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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

The Evolution of Retail Continues

A recent report by Savills, entitled ‘Retail Revolutions, from Digital to Physical’, will give hope to retail landlords as it predicts that the growth of online retailing is rapidly slowing and that some pure ‘e-tailers’ have been transitioning into owning physical retail space, especially within the fashion industry.

Savills reports: ‘For increasingly time poor consumers, the convenience offered by online retailers has become all the more attractive, apparent in its rapid growth. Online retail sales have increased by an average of 11.4% per annum over the last five years, far exceeding the 1.5% growth reported in total UK retail sales.   

‘This rate of growth however, is slowing. GlobalData estimates that online retail sales will expand 8.0% in 2017, slowing to 4.8% by 2022. As a result, online retailing’s penetration rate (share of total retail sales) will start to level out, forecast to reach 18.4% by 2022, only 2.7 percentage points higher than its 2017 estimate. While still a significant figure, it does mean the majority of UK retail sales (81.6%) will continue to take place in stores (offline) by 2022.’   

The online penetration rate differs significantly by sector
The penetration rate of online does differ significantly across sectors and even geographies. At least, or close to, 50% of books, electronics and music & video sales are expected to take place online by 2022 according to GlobalData Retail. Yet, other parts of the retail market will remain relatively immune. For example, only 11.5% of health & beauty sales are forecast to be online by 2022.  

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