UK CONSUMERS SET TO MORE THAN DOUBLE ONLINE SPENDING TO £21.3 BILLION BY END OF 2011

New PayPal report reveals that online spending is the only factor that will enable the British retail sector to grow by the end of 2011
-Almost one in four UK adults (24%) believe online shopping will become the norm and the high street will eventually die out.
- By the end of 2011 shoppers are forecast to spend at least one in every 14 pounds online

Online shopping in Britain is set to boom from £8.9 billion to as much as £21.3 billion* in annual sales by the end of 2011, according to forecasts in a new report by online payment service PayPal**. This forecast 137 per cent growth in online spending means consumers in 2011 will spend the equivalent of approximately £430 for every UK adult – more than doubling the current annual online spending.

As experts debate when Britain will come out of recession, the PayPal UK Online Retail Report, conducted by Experian, predicts that 2011 will offer the first signs that UK retailing has emerged from recession. Online shopping is forecast to see its strongest year ever in 2011, and offline sales are predicted to begin to pick up once again.*** The report suggests that in the 18 months up to the end of 2010, online shopping is the only area of retailing likely to record sales growth. Without this forecast growth UK retailing could be on track to fall in value by an estimated £11.8 billion by the end of 2011, unless consumers choose to move any of their purchases to other channels.

PayPal’s report looks at the impact of the recession on shoppers and how shopping habits affect the economy. It forecasts that by the end of 2011, adults will dramatically change where and how they shop.

A new era of considered consumption

A mood of considered consumption is now well established amongst UK adults, with shoppers now scrutinising every purchase before committing to spending money. The need to make the most of their money is also driving consumers online where they believe they will find the best deals.

Nearly 4 in 10 online shoppers (8.7 million****) now believe that it is easier for them to budget by purchasing items online rather than the high street, while 47 per cent (10.8 million) believe their money goes further online. Meanwhile seven in ten consumers (33.6 million) say they gather as much information as possible before committing to a purchase, and 62 per cent of online shoppers (14.2 million) believe that the best deals are only available online.

Is this the end of the high street?

While millions will continue to visit UK high streets over the next few years, consumers are set to shift more of their shopping online. By the end of 2011 the forecast is that at least one in every 14 pounds spent shopping will be online, which is undoubtedly made easier now that 15 million***** homes in the UK have a broadband connection. Already 8.6 million UK adults shop online at least once a week and now nearly a quarter of adults (11.7 million) believe that shopping online will soon become the norm and high street shopping will eventually die out.

Carl Scheible, Managing Director of PayPal UK, said: “As we all try to make our budgets work harder during the recession it is hardly surprising many of us have headed online to seek a better deal. In fact almost nine million of us now shop online at least once a week. Online shops have already seen phenomenal growth and by the end of 2011, when the recession is expected to be over, we’ll be spending at least one in every 14 pounds online.”

Growing sectors

Over the last six months online shoppers have spent the most money per head in travel, financial services and other major purchases, like white goods and cars. These are all areas in which people want to shop around and compare prices, something the internet has revolutionised.

? Travel spending: 14.7.million online shoppers have spent an average of £940 each, and nearly 3 million adults think they will spend more in this sector before the end of the year.
? Financial services: 7.1 million online shoppers (31%) have done all or most of their financial services shopping online over the last six months. UK adults shopping in this online category have spent an average of £764 each.
? Major purchases (e.g. white goods such as fridges and freezers): 9.7 million shoppers have spent an average of £495 each on major internet orders over the past six months.

Carl Scheible concluded: “The downturn has meant quick impulse buys may be a thing of the past as we now spend longer thinking about what we purchase. However, cost isn’t the only deciding factor when buying online; an easy and secure final check out is also important to shoppers.”

PayPal offers shoppers a faster and easier way to shop online without having to enter sensitive financial details each time, or even to share them with the online retailer. According to the Payments Council Report, PayPal is the UK’s favourite online payment service, with a 21% share of consumer internet payments. Almost one in every ten pounds spent online globally is currently sent via PayPal.