New research on the shopping habits of over 107,000 consumers since the start of the pandemic has shown that COVID-19 impacts drove increased adoption and growth of multichannel retail, further cementing its role in retail going forward. Online channel growth in the six studied countries accelerated significantly during the holidays. Further, in five out of the six countries, online sales from multichannel are growing faster than overall online sales. This means the proportion of online sales supported by a physical store increased during the holidays.
According to the latest report* by GlobalData: ‘Holiday multichannel: United States, United Kingdom, France, Germany. Italy, Spain’, the penetration of online sales reached just over 31% of total sales in the UK and almost 21% in the US. In France online channel penetration reached just over 17% and Germany saw almost 18%. Even Spain and Italy, where online selling is more embryonic, posted an increase in penetration to 9.1% and 8.9% of total retail sales, respectively.
Neil Saunders, Head of Retail at GlobalData, comments: “The usual narrative of online dominating the retail landscape is too simplistic and does not address some of the nuanced shifts occurring in the retail market. Over 2020, retailers moved quickly to make their operations more multichannel and get stores to do some of the heavy lifting in servicing online orders.
“Consumers found options such as collect-from-store shopping and curbside collection very convenient. This is one of the reasons why orders collected from store more than doubled in the US over the holidays, and why countries such as Italy, where online has traditionally been less significant, retailers quickly educated shoppers to the benefits of store-collection.”
In Spain, multichannel accounted for 28% of online sales, up from 26% in the holiday period of 2019. In Italy, the same number was 27% in 2020, up from 24% in 2019.
In France and Germany, multichannel accounted for 21% and 31% of online sales, respectively. Both were slightly up from 2019.
Saunders notes: “Although gains in France and Germany were very marginal, the fact that multichannel increased at all is remarkable – given that many non-essential shops were forced to close for part of the trading period.”
The only country where multichannel sales fell was the UK because non-essential physical stores were closed for most of the holiday period, which reduced the number of people browsing in store before buying online.
In addition to exploring the growth of multichannel, the report also assesses how much of the accelerated online grow was a function of true underlying consumer demand and how much was fueled by pandemic factors such as lockdowns and consumer health concerns.
In all countries, the research found that the pandemic temporarily inflated online penetration. In the UK, where there was a severe lockdown, online penetration increased by almost 12 percentage points solely because of pandemic-related factors. In France, the same figure was four percentage points, and in Germany it was just over three percentage points. In Italy the pandemic inflated online penetration by just over two percentage points. Finally, Spain, which had the shortest shut-down of non-essential stores among European countries studied, had the lowest uplift of just under two percentage points. The US, where the retail economy was open over the holidays, had the second lowest uplift of two percentage points.
Although these figures are only a guide to the effect of the pandemic, they underline the importance of not completely extrapolating online penetration during an exceptional time to future periods when circumstances will normalize.
Saunders comments: “When all UK non-essential stores were closed for most of the holidays, more consumers were forced to shop online. This is an exceptional event that is not driven by natural shopper preferences. Online penetration will come down as the European economies open back up.”
Key findings from the report:
- Over the holidays, US online sales grew by 35% compared to 2019. However, store sales remained in growth and expanded by 2%. Unlike its European counterparts, the US retail economy was not locked down during the holidays, which is one of the reasons US online sales grew at the slowest pace of all countries in the study
- The proportion of online sales supported by a physical store was almost 37% in the US, up from 32% in 2019. Collecting online orders from stores and retailers shipping orders from stores grew by 103% and 80%, respectively.
- The UK saw the most rapid growth in online sales, largely thanks to non-essential retailers being closed for 93% of the holiday period. Compared to 2019, online sales grew by almost 78%
- In the UK, the online channel accounted for 31% of all retail sales over the holidays. However, a lot of this was driven by the lockdown, which meant consumers could not buy from physical non-essential stores. Without the impact of the pandemic, online penetration would have been 20%
- Despite the lockdown, the proportion of online sales supported by a physical store was almost 32%. This was down slightly on 2019 thanks to the extensive lockdown
- Over the holidays, French online sales grew by 36%, compared to 2019. Despite this growth, online still only accounted for 17% of all retail sales over the holiday period. Without the pandemic restrictions, around 13% of retail sales would have been made online
- Largely thanks to increased collection of online orders from stores and an increase in shipping from stores, 21% of online sales were multichannel. This is up from 20% in 2019
- Online sales grew by 43% in Germany, fueled by the closure of non-essential stores in late December, which disrupted Christmas shopping. This pushed up online penetration to 18%. Without the pandemic, online would have accounted for just over 14% of total sales
- Both in-store collection and store shipping of online orders helped to boost the proportion of online sales connected to a store. Just over 31% of all online sales in Germany were linked to a store in some way during the holiday period
- Spanish online sales grew by 36% over the holiday period. Online grew sharply, especially in November as more consumers stayed home. However, online growth moderated slightly in December
- The proportion of online orders connected to stores increased over the holiday period. Over November and December, just over 28% of online orders were supported by stores
- Italian online sales grew by almost 42% over the holiday period. Given the embryonic nature of the Italian online channel, this growth rate is flattered as it comes from a low base
- The proportion of online sales supported by physical stores increased from 24% in holiday 2019 to 27% in holiday 2020. There was particularly sharp growth in customers collecting online orders from stores