The European e-commerce sector is set to experience remarkable growth, with industry analysts predicting a 45% increase in online sales between 2024 and 2029. According to a recent Forrester report, e-commerce revenue in Europe is expected to rise from €389 billion ($404.1bn) in 2024 to €565 billion ($587bn) by 2029, solidifying the digital marketplace as a dominant force in the retail industry.
While e-commerce has been expanding for years, the latest projections indicate a compound annual growth rate (CAGR) of 7.8% from 2023 to 2029. This figure represents a slight decline from previous estimates, which had predicted an annual growth rate of 9.2%. Despite this adjustment, the upward trajectory remains strong, with online retail gaining an increasing share of total retail sales. By 2029, e-commerce is expected to account for nearly 21% of all retail sales in Europe, compared to 16% in 2024.
While digital retail is booming, traditional brick-and-mortar stores face slower growth rates. The Forrester report projects that offline retail will grow at a modest CAGR of just 1.7% by 2029, a significant decline from 4.1% in 2023 and 8.9% in 2022. This shift underscores the increasing consumer preference for online shopping driven by convenience, competitive pricing, and a wide range of choices available through digital channels.
Among European markets, the United Kingdom is expected to remain the leader in online retail. By 2029, the UK’s e-commerce turnover is projected to reach €207 billion ($215bn), up from €152 billion ($157.9bn) in 2024. Online shopping is set to dominate, accounting for 32% of total retail sales in the UK.
Germany is also forecasted to see substantial growth, with online sales increasing from €97 billion ($100.78bn) in 2024 to €146 billion ($151.69bn) in 2029, representing 21% of the country’s retail market. Similarly, France is set to witness e-commerce expansion, with turnover climbing from €73 billion ($75.8bn) to €106 billion ($110.1bn), bringing its share of online retail to 17% by 2029.
Several key trends are fueling the rapid expansion of e-commerce across Europe:
- Advancements in Technology – Artificial intelligence (AI), augmented reality (AR), and personalized algorithms are improving the customer shopping experience, making online shopping more interactive and efficient.
- Increased Mobile Shopping– More consumers are using smartphones and apps for purchases, boosting online retail activity.
- Faster & More Reliable Delivery – Improvements in logistics, including same-day delivery and drone technology, are making online shopping more convenient than ever.
- Expansion of Online Marketplaces – Platforms like Amazon, eBay, and local European marketplaces are becoming the primary shopping destinations, with 47% of consumers starting their purchasing journey on marketplaces.
Forrester’s findings highlight the growing influence of online marketplaces, and retailers must embrace digital transformation to remain competitive. This means integrating both online and offline experiences to provide seamless shopping journeys. Click-and-collect services, AI-driven chatbots, and personalized product recommendations are becoming essential tools for businesses looking to capture the growing e-commerce market.
Jitender Miglani, Principal Forecast Analyst at Forrester, emphasizes that e-commerce is reshaping the retail industry, urging businesses to focus on enhancing customer experiences both online and offline. Miglani suggests that achieving excellence in customer experience across both areas will determine which companies dominate the market in the coming decade.
With e-commerce set to grow by 45% in the next five years, businesses must adapt to evolving consumer behavior. Those that invest in digital retail strategies, marketplace presence, and seamless customer experiences will be best positioned to thrive in this rapidly expanding industry. As technology continues to evolve, the future of European retail is undoubtedly digital.
Major players like Alibaba Group Holding Ltd. (NYSE: BABA) in the e-commerce space can plan how to leverage this expected growth in order to claim a share of the benefits from this market expansion.
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