European e-commerce sales will surpass €565bn by 2029

In 2029, total retail sales of the Europe-5 economies – France, Germany, Italy, Spain and the UK – will reach €2.7 trillion, according to new Forrester research. Additionally, consumers in the Europe-5 countries will spend €565 billion in 2029 on online purchases, accounting for nearly 21 per cent of total retail sales across these five markets. Factors including a stronger economy, increasing adoption of omnichannel strategies, better price transparency and cross-border marketplace expansion will drive this growth. 

 

Forrester’s research Europe-5 Online Retail Forecast, 2024 To 2029 examines total retail sales for both e-commerce and offline channels, and reveals that the growth of offline retail (such as in stores) is expected to slow significantly, compared with the immediate post-pandemic years when consumers showed a stronger preference for in-store shopping. By 2029, offline retail sales are forecasted to grow at a CAGR of just 1.7 per cent, compared with 8.9 per cent in 2022 and 4.1 per cent in 2023.

 

Forrester also expects that total retail sales, online retail sales and offline retail sales in these five countries will grow in line with pre-pandemic growth rates from 2025 and thereafter.

 

Improving economic conditions will drive total retail sales growth

 

A combination of declining inflation, declining interest rates, falling unemployment rates, rising real disposable incomes, increasing retail trade volumes and a strong rebound in tourism has created a positive economic climate that will support retail sales growth in the Europe-5 countries over the next five years.

 

Discretionary retail sales, which have been subdued over the past two years due to increased spending on essentials because of high inflation, will regain momentum.

 

Price, selection and convenience will remain key drivers for online retail sales growth

 

In the UK, the retail industry is steadily shifting towards digital growth, with online retail sales expected to climb from £130 billion in 2024 to £176 billion by 2029. This expansion is driven by consumer demand for convenience, competitive pricing and seamless omnichannel experiences, placing the UK at the forefront of Europe’s e-commerce market.

 

Indeed, two-thirds of e-commerce growth in the Europe-5 markets will come from an increase in online spending per buyer – and one-third will come from an increase in the online buyer population.

 

Marketplace-driven cross-border e-commerce growth and the increasing market presence of Chinese e-commerce platforms such as AliExpress, SHEIN and Temu in Europe will also contribute to e-commerce growth.

 

Offline retail sales will continue to grow

 

However, offline retail sales will still see a boost in growth through retailers adopting omnichannel strategies to integrate online and offline experiences. Physical stores remain important because many consumers appreciate the tactile experience, the immediacy of purchasing and the opportunity to try products before committing to a purchase. Stores also function as convenient hubs for services such as click-and-collect and returns, enhancing overall customer satisfaction.

 

Retailers such as Decathlon and Zalando are expanding their physical footprint to complement their online platforms, recognising that physical stores can also drive increased online sales in nearby (“catchment”) areas.

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Building digital experiences to optimise customer experience will be covered at Forrester’s CX Summit EMEA. You can register to attend here