Despite the economic uncertainties surrounding Brexit, British consumers are purchasing more than ever from overseas retailers, according to new research from RetailMeNot and VoucherCodes. The research reveals that spending from overseas retailers reached a share of 12.8 per cent in 2016, showing minimal signs of stagnating from 12.4 per cent in 2015.
The total cost of purchases made abroad in 2016 increased to £7.7 billion in 2016, rising from £6.7 billion in 2015. Flying in the face of the country's current political ambiguity, this is predicted to increase by 8.9 per cent this year to £8.4 billion.
Expanding this to the entirety of Europe, the increase is even higher, with overseas retail purchases growing almost 20 per cent to £32.5 billion in 2016. This is expected to hit £37.7 billion in 2017.
When looking at the results of the UK's cross-border spend however, the research reveals that we Brits aren't as likely to purchase from overseas retailers compared to the rest of Europe. While the UK saw cross-border sales account for 12.8 per cent of total online sales, countries including Germany, France and the Netherlands saw shares as high as 25 per cent. Whilst cross-border trade is undeniably on the rise in the UK, it is growing at a significantly lower rate than that of its European counterparts.
In terms of value however, the UK continues to be one of the leading European markets and is predicted to spend an average of £8.42 billion abroad this year. While countries such as Spain, France and the Netherlands have a significantly higher percentage share in cross-border trade, the overall value these countries are spending is considerbaly less. Spain, for example, will spend just £1.9 billion in cross-border trade compared to £8.4 billion in the UK.
The research also found that the UK economy and ecommerce in general has continued to perform adequately since the public voted to leave the EU. Consumer confidence – which was forecast to collapse by the Bank of England – has been buoyant, and 2016 proved to be a stable year for growth. This is estimated to continue throughout 2017.
However overall GDP growth has developed at a slightly slower rate than previous years, slowing from 2.0 per cent in 2016 to 1.5 per cent predicted by the end of 2017. Whilst this is still a growth nonetheless, consumer spending is equally predicted to develop at a staggered rate. Although spending grew by 2.6 per cent in 2015 and 2.8 per cent in 2016 and it is expected to increase by just 1.6 per cent in 2017 and a further 1.3 per cent in 2018.
Lastly, the research highlights that e-wallets (such as Apple Pay and Android Pay) are on the rise, with one in 10 Brits now using this as their preferred method of payment for online transactions. Debit cards are still as expected the majority choice with 41 per cent of the UK using them, closely followed by credit cards (37 per cent).
Since credit card providers in the UK are legally obliged to refund payments made for a failed retail transaction, this payment method is perceived as reassuring for many customers. However, e-wallets and payment integrators have continued to grow in popularity in recent years due to their convenience. Payment integrators enable shoppers to register their details and use a variety of card and bank payment methods online, making it easier than ever for consumers to make a transaction at the tap of a button.
Speaking of all the findings, Claire Davenport, managing director at VoucherCodes.co.uk, part of RetailMeNot, said: “Brexit or no Brexit, cross-border trade is becoming increasingly attractive to consumers for so many reasons. Not only does it allow shoppers the access to so many more products at potentially cheaper prices, but delivery options are developing enabling customers to get the products delivered faster than ever, particularly for countries that are in close proximity.
"More and more retailers are now expanding internationally and often the customer is not even aware they are making an overseas purchase. With varied payment options widely available and simplified return policies, consumer confidence in cross-border trade is growing at an unprecedented rate and is offering a fantastic solution for both consumers seeking lower cost and available items, and retailers looking to increase global sales.”