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Internet retail spending will grow by £12.3 billion to £21.3 billion by the end of 2011, according to new research from Experian and PayPal

Online retailers are set to ride to the rescue of Britain’s retail sector by posting the only growth in British retailing before 2012, according to the forecasts in a new report conducted for PayPal.

The PayPal UK Online Retail Report, undertaken by Experian, forecasts that by the end of 2011, high street sales will plummet by up to £8.3 billion while online retail sales in the UK are set to grow by up to 137% per cent. This expected growth, amounting to as much as £12.3 billion, would see the value of annual online retail sales jump from just under £9 billion to £21.3 billion.

The report is part of a major study for PayPal into the future of online retail and its role during and after the current recession. It suggests that the massive online growth is driven by a new breed of ‘considered consumers’ who are heading online to find better value.

The report forecasts that, from 2008 to 2011:

• Retail sales figures will grow by just 0.2%
• High street sales figures will decrease by up to 1.4%
• Overall non-store (catalogue and online) sales will increase by 49%

The figures would see the online retail market more than double its market share from 3.2% in 2008 to a possible 7.4% of total retail spending by the end of 2011.

“The value of online retail can no longer be dismissed as a sideshow. Its phenomenal growth is not only forecast to deliver sales of as much as £21.3 billion by 2011, but a £12.3 billion increase will also ensure that the entire UK retail sector is growing again by the end of 2011,” says Carl Scheible, managing director at PayPal UK.

“The recession has been tough for many UK retailers as they deal with the slowdown and its knock-on impact on consumer spending,” he adds. “Of course, many of the major high street brands have actually enjoyed the online boom, despite facing challenges in their own stores. The improvements in online shopping will continue to drive consumers until they are spending one in every 14 pounds online.”

More and more retailers are adding PayPal to their list of payment options as one in three UK online shoppers say it’s their preferred payment method…

PayPal is on a bit of a roll. Its share of consumer internet payments is up 5% over the last year, from 16% to 21%, 30% of UK online shoppers now say they prefer to use PayPal over any other form of payment online and over 120,000 retailers in Europe now accept PayPal.

“Major UK brands which have launched with PayPal in recent months include William Hill, CDWow, Victor Chandler and all the Arcadia brands; Burton, Dorothy Perkins, Evans, Miss Selfridge, Topman, Topshop and Wallis,” says Mark Hodson, marketing director at PayPal UK.

“Online shoppers are still concerned about identity theft, and are rightly wary of typing their card details on ecommerce sites,” Hodson explains. “PayPal offers the peace of mind that their financial details are not shared.”

Speed is also a factor, Hodson believes. “Consumers are demanding faster online shopping experiences, which are both safe and secure. The convenience of being able to checkout in just a few clicks without having to type in payment details or address are what make PayPal such a popular way to pay.”

A new PayPal debit card could also drive acceptance forward. The card is a joint venture with RBS and carries a Visa logo. No credit checks are carried out and consumers simply pay a £4.95 fee to get a card. They can then top up the card direct from their PayPal account or at any of the 19,800 PayPoint outlets around the country and spend the funds loaded onto the card online, on the high street or even abroad at any Visa merchant.

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