UK FASHION ECOMMERCE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

Market Challenges And Opportunities

High returns rate poses a restraint for retailers as it drives up reverse logistics expenses. Building virtual and augmented reality features that can help customers 'try before buying' and reduce returns could be a strategy to overcome this challenge. Competition from global players like ASOS and Zalando also intensifies pressure on domestic brands to innovate constantly on the product and customer experience front to retain consumers.

UK Fashion E-commerce Market Drivers:

Convenience and Flexibility: The convenience and flexibility offered by online fashion shopping is a major driver of the UK Fashion E-commerce market. Busy lifestyles have led consumers to appreciate the ability to shop from anywhere, anytime on their smartphones, tablets, or computers. Ecommerce offers consumers a seamless experience to browse, compare products, and place orders with just a few clicks. Online shopping saves the time and effort of travelling to physical stores. Customers also have the flexibility to return products easily that do not fit well or meet expectations. The hassle-free and personalized shopping experience provided by online fashion retailers continues to attract consumers.

Rise in Internet and Smartphone Penetration: The increasing internet and smartphone penetration among the UK consumers has led to the rapid growth of the online fashion industry. High-speed mobile internet enable consumers to conveniently browse and shop for fashion products on the go. Smartphones allow customers to shop 24/7 at their comfort. Rising ownership of internet-enabled devices like smartphones, tablets and laptops provide consumers access to online fashion stores from any location. According to estimates, there will be over 53 million smartphone users in the U.K. by 2025. This presents a significant growth opportunity for fashion e-tailers.

Influence of Social Media: The popularity of social media platforms like Instagram, Facebook, YouTube, and TikTok is driving the growth of the U.K. online fashion industry. Fashion brands leverage social media for marketing campaigns, promotions, and influencing customers’ purchase decisions. Many customers discover new fashion trends on social media and directly purchase styles promoted by influencers online. The rise of social media fashion influencers who create content on latest styles and trends has supported the market growth. Retailers also run targeted ads on social media to reach customers.

Rising Online Spending: The U.K. has one of the highest internet retailing penetration rates globally. Over the years, U.K. consumers have rapidly adopted online shopping across categories. Fashion is one of the most popular ecommerce categories. The COVID-19 pandemic further accelerated the shift to online channels, with consumers forced to shop digitally. According to Office for National Statistics (ONS) are the UK’s largest independent producer of official statistics and its recognized national statistical institute, online sales accounted for 27% of total U.K. retail sales in January 2021, indicating the dominance of ecommerce. U.K. consumers are highly comfortable purchasing fashion products through digital channels today.

UK Fashion E-commerce Market Opportunities:

Technology Innovation: The UK Fashion E-commerce market is poised for a transformative shift as a recent study by Vogue Business in collaboration with Snap Inc unveils a significant demand for augmented reality (AR) solutions among luxury fashion consumers. A staggering 72% of respondents, comprising 1,100 individuals aged 16-65, emphasized the importance of brands incorporating AR into their shopping experiences. The survey, conducted in April 2023 by Vogue Business, an online fashion industry publication, highlights a burgeoning trend wherein consumers anticipate an increased reliance on AR over the next one to three years. This presents a unique opportunity for fashion brands and retailers to capitalize on this growing demand, with styling and wardrobe consultations ranking as the most sought-after AR experience. Additionally, exploring runway collections, accessing care and repair tutorials, and immersive brand storytelling through AR are identified as promising avenues, underlining the potential for innovative and engaging AR-driven features in the UK Fashion E-commerce market.

The Rise of Sustainable Fashion in UK E-commerce: The UK Fashion E-commerce market is set to witness a pioneering opportunity with the exclusive debut of the "UK Fashion for a Sustainable Future" pop-up gallery. Scheduled to unfold from September 30th to December 31st, 2021, on YOOXYGEN, YOOX's dedicated platform for sustainable products, this one-time project features brands of varying sizes, origins, and founder ages united by an unwavering commitment to sustainability. Positioned within The Road to COP26 initiative, held at UK House Villa Necchi Campiglio from September 29th to October 1st, and integrated into the official All4Climate Italy 2021 programme endorsed by the Italian Ministry for Ecological Transition, this collaboration between an international luxury e-commerce platform and the government symbolizes a unique opportunity to engage a global audience of young consumers. The initiative not only showcases diverse sustainable brands but also aims to influence positive buying behavior, marking a significant stride in the intersection of sustainability and UK fashion ecommerce.

Omnichannel Approach: Many customers still value an in-store experience for factors like trial rooms. Adopting an omnichannel strategy presents an opportunity for fashion e-tailers to integrate their physical and digital channels. Many UK fashion retailers are now offering services like click-and-collect, in-store returns of online purchases, virtual trial rooms, and in-store screens for browsing products. Omnichannel retail provides customers the flexibility to shop seamlessly via any channel, enhancing the experience.

Personalization: Use of Artificial Intelligence, machine learning, and data analytics presents the opportunity for U.K. online fashion retailers to offer personalized experiences to each customer. Features like recommending products based on past purchases, size preferences and style profiles help retailers provide an individualized shopping experience. Personalized promotions, customized product recommendations and tailored advertisements help build loyalty. Offering personalized experiences both online and in-store can be a differentiating factor.

UK Fashion E-commerce Market Restraints:

• Delivery Issues: Delivery related issues pose a major restraint for U.K. Fashion E-commerce. Customers expect fast and reliable delivery at low costs. However, factors like poor logistics infrastructure in some areas, inefficient processes, returns and exchanges can negatively impact delivery experiences. Delayed shipments or damaged, inaccurate orders can discourage consumers from repeat purchases. Investing in delivery capabilities is essential for retailers to overcome this barrier.
• Security and Privacy Concerns: Despite growth, security and privacy concerns regarding the safety of online payments and personal data continue to make some consumers wary of Fashion E-commerce. Instances of online fraud, phishing scams and hacking make shoppers apprehensive about risks like theft of financial information. Retailers need to implement robust cybersecurity measures, assure customers about transaction safety, and ensure compliance with regulations around data protection to build trust.
• High Logistics Costs: The logistics costs associated with operating Fashion E-commerce are quite high. Costs include warehousing, inventory management, packaging, shipping, and potential returns processing. These reduce profit margins, especially when trying to offer conveniences like next day delivery. Order values in fashion tend to be lower compared to categories like electronics. Optimizing supply chains and logistics will be key for the profitability and growth of Fashion E-commerce.