The Retail Resilience report from Research from Barclays and Retail Economics showed that 49% of UK shoppers reported using these international sites in the past year.
These platforms, the majority of which are Chinese-owned, now represent around 5% of non-food online retail sales in the UK.
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According to the report, the presence of these platforms is shifting from that of a marginal player to a “material force” in the market.
This surge in spending on these ultra-low-cost platforms is creating new challenges for domestic retailers. The report notes that rapidly expanding international competitors are influencing how UK shoppers think about price, product variety and delivery terms.
Domestic businesses, already facing higher costs and adapting to fluctuating demand, are now under further pressure as shopper expectations shift toward lower prices and wider ranges.
Fashion is one of the main areas where this competition is most pronounced, alongside beauty, homewares and general merchandise.
UK retailers are not only losing direct market share to low-cost alternatives, but these sites are also making it difficult to defend their pricing strategies, with consumers becoming more accustomed to deep discounting.
The wide selection and competitive shipping on these platforms have placed additional strain on domestic operators’ ability to maintain service and compliance while protecting their margins.
Cyber security concerns and AI shake-up UK retail
The report also highlights the rise of cyber and data security concerns, as 64% of retail leaders now placing cyber and data security among their key concerns for the coming year, up from 58% last year.
In addition, AI is driving further change in consumer behaviour, as 78% of retail leaders indicated that AI tools are already shaping how shoppers discover and select products.
Nearly nine in ten retailers expect the importance of traditional sales channels to decline as AI gains prominence, forcing companies to compete for visibility in digital recommendation systems as well as online searches and in-person shopping.
The report further found that social commerce is gaining traction, with 30% of Gen Z consumers having made purchases through platforms such as TikTok Shop.
However, only 37% of retail leaders consider themselves fully prepared to scale up these sales channels due to operational challenges.
Retail Economics CEO Richard Lim commented: “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 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.”
