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December 27, 2020

Barclays Bank: Direct-to-Consumer Sales would give UK Manufacturing Industry £24bn Boost by 2023.

Barclays Bank

Photo: Barclays Bank logo outside its branch in High Street, Colchester, England. Image Credit: Howard Lake.

London, December 26, 2020 — A boom in manufacturers selling direct-to-consumer (D2C) will provide a £24bn boost to the industry’s coffers by 2023, research from Barclays Corporate Banking has revealed.

The new report - ‘A direct approach’ - combines polling of manufacturers, logistics firms, and consumers with detailed economic modeling to assess the impact of D2C sales, where traditional channels of distribution such as retailers and wholesalers get bypassed. The results show that a surge in shoppers going direct will mean sales through this channel total £120bn in 2023 - an increase from £96bn this year.

According to the Barclays report, consumer choices exacerbated by the pandemic are driving the growth. Almost three-fifths (57%) of the people surveyed said they now frequently go direct to manufacturers because they believe they will get a better price (36%) and better service (23%). Besides, almost a third (32%) of consumers are buying direct as a conscious decision to support the UK manufacturing sector. The most frequently purchased through the ‘direct approach’ are clothes (39%), electronics (30%) and food and drink (27%) - as well as larger items such as household appliances (24%) and furniture (22%).

Encouragingly for manufacturers, consumers’ newly-formed habits show no signs of abating even after the pandemic. More than half (52%) of consumers say they will continue to shop online as much as they do now, and 13% predict they’ll turn to e-commerce even more often. Shoppers expect 29% of their home deliveries to come via D2C in 2023, rising from 20% in 2020.

These trends have seen 13% of manufacturers set-up a D2C channel this year. Each invested an average of £288,000 in doing so - while 22% have seen an increase in D2C sales. However, despite the growing prominence of direct sales, the vast majority (98%) of manufacturers also continue to work with wholesalers and retailers.

The move to D2C means that many manufacturing firms are creating jobs: 45% of those introducing direct channels this year have recruited new staff across customer service areas. There could be as many as 118,000 new job roles supported by D2C sales across the next three years: rising from 500,000 in 2020 to 618,000 in 2023. It is positive news for the manufacturing industry. On average, each company has lost 26% of its revenue and 19% of its headcount across 2020.

The logistics sector is also benefiting from the move to D2C. Barclays estimates that around 85 million parcels and packages will be delivered to UK households this year thanks to manufacturers’ D2C sales. It will rise by about 30% to 110 million in 2023. Logistics firms predict that D2C contracts will account for 50% of their annual revenue in three years, compared to 39% this year. 45% are leasing more vehicles to accommodate this growth, 42% are employing more staff, and 28% take on more real estate.

Lee Collinson, Head of Manufacturing, Transport, and Logistics at Barclays Corporate Banking, said: “2020 has been a turbulent year for all industries, and the manufacturing sector is no different. However, the increasing demand to procure goods directly from the companies that make them provides growth opportunities and confidence for manufacturers of all sizes. D2C sales will help manufacturing firms increase their earnings and protect and create jobs in the next three years: that’s a welcome shot in the arm not only for the industry but also for the wider UK economy.”

Other notable findings from the Barclays report include:


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Edited & Posted by the Editor | 10:19 AM | Link to this Post

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