UK shoppers are spending almost £5bn on low-cost Chinese shopping platforms every year, according to new research from Barclays and Retail Economics.
Around £4.7bn is being spent on ecommerce sites such as Shein, Temu, and JD.com, with 49% of UK shoppers having purchased from these platforms in the past year.
They now make up around 5% of UK non-food online sales, with the report saying the growth is changing customer expectations on “price, range and delivery”, adding pressure to domestic retailers as it intensifies competition in categories such as fashion, beauty, homewares and general merchandise.
The report states: “For UK retailers, the challenge is not only the loss of consumer spend to new competitors, but the wider effect on pricing expectations.
“As shoppers become accustomed to low prices, frequent promotions and vast online ranges, domestic retailers face a tougher task in defending margins while maintaining service, quality, trust and compliance standards.”
UK retailers are looking to international markets to sustain growth.
Barclays UK head of retail and wholesale Karen Johnson said: “Ultra-low-cost international platforms are no longer a fringe trend – they’re reshaping how UK consumers think about price, choice and value.
“For domestic retailers, that raises the bar, but it also sharpens the focus on where they can compete and win.
“We’re working closely with clients to help them respond – whether that’s strengthening supply chains, improving working capital efficiency, or unlocking growth in new international markets through our trade and cross-border expertise.
“Those that can adapt quickly and operate with confidence across markets will be best placed to stay competitive.”
Other findings
Other important figures from the report include the risk of cyber and data security. Of retail leaders surveyed, 64% rank cyber and data security among the top three risks for the year ahead, up from 58% last year.
Now, 37% said they are highly prepared to detect risk, respond, and recover from cyber incidents, up from 25% last year.
On AI, 78% of retail leaders believe AI is changing how customers discover and search for products, while 89% said they expect AI to reduce the importance of traditional discovery channels in the next 12 to 18 months.
Social commerce is growing as a sales channel, but only 37% of retail leaders say they are ready to scale it.
Retail Economics chief executive Richard Lim added: “The risk environment facing retailers has become far more complex. Heightened uncertainty around geopolitics, supply chains, cyber security, and AI is creating a much more testing backdrop for businesses already operating on tight margins.
“A disruption in one part of the business can quickly spill over into operations, customer trust, financial performance, and long-term competitiveness. That means resilience can no longer sit in a silo or just be one business function’s responsibility.
“The retailers best placed to navigate this environment will be those that build greater agility into how they operate, plan for a wider range of scenarios, and respond quickly when conditions change.”
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