In the last few weeks, a few headlines have caught my eye.
Firstly, the UK has officially become the 3rd largest ecommerce economy in the world, behind China, and only just behind South Korea (by only 0.1% of GDP). This should be a timely reminder that UK consumers and businesses are extremely advanced in most things digital. It’s why the likes of Uber and Amazon often include the UK in their international expansion plans in the early stages!
The digital sector contributes over £149billion to our economy and is a key source of jobs with more than 1.5 million people working in related businesses.
The second eye catching fact I read recently is that the driver shortages we are regularly hearing about in the supply chain also exists in ‘last mile’ distribution.
We know the Convenience and Hospitality sectors are accelerating the use of home shopping/delivery apps and online ordering. However, that opportunity is increasingly being hampered by the lack of delivery drivers which is having serious impact on operators’ ability to physically deliver what they promise.
The number of temporary delivery drivers ready to pick up shifts has tumbled by OVER A QUARTER, with many leaving flexible working (or the gig economy) behind.
Thousands have returned to their pre-pandemic professionals, according to Indeed Flex, the job sites flexible working division. In London, the number of available drivers has fallen by 14% while the number of shifts available has risen by 53%. This isn’t a London centric problem – in Edinburgh, the number of drivers has plummeted by 54% while at the same time, the number of available shifts posted by employers has spiked by 131%.
There’s an irony that as demand grows and comfort factors increase around the ease and use of online ordering, we are now in a position where fulfilment cannot keep pace! You can have the best online platform in the world but if you can’t get the products delivered, it’s a challenge to say the least.
I don’t know if you have tried to book an Uber cab in recent months (or Bolt) but they’re very scarce. Waiting times are long, and my last 3 bookings have all been cancelled.
Ecommerce operators may find it hard to find people to deliver product to consumers’ homes or places of work. Traditional bricks and mortar retailers/operators may find it easier to entice shoppers back into their existing physical outlets than setting up or expanding home deliveries. I notice that supermarkets’ share of sales being done online is down in recent months compared to the height of the lockdowns. So, we can’t take for granted that everyone is embracing digital.
TWC Trends data shows that 51% of UK consumers say that shopping and ordering online through their local convenience stores is a no brainer – a figure which rose to 65% for Millennials and 55% for Gen Z). The younger generations are leading the digital revolution. Just don’t forget, though, we have a lot of older people living in the UK…so the change will take time. But we are already the 3rd most digitally savvy nation.
My third eye-catching market trend spot is on subscription services:
Indeed, the subscription box sector is on course to reach over £1bn in market value by 2022** (City AM) and already an estimated 6.3m of us aged 18 or over are signed up to some form of subscription box service in the UK.
- 27.4% of Brits were signed up for a subscription box in February 2019.
- UK residents spend an average of £2 billion on subscription box services every year.
- The average spend on a subscription box in Great Britain ranges from £7.5 to £30.
- Food is the most popular subscription box category in Britain.
- Netflix is the leader among entertainment subscription services.
- British women are more likely to sign up for subscription boxes than men are.
- Londoners account for the highest percentage of subscriptions.
- 47.2% of Brits bought a subscription box based on a recommendation.
- The biggest problem for UK subscription businesses is “churn”.
- The UK subscription market is expected to grow 72% by 2022 across all categories.
The subscription lifestyle market is currently booming with increasing numbers of consumers opting for the convenience it provides. That includes groceries, clothing, beer, contact lenses – anything that is purchased on a repeat or regular basis.
How many of a convenience store’s sales are in regular, repeat purchases? Quite a lot I’d argue. Newspapers are already ‘bought’ (i.e. collected) on subscription from c-stores. What other products could follow that theme? Pret now does subscription coffee….
Interesting times ahead.