The UK is one of the leading retail markets in Europe, home to the highest proportion of international retailers and Europe’s largest e-commerce market.
With a prestigious retail history, the UK is home to everything from internationally recognised brands to artisanal small businesses. Its retail sector has proven resilient, with sales reaching £403 billion in 2020. The UK builds on this success, providing direct support to the industry along with a host of retail technology networks. This, combined with the sector’s size and variety, provides a range of market opportunities for retail businesses choosing to locate to the UK.
With one of the largest retail market in Europe, the UK offers a number of investment opportunities:
The world’s wealthiest shoppers spend an average of over £29,000 in UK stores, the highest average spend of all European countries. Globally, the UK is the second most popular destination for elite shoppers, taking a 31% share of the market. Strength in this field makes the UK an exciting location for the provision of services in high-end retail.
The UK has the largest mobile retail sector in Europe, with 43% of retail being conducted through smart phones and tablets. The transformation of shopping has provided new opportunities in mobile retail, which is now the fastest growing segment of the retail sector in the UK. Companies and innovators can make use of the services provided by the existing market, along with the excellent skills and talent present in the UK.
The fashion industry produces up to 10% of the world’s carbon emissions. The UK has a goal of net zero emissions by 2050 and is changing its consumption patterns to reach this. The Sustainable Fashion Week (SFW) programme launched the first ever sustainable fashion week of this kind in the UK. The SFW seeks to empower and upskill the community, helping equip them for a more sustainable relationship with fashion. It includes community gatherings, hubs, and a marketplace to showcase sustainable products.
Support for startups
The UK supports various early-stage companies through a variety of institutions. British Patient Capital exists as an £2.5 billion investment vehicle to increase the availability of patient capital to high-growth businesses. True is Europe’s only retail and consumer investment and innovation firm. It provides valuable services to the industry, investing in economically proven future-fit businesses, pre-empting ever-changing retail, consumer and leisure behaviours.
The UK is a world leader in the development of fintech, which provides many of the skills needed in the retail technology sector. Fintech employs over 76,500 people and this number is set to grow to 105,500 by 2030. UK tech companies are using AI and data analytics to improve efficiency, customer satisfaction and support.
With almost 3 million workers, retail is the UK’s largest private sector employer. London is home to prestigious shopping areas, such as Oxford Street and Mayfair, along with high-end retailers such as Tiffany and Co and Burberry. The UK takes a 31% share of this market.
The UK is pioneering in e-commerce and retail technology. Over £92 billion was made in 2021 through online sales, the highest in Europe. The government actively supports these efforts through DIT, helping UK-based companies expand into emerging markets.
Key UK assets
The UK has a multitude of notable resources and assets, ranging from retail technology testbeds to logistics infrastructure:
UK Export Finance
The UK Export Finance (UKEF) is the UK’s export credit agency. It helps companies in the UK win export contracts by providing attractive financing terms to their buyers and assists them in fulfilling orders by supporting working capital loans. From 2016 to 2021, UKEF demonstrated this assistance through the provision of £18.5 billion in support for UK exports.
The Digital Commerce Team at the Department for International Trade (DIT)
DIT has a dedicated team of experts in digital trade, providing investors with market entry advice and encouraging connections throughout the digital ecosystem.
The government is committed to improving infrastructure to support continued growth. The National Infrastructure Strategy has outlined £100 billion to improve connectivity in transport systems and works towards the government’s goal of net zero emissions by 2050.
Retail technology testbeds
There are retail technology testbeds across the UK, including the UK Digital Retail Innovation Centre. This is a national centre for testing and developing disruptive innovations such as holographic ‘virtual employees’, AI, 3D scanning and printing of products, and drone deliveries.
Textile innovation in the UK ranks 3rd globally and 1st in Europe for patent generation. E-commerce and retail technology can also draw on the skills and capabilities provided by AI and fintech, making use of the UK’s competitive advantage in both. The transferability of developments in AI is also enhanced by the UK Tech Cluster Group. They enable collaboration and provide a forum that engages thousands of technology businesses, encouraging innovation in AI.
The UK Fashion and Textile Association (UKFT), through the Future Fashion Factory, provide a £5.4 million R&D partnership. This is for exploring and developing new digital and advanced textile technologies to boost the design of high-value creative products. The UKFT pioneers innovation in sustainability, working with IBM, Tech Data, and the Future Fashion Factory to design, prototype and pilot a new technology platform. This will help the British fashion and textile industry drive sustainability and profitability through increased transparency within the supply chain.
Business and government support
Coronavirus (COVID-19) was a catalyst in changing patterns of consumer behaviour towards e-commerce. The government is helping UK businesses adapt to online retail through various programmes. The UK Export Academy provides sector-specific webinars, masterclasses and virtual missions. More experienced exporters make use of DIT’s free sector faculties. These provide information that allows UK businesses to operate effectively in international markets and sectors.
Businesses can also make use of retail technology networks. JLAB is an accelerator programme looking for start-ups and existing businesses that can provide disruptive retail solutions, providing them the chance to become part of the John Lewis or Waitrose supply chain.
China’s retail giant Alibaba has opened two data centres in London, bringing its business into the UK for the first time. They offer a wide range of services such as elastic computing, storage and big data analytics, from which both the financial and retail sector can take advantage.
Sydney-based e-commerce technology company Comestri has expanded its UK operation, after receiving enquiries from UK merchants for support with the huge growth of e-commerce. Their hub will help retailers streamline operations and meet these new challenges. This expansion to the UK reflects the growth and opportunities present in the British e-commerce market.
Amazon, the US e-commerce giant, has opened its first general store in the UK, selling items including books, technology and toys. It is continuing its expansion in physical retail after successes in the US. This is the first Amazon 4-star store outside the US, and it will be located at the Bluewater shopping centre, near Dartford in Kent.
As part of a £1.3 billion expansion plan, Aldi will create 2,000 jobs and open 100 stores across the UK from 2021 to 2023, trialling a new checkout-free store in Greenwich also. This will entail the use of cameras and data analytics, a reflection of the evolution of British retail.