Forrester announced its newest report “Europe-5 Online Retail Forecast, 2023 To 2028” on the blog and summarized the most interesting outlooks. Let’s take a closer look at Forrester’s predictions.
The five biggest economies in Europe, in order of size, are Germany, the UK, France, Italy and Spain. All of them represent 70% of the total GDP of Western European countries The last few years were significantly impacted by COVID-19. The pandemic influenced global supply chains and inflation, among other factors, with the war in Ukraine being worth mentioning. Forrester predicts the following trends:
Prediction 1 – after the negative growth in 2020, total retail sales for Europe-5 countries grew strongly in 2021 and 2022. Total retail sales growth slowed in 2023 but is still higher than the average growth during the pre-pandemic years from 2014 to 2019. Forrester forecasts that total retail sales in the mentioned 5 countries will reach 2.7 trillion Euro by 2028. The top three economies remain the same – Germany, the UK and France.
Prediction 2 – After very strong (driven by the COVID-19 pandemic) growth of online sales in 2020, online retail sales experienced negative growth in 2022 and returned to a positive trend in 2023, however, it was much below the average growth during the pre-pandemic years from 2014 to 2019. Forrester expects that online retail sales growth to come back to pre-pandemic levels in 2024 and in the next years. In total, Forrester predicts that total online sales will grow from 372 billion this year up to 579 billion in 2028. It means a five-year mixed annual growth rate of 9.2%.
Prediction 3 – Online retail penetration, which is the percentage of online retail sales out of total retail sales, has been steadily increasing in the biggest five economies. In 2022 online retail penetration declined, due to general negative growth in online retail sales. This year online retail penetration stays flat because of moderate online retail sales growth. Forester however expects that online retail penetration of the biggest 5 economies will increase from 16% in 2023 to 22% in 2028. The biggest growth is predicted in the UK.
Prediction 4 – Offline sales recorded negative growth in 2020 (again, driven in general by the pandemic) growth came back in a positive way in 2021. 2022 was the first year when offline retail growth overtook online retail growth as more consumers shopped in stores, and this trend continued in the current year. Forrester predicts that combined offline retail sales in the biggest European economies will reach €2.1 trillion by 2028.
Conclusion: The prediction looks promising after the very unstable pandemic followed by the war in Ukraine and high inflation in all European countries. Most predictions, including those from Forrester, suggest that both offline and online sales should grow in the coming years. Obviously, it looks like we are still uncertain what the situation will be like in Ukraine and many other factors can influence the general economy, but at the moment predictions look optimistic. More growth may be also driven by the exponential growth of AI tools that allow companies to reduce costs and generate higher profits.
The full report is available on the Forrester website.