As we approach the end of the year, UK retailers are taking a calculated look at their progress. With the autumn budget growth forecast slashed from 2% to 1.5%, and productivity growth set to fall in line, there's a general squeeze on the economy all around.
Due to rising inflation and stagnant wages, the entire retail sector has risen only 2.9% this year and growth continues to slow. In fact, the ONS compares the December sales slump to April 2012 - when fierce rains and flooding prevented shoppers from getting to the stores. It's going to be a wet Christmas.
The slump has taken its toll on the e-commerce market too, which has curbed its 17.8% growth in 2016 down to 14%. Nevertheless, there is good news for digital retailers. Online and mobile sales continue to eat up the competition, with UK e-commerce retailers hacking into 17.9% of the total retail market. So, what is it that's keeping the e-commerce market so strong?
As technology - especially mobile - plays an increasingly central role in our lives, more and more consumers are taking advantage of the ease and convenience of ordering online. With the rapid rise of voice and contextual search, the barriers between users and their devices are breaking down. And with the explosion of digital home assistants like Alexa and Google Home it's quicker and easier than ever to order online. In fact, if the market for at-home AI continues to grow at its current rate, there'll be more assistants than people in the world by 2021.
For online retailers, this means an increased pressure to respond to the changing rules of search engine optimization. Contextual search markers such as location, time of day, age, and individual preferences, are more and more important to search algorithms by the day. SEO content with a firmly embedded contextual strategy is going to be the key to unlocking consistent growth online for everyone from the biggest retailers down to the tiniest. However, the rise of contextual search opens new opportunities for local brick-and-mortar retailers who can leverage digital location services as a new dimension in their interactions with consumers.
The growth of e-commerce can only mean good news for paid media distributors, who have seen astronomic increases in ad revenue. Alphabet - Google's parent company - is expected to make $73.8 billion dollars in 2017. Competition in these marketplaces is increasingly high, with many companies spending a majority of their marketing budgets on PPC. The social media ad industry alone will absorb $41 billion in business' cash.
Now is a great time to be a strong player in the e-commerce realm. It's an ever-evolving space with constant innovation and new opportunities at every turn. As always, though, it's down to you to work out what digital strategies will play to your strengths and enable you to grow with the rest of the market. Though retail at large is in a slump, digital is taking over. How far will its rise take you?
