An overview of the UK Retail Market.

It is clear that there are numerous opportunities in the UK retail market and especially in the food and beverage sector, as it has consistently been the larger retail sector for the last 25 years. The UK imports around 46% of the total food it consumes and is reliant on both imports and its agricultural sector to feed its population and drive economic growth.  In 2020, the United Kingdom was the world’s biggest importer of Preserved Meat ($878M), Fermented Milk Products ($531M). It is clear that the UK is one of the most prominent markets especially for countries with a highly developed agricultural sector like the Netherlands, France, and Germany. The post-pandemic retail environment will be highly affected by the sustainable and digital transformation. 

Trends: Sustainable Transition.

In the middle of major social and environmental crises and technological developments, the retail industry has been called upon by the governments and the consumers as well to take measures in order to combat major issues, like climate change. Businesses are becoming more and more conscious about their energy consumption and their carbon footprint by exploring new and more sustainable ways of production while at the same time they are obligated to report in their annual reports the measures taken for environmental and social governance (ESG) purposes. Along with the regulators, it is also the consumers that push for active change.  

The majority of consumers claim that they take into consideration the actions that the companies take towards the amelioration of society and environment, tending to sabotage companies that use false environmental claims (greenwashing) or they do not comply with the environmental demands. Another challenge of the UK retail companies is to attract the Gen Z consumers, whose consuming power steadily increases. This is the generation that their purchase behaviours are strongly influenced by the commitments to social and environmental sustainability. 

Circularity is now in the spotlight, especially in the fashion industry. Being highly committed to the targets of 2050 for zero emissions, the UK fashion market is one of the most prominent. Searches for ‘circular fashion’ increased by 100 percent and searches for ‘vintage fashion’ went up by 22%. In 2020, it was estimated that 20% of the UK consumers chose sustainable fashion items, with 53% of men and 47% of women in the UK buying from sustainable brands.

Online vs Offline retail.

It is well known that we are finding ourselves in the era of digital revolution. Businesses, governments and consumers have to adapt to this new status-quo. Due to the high competition levels and its strategic significance the companies in the retail sector have to keep up with the new technologies and develop the customer experience and their operational management by adopting new technologies throughout. 

Undoubtedly, the United Kingdom is the leading market in Europe in online shopping. In 2021 only, the revenue of e-commerce in the United Kingdom reached a total of 129 billion British pound, almost 15% higher than in 2020, and over triple the revenue of UK e-commerce in 2015.The pandemic of course contributed a lot in this transformation and it is estimated that the numbers will continue to rise every year from now on as both consumers and businesses have adapted to this new reality. 

Nevertheless, offline stores remain on the top of the consumer’s preferences with their popularity reviving after the pandemic. According to the Office for National Statistics, increased household income and population between 2007 and 2020 may explain the lack of a substitution effect between in-store and online retailing and the higher level of total retail spending.

The spotlight on the UK vegan consumers. 

Research from NielsenIQ found that 2.7 million households in the UK claimed that they have a vegan or vegetarian living on the premises, while 10.5 million households, at least once a week, were replacing meat-based meals with vegan or vegetarian alternatives (2021).It is clear that veganism and vegetarianism, especially in the UK, is on the rise. The big retail players have grabbed this opportunity by supporting this trend. They expand their vegan options portfolio in their stores, and make vegan recipe suggestions on their websites. At the same time, the plant-based food market is expected to almost double till 2026 compared to 2021, as there are not only vegans that choose plant-based alternatives, but flexitarians as well. Most of the consumers that chose this lifestyle are doing it mainly for health and sustainable purposes. 

Vegan products are not only popular in the food and beverages market but in other sectors like fashion and cosmetics as well. More and more consumers tend to choose brands and products that are vegan and/ or cruelty free. Google Trends also report breakout searches of the terms ”cruelty free” and “vegan” in the beauty and fitness category.At the same time, in the fashion industry the faux leather market is expected to reach up to $89.6 billion by 2025 aligning with the demands of the market, while more and more consumers are searching for organically made products.

Market entry opportunities.

Being the biggest and the most diverse retail market, the UK offers numerous opportunities for market entries. Culturally, British people embrace consumerism and tend to do spontaneous shopping. 

Approximately 43% of UK’s shopping is taking place online and more specifically via smartphones or tablets, making online and mobile retailing the fastest growing market of this sector in whole Europe. Companies that innovate in this sector are expected to flourish especially in the proceeding years. One successful example of a dutch company that has managed to conquer the UK food delivery market is the Amsterdam based Just Eat Takeaway.gr (Thuisbezorgt), being the number one platform in its category. Companies that want to thrive in online retailing in the UK have to continually focus on improving design and convenience for the customers, making the user experience simple and presenting all the information needed. Variety is also a key that can differentiate your product from the competitor. The German online retail platform has proven to be a success story in the UK e-commerce market, by managing to compete with local giants such as ASOS. 

The demand for plant-based meat and dairy alternatives has boomed in recent years in most parts of the world, but especially in the UK. The plant-based market has doubled its value from 2016 to 2020 to around $1.6 billion with the majority of the consumers being mainly young people living in the city centres. With the number of vegans and flexitarians surging every year, the UK is considered the European country with the most vegans, while being simultaneously among the top 5 countries that have the most reported vegan citizens worldwide. Plant-based food companies like Heura from Spain and Vivera from the Netherlands, are some of the few examples of popular plant-based brands in the UK, as they have managed to gain the consumers and a place in the shelves of huge supermarkets like ASDA, Waitrose, and Tesco.