandemic. Supply chain disruptions, shops forced to downsize – or worse – shut down permanently, post-apocalyptic empty shelves; definitely a rough patch.
Therefore, Britons have been doubling down on online shopping, making it a super fast-growing e-commerce market. We can’t say that the pandemic is over, but could we see encouraging signals? Or has the pandemic put an additional nail in the coffin for a stagnating brick-and-mortar retail trade? What remains of the pressure that the COVID-19 pandemic put on online retail? How do British consumers imagine shopping in the future?
Market research firm Appinio teamed up with e-commerce experts from Spryker to find out.
In order to gain insight into the current retail landscape, 2,000 people in the UK, nationally representative according to age and gender, were asked about their shopping behaviour, habits and routines.
Appinio has summarised the entire study results in less than 40 pages, download the report for free!
Current major UK consumer trends in 2022
Online killed the brick-and-mortar store (?). Here's how online shopping took over:
A third of UK consumers prefer shopping online.
Results from the Appinio Retail Report show that 39% of UK consumers prefer shopping online, with Gen Z shoppers at 42%.
It’s easy to understand why such a big portion of consumers (especially young ones) prefer virtual stores: convenience.
This is the biggest driver of online retail, 60% of online shoppers say that they shop online because of the convenience factor: being able to visit any shop and pick items from any brand without the hassle of driving or walking to multiple stores, sticking to their opening times, waiting ages for a fitting room or to pay at the till – these and many more reasons make the online experience a winning one.
This is especially true for older consumers, with Boomers being the most appreciative at 72%.
Keeping in mind that older customers may have difficulties travelling from one shop to the other, or travelling altogether, and may find it hard to navigate big, jarring stores, it is easy to see why older segments favour online shopping.
However, are websites and online stores optimised for older users?
The silver wave is becoming bigger and businesses and brands need to be ready to cater to older consumers’ needs if they want to retain them, embracing customer centricity is key to providing a great shopping experience to any target group.
Another important factor in favour of online shopping is the ease of use.
With the help of filters, consumers can find what they want in a matter of seconds instead of searching endlessly through clothing racks only to find that the dress they fell in love with doesn’t come in their size; or they can save their favourite items in a wishlist that keeps them up to date on reduced prices or low stock. More than two in five (44%) Britons greatly value the ease of use of online platforms, it’s no surprise that for half of Gen Zers (50%) as well as one in two Millennials (49%) this is a must; the trendiest generations want to be always in the know.
In the top three of why UK consumers prefer shopping online, third place goes to better deals. Two in five UK online shoppers (41%) find better deals online when compared to physical stores.
This is not new, however during the pandemic and in the current climate consumers have become even more price sensitive, and are trying to be more cautious of their spending; furthermore, nothing can beat the satisfaction of snatching a bargain.
The biggest shopping mall in the world within your hands' reach: your smartphone
The Appinio Retail Report in collaboration with Spryker reveals that online shoppers prefer shopping on their mobile devices rather than on a computer (further research from Appinio x Remazing reveal similar consumer preferences).
Well over two-thirds (69%) of UK consumers use their smartphone to visit online stores, while only 21% use their laptop/computer.
Less than one in ten (8%) use a tablet and only 2% use voice assistants like Alexa or Siri.
We can also observe gender differences, it appears that three-quarters (75%) of women prefer mobile shopping, versus 64% of men.
Perhaps unsurprisingly, the Appinio report highlights that older segments prefer shopping on desktop (37%).
Shopping on a smartphone could be very challenging for them – not only due to the font size, but also concerning the loss of precision that comes with age and makes fine motor movements more difficult to perform (especially on a “temperamental” touch screen).
Again, customer centricity is a must, optimising e-commerce on smartphones so that younger segments can keep shopping and sharing all in one place, meanwhile not neglecting desktop shopping, as groups that will need to shop online the most are ones that experience some kind of mobility difficulties.
Online shopping is key for the future of retail. Purchasing online with home delivery is the most popular way of shopping among consumers. Furthermore, smartphones are already being used more than computers to buy online. This means that companies must ensure their customer experience is optimised for both mobile and desktop users.
