August 5, 2011, 12:45 PM

E-retail accounts for nearly 10% of all retail sales in the U.K.

20% of online spending goes toward food and drink, Forrester says.

Allison Enright

Editor

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U.K. consumers will spend 9.4% of their total retail budgets online this year, according to new Forrester Research Inc. projections. By comparison, the U.S. Commerce Department estimates that 4.3% of all U.S. retail sales, excluding auto sales, fuel, travel, digital downloads and ticketing, took place online in 2010.

Forrester estimates U.K. consumers will spend 28.6 billion pounds ($46.8 billion) online this year, with the largest single chunk—20%—of that amount going to food and drink purchases. Consumer electronics and clothing product categories each will account for 19% of online retail spending.

“The U.K. is unique among its neighbors in that groceries represent the largest online category by spend,” writes Forrest analyst Martin Gill in the U.K. Online Retail Overview 2011 report. He says the U.K.’s largely urban population makes it possible for online-only and multichannel retailers to create flexible delivery options for groceries and other items. Online-only grocer Ocado.com, for example, offers a one-hour window for home delivery of purchases, with the delivery price determined by the time of day selected. Delivery on weekdays costs about three pounds ($4.90) at midday and about six pounds ($9.83) for early evenings. Grocers with bricks-and-mortar stores, such as Tesco, offer shop online, pick up in store options.    

The report says all U.K. e-retailers have to continue innovating on delivery options to remain competitive. “The bar is being raised,” Gill writes. “E-business executives can’t assume that consumers will continue to be satisfied with a one- to three-day delivery timescale. They must be clear on the delivery options that make sense to their customers.”

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