Category: Europe

• Online spending now accounts for a fifth of all UK card spend and is growing 11 per cent a year
• £107 billion is expected to be spent online in the UK this year – an average of £4,000 by each household
• A third of UK online sales are made on a mobile device, with men most likely to buy on their phone or tablet

As online shopping celebrated its 30th anniversary last month, new figures show that online transactions now account for 20 per cent of all credit and debit card spending in the UK.

According to Barclaycard, which processes nearly half of all the UK’s debit and credit card payments, more consumers using online shopping than ever before is helping push up spending on the web by 11 per cent a year.

This reported growth is supported by figures from IMRG, the UK’s industry association for e-retail, which expects the UK to spend £107 billion online this year, breaking the £100 billion per annum mark for the first time. This equates to an average of £4,000 spent online by every UK household.

Barclaycard’s data shows that music downloads have become the fastest growing category of online spending – last year alone it grew by 124 per cent and 79 per cent of all music is now bought online.

Airline spending occupies the top spot for online spend share at 80 per cent, propelled by the boom in low cost airlines and the move to e-ticketing by carriers. Already this year the number of online airline transactions is up 5.6 per cent and total spend is up 4.2 per cent on an inflation-adjusted basis.

As more concert and entertainment tickets are sold and advertised on the web, online spending on these events almost doubled last year.  Just under half (49 per cent) of all spending now takes place online; as does 59 per cent of cinema and theatre spending as consumers research events and book online before heading to the venue.

Although spending online in DIY and Garden Centres is still comparatively low, the booming housing market is leading to huge increases with 37 per cent online spend growth this year.

Chris Wood, Barclaycard managing director, said: “Online shopping has come a long way since it first emerged in 1984 and now accounts for one in every five pounds spent on credit and debit cards in the UK. More and more of us are turning to the web to research, compare prices and buy everything from cinema trips and electronics to the latest fashions, making it an inextricable part of modern retail.

“The music and airline industries are prime examples of where businesses have fully embraced the potential of the internet and have made it their main source of business. These sectors show it is vital for retailers to move quickly to keep pace with their customers’ desire to shop online, where they can build deeper relationships and engage with customers, or they risk being left behind.”

The proliferation of mobile devices has clearly driven online spend, as IMRG data shows that nearly half (45 per cent) of visits to online retailers and a third of all online sales now come from mobile devices – smartphones and tablets.

This has in turn led to the morning commute becoming one of our favourite times to browse, with online sales also spiking at lunchtime on laptops and in the evenings on tablets whilst we sofa surf for deals whilst watching TV.

And according to IMRG, men are more likely to buy through a mobile device, at 64 per cent, compared to women at 59 per cent.

Andrew McClelland, chief operations & policy officer at IMRG, said: “Today’s consumers are just getting to grips with the opportunities that technology brings to their everyday lives. Everything from booking a taxi through to buying a car can be done through digital channels.

“Over the next few years, internet shopping will increasingly become the norm as more of us become accustomed to researching and buying products through online stores. The devices we purchase from are also likely to change in the next few years, whether it’s through shopping online using our smart watch, or programming our smart fridges to order groceries online as soon as they’ve run out.”

Newly released data from Kantar Media’s syndicated study, futurePROOF, shows that tablets have become mainstream consumer devices, with more than half of 16-44s now having access to them.

45% of all GB adults now have a tablet compared to 32% a year ago, and 36% at the end of 2013. The highest penetration is among 35-44s where 58% of adults now have at least one tablet in their home. Presence of children is the strongest driver of this, with 69% of parents of school age children having a tablet at home.

In terms of device operating systems within the home, 37% of users now have an Android based tablet, up 10 percentage points in six months, and 15% own Kindle Fire or Fire HD tablets.  Apple remains the market leader with 56% of tablet users having an iPad, although this is down from 63% in the last six months. The shift towards Android devices is linked with their relative affordability compared with Apple’s iPad.

The increasing ubiquity of tablets is also changing their role. More than four out of ten users now live in a home with more than one tablet (up six percentage points in the last six months). Consequently, tablets are moving from being a shared device to an increasingly personal one, opening up new content and advertising opportunities for targeting and engaging specific users much more effectively.

As consumers become more comfortable with tablets, they are gaining a clearly defined role in households with multiple devices. Tablets are more likely than smartphones to be used for watching or catching up on TV programmes or film, YouTube, or gaming; anything where a larger, better screen will enhance the experience.

Tablets are also playing a growing role in the purchase process with 53% of tablet users researching information on a product or service using their device, up from 44% six months ago.

Fewer users are taking their tablets out of their homes with just 8% using their tablet out-of-home every day, and 44% never taking their tablet out the front door, up from 36% six months ago. Rather than indicating that people have stopped taking tablets out with them, this reflects the different usage patterns of new tablet owners, who are driving the rapid growth.

Trevor Vagg, director, Kantar Media Custom, said: “Tablets have rapidly become part of our digital lives, with Christmas sales and cheaper, Android powered devices all contributing to make tablets a ‘need to have’ rather than just a ‘nice to have’. The arrival of cheaper Android based tablets such as Tesco’s Hudl and the Kindle Fire has turned what was a premium device into something that’s much more ubiquitous but also increasingly as personal as the smartphone we use when we are on the go. These shifts open new doors for advertisers in terms of targeted messaging opportunities.”

A survey of more than 2,500 UK consumers has found that nine out of ten (89 per cent) believe most brands put more effort into attracting new customers than looking after existing ones.

The research, which was carried out by The Grass Roots Group, revealed this leaves customers feeling frustrated, with just under half (49 per cent) even considering switching loyalties if a provider’s special offers are only available to new customers.

In today’s highly competitive market, it is imperative brands do not lose sight of the importance of retaining existing customers, especially when they opt to attract new business with exclusive special offers. More than half (55 per cent) cited loyalty rewards as an important factor when staying with a provider, demonstrating it is an area that must not be ignored to keep customers happy.

Ian Horsham, divisional director, promotions and incentives at The Grass Roots Group, said: “It’s hard to go online or watch TV without being served up special offers for new subscribers or shoppers, making it all too easy for consumers to become fickle when it comes to loyalty to just one brand.

“Our research has shown that customer loyalty is being compromised and people will switch brands if they feel they are being forgotten or not given the same treatment as new customers.

“Brands are becoming complacent when it comes to customer retention. They concentrate too much on securing new customers, leaving others to feel undervalued. With the cost of customer acquisition five times greater than keeping existing customers happy, this strategy could have a huge impact on revenues and future business success.

“A loyalty scheme should go hand in hand with a new customer programme, as a key part of retaining them once they have made the decision to switch.”

The research was carried out this month and surveyed 2,610 UK consumers about their relationships and loyalty towards the following suppliers: phone and broadband; utilities; insurance; banks; supermarkets; and car manufacturers.