In 2025, UK total retail sales are projected to reach £599.07 billion ($744.87 billion), with online spending accounting for 30.7% of this total. This marks a slight increase from previous years but suggests a plateau in e-commerce growth. The UK remains the third-largest e-commerce market globally, following China and the U.S., with consumer e-commerce now comprising 36.3% of the total retail market. However, the growth rate is moderating, indicating a transition from rapid expansion to more sustainable growth.
Why Is Online Shopping Growth Slowing?
Several factors contribute to the deceleration of e-commerce growth in the UK:
1. Economic Pressures
Rising inflation, increased borrowing costs, and higher taxes have led to reduced disposable income for many consumers. This economic strain is causing shoppers to be more selective in their spending, often prioritizing essential goods over discretionary items.
2. Market Saturation
With a high percentage of the population already shopping online, the UK e-commerce market is approaching saturation. This limits the potential for new customer acquisition, leading to slower growth rates.
3. Increased Competition
The entry of global e-commerce giants and the rise of niche online marketplaces have intensified competition. Established retailers are finding it challenging to maintain market share amidst this crowded landscape.
4. Consumer Behavior Shifts
Recent surveys indicate that while online shopping remains popular, consumer behavior is evolving. For instance, 63% of UK adults in 2024 preferred to do their food shopping online rather than in-store. However, there’s a growing emphasis on value, with consumers seeking better deals and prioritizing quality over convenience.
Sector-Specific Insights
Fashion Retail
Brands like Next have reported that the major structural shift from physical stores to online retail is behind them. Next plans to expand its physical trading space in the UK by 0.4% in the fiscal year ending January 2026, marking the first increase in over five years.
Grocery Sector
Online grocery retailing has shown resilience, with some segments returning to real-term growth. However, the overall growth rate is slowing as consumers become more discerning in their online grocery purchases.
Looking Ahead
While the rapid growth phase may be over, the UK e-commerce market is not in decline. Businesses are adapting by focusing on customer retention, enhancing user experiences, and leveraging technologies like AI to personalize shopping journeys. Additionally, cross-border sales are increasing, highlighting international markets as a key growth driver.
Conclusion
The UK e-commerce sector in 2025 is transitioning towards a phase of sustainable growth. While the days of double-digit expansion may be behind, the market remains robust. Retailers that adapt to changing consumer behaviors and economic conditions will continue to thrive in this evolving landscape.
