ONLINE DRIVES RECOVERY FOR BRITISH RETAIL SECTOR

o Online retail expected to grow by over 36% in the next 18 months compared to just 1% for in-store sales
o Online retail is on track to double its retail market share, equating to over £30 billion by 2012
o One in every £10 will be spent online by 2012

Online retail is expected to be the hero amid sluggish growth for the retail sector overall according to the second annual PayPal Online Retail Report*, undertaken by Experian. Against bleak growth prospects for the wider economy online retail is set to benefit significantly from improved internet access and shoppers’ belief that the internet can save them money.

Online shopping has grown much faster than the broader retail sector and is set to continue to punch above its weight by posting the largest growth in British retailing by the end of 2012. Experian predicts the internet retail sector to grow by £8 billion, a leap of 36% from its current value to be worth £30.6 billion by the end of the UK’s Olympic year. This is almost equivalent to the total £32 billion worth spending cuts announced in the recent Budget or a quarter of the UK budget deficit**.

One in every £10 will be spent online by 2012:
If online retail grows as predicted then it will double its market share of total retail sales by 2012 to 10.4% meaning one in every £10 spent will be spent on the internet.

Carl Scheible, Managing Director of PayPal UK, said: “Online retail is booming even in the current economic uncertainty because shoppers turn to the internet when they are trying to be thrifty. Two thirds of online shoppers are now convinced their money goes further online compared to less than half who believed it last year, an increase of 8.5 million people. The success of online retail really is the silver lining in the economic crisis.”

Larger online growth:
Online retailing is set to grow by £8 billion by the end of 2012 compared to store retail which is only forecast to grow by £3.3 billion or just 1%.

Faster online growth:
Internet spend has already almost tripled as a share of total retail spend since the end of 2006. According to this year’s PayPal UK Online Retail Report this growth shows few signs of slowing. Online shopping is predicted to grow by at a rate of at least 22% through 2010 and 18% through 2011. This is much faster than overall retail sales which are only set to grow at a rate of 0.4% this year and 1.6% in 2011.

Online seen as a saviour in tough times:
The report suggests that almost four million more online shoppers than last year think the best deals are available online (71% or a total of almost 24.4 million people compared to 62% in 2009) and nearly four million more online shoppers than last year also say that buying online makes it easier to manage what they spend (38% last year increasing to 48% or 16.5 million people this year).

Scheible adds “The growth of online shopping is not just about saving money, it’s also about saving time. In the last year we’ve seen an 11% increase in the number of online shoppers who say buying online does just that. And payment options such as PayPal make it even quicker to check out from websites”.
- ENDS –

For further media information please contact:
Rob Skinner, Head of PR, PayPal UK
020 8439 2067 or rskinner@paypal.com

Sophie Lilley / Caroline Macleod-Smith/ Lucy Banks - Lansons Communications
020 7566 9777 or paypal@lansons.com

Notes to Editors
* PayPal UK Online Retail Report 2010 compiled by Experian and The Future Foundation on behalf of PayPal, March 2010. Working on behalf of the Future Foundation, Research Now conducted online research among a nationally representative sample of 1,500 consumers over 18 years old in the UK (1,373 of those surveyed were online shoppers who had bought a product or service online in the last six months). The research was carried out during late February 2010 and complies with all MRS guidelines: www.mrs.org.uk.

The research built on – and has been compared in this release with - an initial wave of online research undertaken by Research Now among a nationally representative sample of 1,000 consumers over 18 years old in the UK, in early April 2009.

All figures in the press release (except as otherwise footnoted) are based on Experian’s forecast figures set out in the UK Online Retail Report.

** £32 billion spending cuts announced in the Emergency Budget 22nd June 2010 http://news.bbc.co.uk/1/hi/business/10390823.stm. ONS revised UK Budget deficit calculation of £156.1bn, published by the Office for Budget Responsibility on Monday 14th June 2010.

About PayPal
PayPal is the faster, safer and easier way to pay and get paid online. PayPal stores your card and bank details, enabling you to pay online without entering your sensitive financial information every time you shop, and you can be confident that it is never shared with the seller.

PayPal (Europe) S.àr.l. et Cie S.C.A. is a Luxembourg-based limited liability partnership, which is regulated by the Commission de Surveillance du Secteur Financier (‘CSSF') in Luxembourg. PayPal Inc is the ultimate parent of PayPal (Europe) S.àr.l. et Cie S.C.A. and is 100% owned by eBay Inc. PayPal Inc was set up in the US in December 1998 and acquired by eBay Inc in 2002.

PayPal has over 26 million accounts in the UK and is accepted on over 165,000 retailers’ websites across Europe

More information about the company can be found at www.paypal.co.uk or www.paypal.co.uk/press

Published on: 10:46AM on 29th June 2010