UK online retail penetration will be highest in Europe by 2023 in major threat to landlords

Ecommerce

Online retail penetration in the UK is set to be the highest in Europe over the next three years, spelling trouble for retail landlords.

According to new research from Moody’s Analytics, 25 per cent of the UK’s total retail spend will be generated online by 2023.

In comparison, Moody’s expects average online sales penetration across the rest of Europe to be just 15 per cent, though this is up significantly from the 10 per cent predicted before the pandemic.

This shift online is expected to be bad news for the country’s retail landlords, who Moody’s expects will be forced to drop retail rents between “15 and 25 per cent in the next few years to make them more affordable for retailers” and adjust to weaker demand.

READ MORE: Online spend to overtake high street sales this year in first ever “truly digital Christmas”

Aside from diminishing demand for physical retail space, landlords must also contend with continually high business rates and the increased use of Company Voluntary Arrangements (CVAs) to aggressively negotiate rent reductions.

Moody’s analyst Ramzi Kattan said: “UK retail landlords are beginning to take a different approach to leases using a more flexible structure, similar to continental leases, with either shorter leases or more break clauses and a higher proportion of variable rent linked to sales or footfall.”

Earlier this week it was reported that online sales could overtake physical sales for the first time this Christmas shopping season.

Analysts estimated that while overall sales would remain flat at £78 billion, online sales could account for a whopping £39.17 billion of that.

Click here to sign up to Charged free daily email newsletter

Ecommerce

RELATED POSTS

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.

Menu

SUBSCRIBE TO OUR NEWSLETTER

Sign up to our daily newsletter to get all the latest retail tech news and insights direct to your inbox.

  • This field is for validation purposes and should be left unchanged.