- Alexander Graf, Co-Founder & Co-CEO, Spryker
Shoppers still value in-store retail experience
Even if online retail is seeing massive growth, this doesn't mean that UK consumers are no longer interested in physical stores. Seventeen percent of UK consumers still prefer to shop solely offline and a whopping 43% of shopping happens both online and in-store.
The arguments in favour of physical stores are many.
The most important one, according to UK consumers, is being able to touch and feel the product (39%), therefore avoiding a trip to the post office to send back an item that looked different online (that feeling when you get catfished by an item of clothing...). This is especially true for consumers over 45, who may find return procedures cumbersome.
But one-third (33%) of consumers just enjoy the experience of being in a store, and the older the respondents, the more likely they are to say so.
Lastly, 26% of respondents like shopping in physical stores because they don’t want to pay shipping fees. As mentioned, consumers are getting more price sensitive so they are focusing on avoiding extra spending.
Even if Gen Zers and Millennials are seen to be very much online, it would be incorrect to assume that they don’t visit physical stores at all – they just do it for different reasons.
Gen Z and Millennial consumers are the most likely to go to a physical store to get advice from a customer assistant (respectively at 18% and 16%), and also because they value their privacy and don’t want to share unnecessary information online (respectively at 18% and 15%).
Furthermore, the majority of UK consumers can’t imagine a future where physical stores don't exist; the striking majority of shoppers will keep shopping at brick-and-mortar stores in the future.
The ingredients of a great shopping experience
Unsurprisingly, poor customer service is a big turn-off for online and in-store shoppers.
The striking majority of UK consumers (94%) say that good customer service is essential when it comes to the perceived quality of shopping experience.
Another factor that contributes to a great shopping experience is an seamless omnichannel journey, for 84% of UK consumers being able to pop into the store after having browsed/shopped online, is (very) important.
An excellent shopping experience, whether offline or online, should also provide shoppers with a wide variety of different paying methods (83%) as well as, to take it up a notch, offer innovative products (83%).
Good customer service is crucial for a high-quality shopping experience. E-commerce solutions such as marketplaces can enable companies to entirely manage their own customer service, thus avoiding third-party mistakes and improving shopper satisfaction. These solutions can also help to increase convenience and product selection, two key benefits of online shopping.
- Alexander Graf, Co-Founder & Co-CEO, Spryker
Further research from Appinio x Remazing consolidate the same consumer preferences.
The Internet has an answer to everything, and consumers leverage it
The Appinio Retail Report tells us that, when considering the purchase of a product, the majority (71%) of UK consumers search online for information, followed by looking online for reviews & blogs (49%), third place goes to asking friends and family for advice (36%).
The online world is not only the biggest shopping mall, but the biggest encyclopaedia ever.
If we think that YouTubers upload about 720,000 hours of fresh video content per day, we could safely assume that a big portion of those hours are going to be product reviews, unboxing, hauls, product placements, sponsored content and ads. All this content drives awareness and secures purchases. And YouTube is just one piece of the puzzle.
Social media platforms like Instagram and TikTok are also on the rise in the retail space, an internal piece of research from Google shows that 40% of US Gen Z users prefer using TikTok and Instagram for search over Google.
If brands and companies aren’t on social media or their presence is not consistent nor up to date, or they fail to engage with their customer (fan)base, they are losing a growth opportunity with key targets.
Heard it through the grapevine: the power of online reviews
The Appinio Retail report revealed that about 9 out of ten (89%) UK consumers write online reviews.
The power of reviews is undisputed, they can make or break a business.
Let’s consider Yelp. Founded in 2004, Yelp has become a household name in local commerce, a multibillion-dollar empire built on digital interactions between consumers and local businesses, according to Forbes.
Online reviews have great potential for business.
If handled correctly and timely, reviews can drive purchase decisions and customer loyalty, they can provide free marketing and strengthen the brand-consumer relationship, and they can even provide you with insights into your customer base and help you identify niche targets.
The Appinio Retail Report shows that one in two (47%) consumers write reviews when they are satisfied with the product, while 39% when they’re not satisfied with the product/service.
This is not out-of-the-ordinary behaviour, it is simply part of the human experience.
When we're happy we want to share the joy with others! When we're sad and disappointed? We want to vent and maybe spare other people a terrible experience.
