Analysts: UK to become e-commerce capital of the world

In the future 81 per cent of the UK population will be living in urban areas. There will be 200 million connected devices and one in four British citizens will be shopping online – the highest number in the world, per capita. The over 65s will represent a fifth of the population. The country’s South East region will grow to become the second largest region after London, accounting for 15.3 per cent of total GDP. That’s all if Frost & Sullivan’s 'New Mega Trends in the UK' analysis, which looks forward to 2025, turns out to be correct. However, even if there are only half right the flavor of what might take place in the next year if of interest to all sectors of the industry.

In the report, which is being launched on 14 May, Frost & Sullivan details and analyses 12 New Mega Trends that will drive growth and innovation in the UK. “These are new areas of growth in key industries that will help economic development, boost private sector investment and promote partnerships with overseas companies,” explains Frost & Sullivan Partner Sarwant Singh.

Frost and Sullivan offer 12 ‘mega trends’ that will shape Britain

One of the most interesting and important Mega Trends in the UK will be Connectivity and Convergence. The UK will have 200 million connected devices (six for every household) by 2020 which means that the country is on the path to becoming a digital economy with new business models and digital innovation hubs. One of the major industries that has benefited from the proliferation of digital devices is retail. Retail in the UK is transitioning from brick and mortar supermarkets to virtual stores and online hypermarkets – merging both bricks and clicks. 

The Bricks and Clicks Mega Trend is influencing most British retailers to transition from having a single/multiple channel to an integrated cross-channel model, merging physical and virtual forms of retailing. The report suggests the UK will have the largest online retail penetration in the world as 26 per cent of all retail sales will be online by 2025. Over 80 per cent of entertainment products will be sold online by 2025. New retailing business models in the UK have also opened up new commercial opportunities for allied industries such as logistics. As a result we are witnessing the introduction of innovative last mile options such as click and collect, addressing challenges associated with making urban deliveries, given the Mega Trend of Urbanization in Britain – all of which is relevant to the tyre business. Indeed it should be of particular interest for tyre retailers and e-tailers that have been trying to fuse “bricks and clicks” with varying degrees of success over the last decade.

The UK will follow the global pattern of cities – not countries – driving wealth creation in the future. As mentioned, around 81 per cent of the total population in UK will live in urban centres, say Frost & Sullivan. London accounted for 20 per cent of UK’s GDP in 2011 and could contribute about 25 per cent in 2020.  This rapid rate of urbanization will compel companies to target cities as their growth markets, with most UK cities also expected to become the micro manufacturing hubs or digital hubs of the country by 2025. Urbanization will also influence companies to become more rational and optimal in their operations, creating a new ‘smarter’ UK.

Smart is the new green. This Mega Trend will see smart initiatives replacing green concepts in many parts of the UK. For example, smart technology will find its way into most homes, with nearly five million broadband homes expected to have at least one smart home system by 2017, generating £1 billion in digital revenues. Smart Mobility will save millions of pounds from reduced congestion as more door-to-door integrated mobility solutions are introduced. A key aspect of dispensing any smart initiative would centre on smart grids which are expected to increase energy efficiency by 30 percent. Nearly 43 million Smart Meters are expected to be installed in 30 million UK homes by 2019 generating £14 billion to Britain by 2020. Of course tyre labeling and green tyres in general neatly dovetail into this. But while the kinds of tyres we might see on electric vehicles have been prototyped, this area is very much still in development.

The study also reveals many Social Trends. For example, one out of five people in the UK will be aged over 65 by 2020. The 65+ group is expected to contribute £77 billion to the British economy by 2030 (from £42 billion in 2011), with spending power to increase to £130 billion in 2030 (£78 billion in 2011). Future opportunities from Social Trends include new services and solutions in Healthcare, and neighbourhoods for aging citizens with new technologies such as robotic care for the elderly. Health, Wellness and Wellbeing in fact would become a key Mega Trend for the UK as preventive care becomes more important and relevant to its aging society. The future of Healthcare will be focussed more on wellness and well-being that define mind, body and soul.  This will create new opportunities in e-health, regenerative medicine, personalized medicine, health kiosks, tissue engineering, nutraceuticals, healthcare tourism, cybernetics, and non-invasive surgery.