The Covid pandemic may have wiped out thousands of firms across the UK but it has turbocharged the online retail market, amid forecasts that by 2025 the market will be nearly a decade ahead of schedule.
A new analysis from Experian has charted the changing face of British business since 2016 and offers a snapshot into the health of British firms and identifies growth areas which could flourish in the future.
Business growth in established sectors on which the economy relies, such as construction, finance and property, have stood up well through this period, despite concerns about both Covid and Brexit.
The number of registered digital and traditional retail businesses grew by 8% over the last five years, of which 7% occurred in the past year alone, driven by the online sales boom.
The sector includes small, independent companies which have been set-up from home, as people sought to use lockdown as a way of establishing their own ventures.
According to Experian Economics, there has been a significant increase in the expansion of online retail. Online retail sales experienced four years of expected growth in just 12 months, rising from 12% to more than 34% of total retail spend – a level that previous estimates anticipated would not be reached until 2025.
By 2025, Experian Economics predicts that online sales will have reached levels not previously expected until 2035 – a full decade of digital acceleration which will have a lasting impact on the UK economy.
Overall, the transportation and selling of goods sector, including wholesalers and the logistics companies which help support online delivery services, grew by 8.7% and now makes up 16.2% of the economy.
Experian, UK&I chief economist Mohammed Chaudhri said: “The last twelve months have had a profound effect on all types of businesses and sectors. What’s clear is that there is an enormous opportunity to capitalise on changing consumer behaviours and accelerated digitisation to supercharge economic recovery.
“The pandemic forced an unprecedented pace of change which has opened up new opportunities not only for companies with established digital presences such as fintechs and retailers, but for sectors like delivery and logistics who will see the benefits as these new trends become established behaviours.”
Several established sectors have shown resilience and consistency throughout the pandemic.
The number of construction businesses increased by 7.1% over the last five years. Analysing where these new businesses are located, the number of firms in London rose by 18%, followed by Northern Ireland (10%) and Wales (9%).
The volume of firms in the finance sector grew by 11.5%, boosted by the UK’s burgeoning fintech operators, which are driving digital innovation and new services in the space. Property saw the largest increase (32.7%) of all sectors, with both the West (41%) and East Midlands (40%) outperforming London (28%) and the South-East (32%).
Overall, the service sector makes-up nearly a third of British businesses (30.5%), followed by transportation and selling of goods (16.2%) and leisure (10.8%). The primary industries – made up of agriculture, forestry and fishing and mining – are the smallest sector, accounting for just 1.7% of the total economy.
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