However, one in four (25%) UK review-writers write because the seller/shop has asked them to, and another quarter (24%) write reviews as they’re promised an incentive.
Finally, there is a hardcore 15% that will always write reviews, no matter what.
Consumer interest in free shipping and returns is at an all-time high
The striking majority of UK respondents consider free delivery and free returns (very) important (respectively at 95% and 94%).
This is, of course, the result of the convenience/quick economy, however, it could be detrimental to business as there are costs associated with these policies and they can’t always be taken out of the equation. Even if consumers are extremely price conscious, especially due to the current circumstances, they will also buy from brands they trust which can provide them with a great overall shopping experience.
Nevertheless, additional Appinio research conducted in May following the news that Zara would stop its free policy and start charging its shoppers for returning items, joining other major retailers including Next, Uniqlo, and Sports Direct, showed that 71% of Brits are likely to avoid shopping online if they’re required to pay for the postage of their returns (source: Retail Tech Hub, if you’re interested in the full study, have a look at the Appinio Analyser).
This is definitely food for thought, especially if brands and businesses are considering introducing a fee to return unwanted items. As always, transparency is the key to winning even the most sceptical shoppers.
Appinio has summarised the entire study results in less than 40 pages, download the report for free.
Shopping in the UK vs. Germany, Spain, France and the US
The Appinio Retail Report has been produced also for four more countries (in their respective languages): Germany, Spain, France and the US.
Having data from such different parts of the world allowed us to make some interesting country comparisons.
The Appinio Retail Report has been seeing the same retail trends popping up across countries, but with peaks and dips according to the different areas.
For example, around 90% of consumers in all countries see themselves shopping online in the future (to some extent) and around 70% of consumers across countries use their smartphones to shop online already.
However, German respondents seemed to be the most excited about online shopping (52%), while American and Spanish respondents seem to be sticking to a mix of online and in-store shopping for now (respectively at 50% and 47%).
But if there is one area where UK consumers differentiate themselves from international ones is their obsession with “Click & Collect”. Almost two-thirds (58%) of UK shoppers have already tried the omnichannel enabler.
The “Click & Collect” entails shoppers simply placing their order online through the store's website or mobile app and picking it up in-store (or any other dedicated facility).
The advantages of Click & Collect are clear and highlight the importance of a seamless experience. Shoppers can browse and buy items from anywhere at any time and pick the best time and place to pick up their parcel, without having to be subjected to the whims of the courier. But this channel has advantages for retailers as well, as it allows them to save money in areas such as delivery and packaging.
However, it appears that many customers fail to pick up their parcel at the Click & Collect location, one of the most mentioned reasons why this happens is the long waiting times.
The Impact of Brexit (not only) on the UK retail industry in 2022
The retail landscape in the UK is a challenging one.
Firstly eroded by Brexit, then hit by the COVID-19 pandemic and now a raging cost-of-living crisis exacerbating an already uncertain situation.
A survey conducted earlier this year investigated how 500 retailers in the UK have been navigating these difficult times.
Since the Brexit deals were struck, retailers have been struggling with supply chain issues, finding enough staff to run operations, import and export tariffs, and generally a slump or decrease in sales. The pandemic has done nothing but exacerbate present issues, and the current cost of living crisis with increasing inflation rates is not helping.
Rumour has it that the era of "predictable unpredictability" is not going away and retailers need to be prepared and able to adapt to major disruptions and build strategies that make them resilient.
The UK retail industry growth rate in 2022 vs. 2021
But this is not all bad news, further research shows that the UK economy has been more resilient than expected and many households have been managing to reduce personal debt, mortgages and increase savings. Those savings are going to be key in supporting (or bringing down) retail sales. But experts say that consumers’ confidence remains weak.
After a great summer, driven by the heatwave and generally sunny weather, the rest of 2022 looks like a bumpy ride. The Bank of England expects inflation rates to reach 13% and energy bills will increase again; consumers will need to prioritise essentials, and discretionary spending will be cut.
Brand and business must be there for them, showing empathy and providing them with value. If consumers know they can depend on specific brands, they’ll become a staple for them.
Nevertheless, retail sales are expected to rise by 2.0% in 2022, following a rise of 7.8% in 2021, with inflation being a key driver of sales growth across the industry as a whole.
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